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Discussion ***Official*** 2021 Stock Market Thread

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Scarpozzi said:
I'm pretty sure market price orders still have limits on what happens if the price changes a certain percent over what's in someone's account. It sounds like they're just manipulating stuff for their friends and trying to tank these select stocks.
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JPM is my broker. I have $5k left in my brokerage cash, I'll try to see if I can buy 250 shares or so of BB. In the buy preview that is. Not sure if I'll actually click the submit buy button.
 
IEC said:
Joke's on them, I was almost all dry powder.

Time to put some of it to use burning the shorts.
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The sad thing is if they are successful and do crash the market, they are just going to burn other retail to pay off GME retail instead. They are going to socialize their losses because they can somehow afford to wait it out. It's the only way I can see them getting out of this. Imagine if the market bull run continued in force full this past week? GME would trading over $1000.
 
Alright I just bought 281 shares of BB at $14.24, a $4001 buy in with JP Morgan broker just for something for me and maybe some others here to follow for the next 45 minutes or so.

edit: Ah up $50.
Update: and now down $52 🙁
Update: down $48 and with that I'll hold it to see it if bounces back in after hours.
 
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So was thinking about buying 5 different Wsb recommended stocks on a Monday then selling them over 2 days later. I can't be flagged for pattern day trading right? They have to all be day trades like buy and sell in the same day, or over 3 day trades in a week in order to get flagged I think.
 
dasherHampton said:
I have to say - Thanks Torn.

If you hadn't of posted that I never would have bothered to check options prices on the stock.
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Much appreciated, but I didn't do much.
I was just checking Yahoo Finance's losers list. It was there for all to see since the morning.

But still, I am glad you got extra dough.
 
PlanetJosh said:
So was thinking about buying 5 different Wsb recommended stocks on a Monday then selling them over 2 days later. I can't be flagged for pattern day trading right? They have to all be day trades like buy and sell in the same day, or over 3 day trades in a week I believe in order to get flagged.
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A day trade has to be bought and closed on the same day so if you hold overnight it doesn't count.
 
Ok for a Monday consideration what about the Reddit Wsb recommended AMC? It's a little under $14 so somewhat affordable to many. Is its main run done and too much of a risk now? Or get in and try to make some bucks?
 
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Does anyone here sell covered calls for passive income? Thanks to all the GME drama, I've finally started learning about options. And one that I like in particular is selling a covered call: it seems like an easy way to earn passive income on a stock I plan to hold long-term. It seems like there are only two downsides to selling a covered call:

1. You are stuck with stock if it corrects or crashes before expiration.
2. You miss moon if it goes well above your strike price sale.

Now to me, these two things are be mitigated with the following

1. You buy a solid company, confident it will rebound after a correction or crash.
2. You set a strike price you are OK with selling - in the end you still profit + collect premium.

Am I missing something here? It almost seems like too easy of a way to make something like $10K / month. For example:

STOCK HOLDING: 1000 shares
CURRENT PRICE: $38
MAR 19 2021 45 CALL PRICE: $6

This means I can sell 10 contracts of this stock, collect $6000, and all I have to do is wait until March 19th for the option to either expire worthless, or sell my stock holding at $45 potentially before then? But with the risk of this stock going to say something like $20 before then? (which is slightly offset by collected premium)

Now I'm, guessing that if calls are "expensive", it's one of two things or both:

1. Lower cap, volatile, less established (AAPL calls don't generate nearly as much income for example), sop higher chance of correction / crash
2. Market is betting the stock will rise

Other than that, to sink ~$100K into this strategy and generate something like $10K every 1-1.5 months... seems almost to good to be true!? Am I missing something?
 
What you say is true. Covered calls can give you passive income. Options prices can also give you insight as to which way the market thinks a stock will move. If the premium seems too good to be true be wary.

Selling puts until you get put a stock and then selling covered calls on it is pretty much options 101.

What stock are you taking about so I can take a look.
 
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njdevilsfan87 said:
Does anyone here sell covered calls for passive income? Thanks to all the GME drama, I've finally started learning about options. And one that I like in particular is selling a covered call: it seems like an easy way to earn passive income on a stock I plan to hold long-term. It seems like there are only two downsides to selling a covered call:

1. You are stuck with stock if it corrects or crashes before expiration.
2. You miss moon if it goes well above your strike price sale.

Now to me, these two things are be mitigated with the following

1. You buy a solid company, confident it will rebound after a correction or crash.
2. You set a strike price you are OK with selling - in the end you still profit + collect premium.

