Verticals vs CC's

Discussion in 'Options' started by Arnie Guitar, Nov 27, 2024.

  1. Those numbers are for filled orders.
    I only place Limit Orders, and adjust the prices until I get filled.
    As far as Placed Orders, double those numbers, maybe triple.
    I never place Market Orders.
     
    #21     Nov 28, 2024
    spy likes this.
  2. Just for example,
    I currently have 46 Options expiring next week.
    Granted, many if not most of them are "pairs", or Spreads, or...
    Where I'm long the lower priced Strike and short the higher, same exp date.

    Lately with this Bull Market, when I Roll Out,
    I'll bump the short Option to a higher Strike
    if the Underlying has risen well past that Strike.

    My smallest spread is 2.50 and my biggest is 30.00.
     
    #22     Nov 28, 2024
  3. poopy

    poopy

    To elaborate (poorly) on what tao stated.

    The problem with verts as you're using them is that the same strike put prem is embedded in the call you're long. WMT Dec20 90-strike: 2.88C, 0.88P with the 95C at 0.65. You're going to need to go DITM on the long call to replicate shares and minimize the embedded put prem of the arb/parity. Calls are puts; puts are calls. If the put premium wasn't embedded in the call, or simply discounted, you could complete the reverse conversion at edge.

    Stock + put = synthetic call. The difference between a call and a put? Shares.

    upload_2024-11-28_9-52-38.png
     
    #23     Nov 28, 2024
    nbbo and Option_Attack like this.
  4. poopy

    poopy

    Did WMT split?
     
    #24     Nov 28, 2024
  5. spy

    spy

    Individual contracts? Or more complex positions on 46 underliers or, idk... something else? Can you post your portfolio... kidding, kidding.
     
    #25     Nov 28, 2024
    Arnie Guitar likes this.
  6. Enjoy the Holiday,
    some turkey and some football.

    We can talk tomorrow or privately.

    Arnie
     
    #26     Nov 28, 2024
    spy likes this.
  7. TheDawn

    TheDawn

    Why is it nutty? Out of all of the dividend payout dates from the last 2 years, there were only TWO instances where the stock actually went up on and/or after ex-dividend dates. HD is not a growth stock like NVDA or TSLA; its dividend payout ratio is 60%. It's a dividend stock at this point. Everybody buys the stock pretty much for the dividend, and once the dividend got paid, the stock goes down, sometimes for the full dividend, sometimes less but they all go down.

    True, just to be 100% conservative and to cover the shorts from the assignments, I would exercise the call but given its performance pattern around ex-dividend dates, I might attempt to sell the call and then just buy back the stock to close the shorts either on ex-dividend dates or 1 or 2 days after to potentially make back some of the dividends that I missed. Either way, I won't get the dividends regardless at this point so I might as well try to get some money back. HD is tanking atm.

    What's the matter? You don't have enough nuts to do it? :sneaky: You disappoint me, General Tao. LOL
     
    Last edited: Nov 28, 2024
    #27     Nov 28, 2024
    taowave likes this.
  8. TheDawn

    TheDawn

    Happy Thanksgiving Arnie! Hope everything worked out with HD.
     
    #28     Nov 28, 2024
    Arnie Guitar likes this.
  9. taowave

    taowave

    Veet went deep, its now a dividendl play..You are way over complicating the position.

    Calculate long carry, add in the price of the put and compare it to the Div..

    You are a day late and dollar short if you are exercising after the stock goes Ex Div..

    Let me know if you are trading any deep verts on high yields around Ex date..ill kindly facilitate :)




     
    #29     Nov 28, 2024
    nbbo likes this.
  10. poopy

    poopy

    CC = long stock -> short call
    bull vert = long put -> long stock -> short call

    The bull vert makes a poor alt to a CC unless you're near D1 on the long call leg. Generally you want to be near D1 on the long call and ATM on the short call leg.
     
    #30     Nov 28, 2024