Selling itm (covered) calls the same as shorting the stock?

Discussion in 'Options' started by wxytrader, Sep 6, 2024.

  1. cesfx

    cesfx

    You are too advanced for me. I won't even try anymore.
     
    #11     Sep 6, 2024
  2. AKJ

    AKJ

    this guy's ability to generate engagement on ET is impressive.
     
    #12     Sep 6, 2024
    nbbo, taowave and cesfx like this.
  3. BKR88

    BKR88

    I didn't read your original post close enough so I edited my first response. :cool:

    Owning the stock and selling the 95C for 5 has a max profit of ZERO and max loss of 95.
    Stock goes to zero you lose 100 on the stock buy keep the 5 on the call sale. (100)+5=(95)
    Stock goes to 150 you make 50 on the stock but lose 50 on the short call.
     
    #13     Sep 6, 2024
  4. poopy

    poopy

    Shorting a deep ITM call is = shorting a deep OTM put. You're not short. You've simply reduced your delta position to that of the OTM put.

    And frankly, your TA sucks. The only thing you're trading is MARA and you're long from 23 (marked to 13.33).
     
    #14     Sep 6, 2024
    Flynrider and nbbo like this.
  5. I'm also down on GME... Actually my break even on MARA is 18.31.

    However, these weren't TA trades. It was my Hulk system of selling atm money puts then turning around and selling atm calls... Basically a premium collecting machine. You said that you're not going to overcome large drawdowns but in fact had I employed that strategy I would have been out and earning the whole way down so my break even would be much lower now.

    You should let me join your little club so I can help you out with your TA shortcomings...collaboration is the key right? :)


    Anyway being down isn't a problem...I get paid when the big boys go to collect their money from accumulating all those shares on the way down.
     
    #15     Sep 6, 2024
  6. You're considering both positions as a tandem. When I look at them as completely separate entities for pnl purposes. I'm not concerned about missing out on downside profits that are never going to materialize, nor am I concerned about downside loss because it's a long-term hold... and I'm not concerned about upside risk because of my long shares.
     
    Last edited: Sep 6, 2024
    #16     Sep 6, 2024
  7. poopy

    poopy


    So you're only down 25% on MARA. Fantastic.
     
    #17     Sep 6, 2024
    cesfx likes this.
  8. Yes because I didn't follow my system... Seemed counter intuitive letting shares get called away below the strike you got assigned at, but the math checks out.

    Anyway, the best way to fix a down position is to throw more money at it, which I don't have right now. Unless they're going bankrupt and I don't believe they are. I think they have a pretty good z-score then you'd be pretty stupid not to be buying at these levels. :)
     
    #18     Sep 6, 2024
  9. BKR88

    BKR88

    Convert part of your position to the Oct. 18 Call Spread (10/19).

    Buy 10C ... 3.80
    Sell 19C ... .40
    Total cost ... 3.40 ($340)
    Just .05 of extrinsic value.
    10.35-3.40= 6.95 ($695) .... cash back in the account.
    If the stock closes at 16 or higher then roll the position up to the 13/22 Call Spread (maybe Nov. if getting close to expiration).


    mara.jpg
     
    #19     Sep 6, 2024
    wxytrader likes this.
  10. taowave

    taowave

    And no mention of CLSK?

     
    #20     Sep 6, 2024