Am I missing something here? It almost seems like too easy of a way to make something like $10K / month. For example:

STOCK HOLDING: 1000 shares
CURRENT PRICE: $38
MAR 19 2021 45 CALL PRICE: $6

This means I can sell 10 contracts of this stock, collect $6000, and all I have to do is wait until March 19th for the option to either expire worthless, or sell my stock holding at $45 potentially before then? But with the risk of this stock going to say something like $20 before then? (which is slightly offset by collected premium)

Now I'm, guessing that if calls are "expensive", it's one of two things or both:

1. Lower cap, volatile, less established (AAPL calls don't generate nearly as much income for example), sop higher chance of correction / crash
2. Market is betting the stock will rise

Other than that, to sink ~$100K into this strategy and generate something like $10K every 1-1.5 months... seems almost to good to be true!? Am I missing something?
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I sell covered calls and cash secured puts for income. I'm not usually super aggressive like some here. But I generate about $10k to $100k a month from my options selling depending on how aggressive I am or how volatile the stock or market is. It's why I don't care about dividend stocks. I make my own dividend like income from option selling. Sometimes I only sell covered calls. Sometimes just cash secured puts. Or sometimes both at the same time. Or nothing at all. It's why I love TSLA. The IV on TSLA averaged about 80-90% all last year so its options were very expensive. TSLA can have crazy swings. TSLA option prices have come down some since it joined the S&P 500 but the IV is still way higher than something like Apple.

You can sell shorter dated covered calls if you have deep ITM leap call options and use that like stock. So it doesn't just have to be stock your holding.

If you're planning to hold the stock, the big risk is you cap your max gain by selling covered calls and the stock moons. You can try to minimize the pain by buying higher strike option and basically creating a spread. You can also roll the option to further out expiration and higher price and try to ride out the temporary spike and possibly make even more money. You can also sell cash secured puts to collect premium to offset some of the potential money lost. Remember, stock can only go up or down. It can't do both at the same time. So if your calls expire in the money, the puts you sold should expire out of the money unless you did straddle option. Or you could simply buy the call option back higher and take the loss instead of losing your stock. I do that if I have lot of capital gain in the stock and want to try to keep the stock for long term capital gains. If your stock gets called away because the call expired ITM, then the money you lose to short term capital gains tax by selling your stock could be lot higher than any loss you take on buying back the call you sold. I've done everything above and the only time I really buy back the calls at a big loss is when I don't want to lose the stock because of the massive short term capital gains on the stock.

But be careful and always be mindful of the risk and don't overextend yourself. Selling covered calls and cash secured puts are not free money people will try to lead you to believe. It carries lot of risks but you can kind of control how much risk you want to take with strike prices and expiration dates you pick. You can't account for craziness like we have seen recent week with shorted stocks all going crazy.

I sold Jan 2022 TSLA $1,400 covered calls. I normally don't sell covered calls that far out but I felt I would be ok with letting my TSLA shares go at that price. I got paid over $140 per share it's really like selling it for $1,540 by Jan 2022. I sold 10 of the $1,400 calls so I got paid over $140,000 in premium. I also sold some $1,000 calls too which I'm little more nervous about but I just look at it as partial downside protection. The covered calls I sold shielded me from lot of the TSLA drop on Thursday and Friday.

And I sometimes sell naked calls. That's the riskiest of all but sometimes the call prices can go absolutely crazy when TSLA is on one of its crazy runs. People here shouldn't do it. I really shouldn't do it. I've been burned badly before. But it's tempting sometimes when you see crazy premium you can collect on super far out options that's expiring like in 1 or 2 days. But don't do it. Or you'll end up like Melvin Capital with their GME short. Just get killed if Black Swan event happens.
 
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I forgot another and one of the biggest downside to covered call selling. It's all considered short term gain so you will pay ordinary income tax on any covered call you sell. And since you're in CA, that means you can lose over 50% of your profits to taxes depending on your income bracket. So be mindful and pay your quarterly estimated taxes.
 
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I'm starting to understand all of this: in a sense I'm selling liquidity (if I want to play it safe). But it almost seems to make it easier to form a trading strategy: if I'm OK with buying in at X price, I sell a cash covered put to buy at that price. If I'm OK with selling a position at Y price, I sell a covered call to buy at that price.

I can also see the focus is income generation if you're trading them - but that doesn't necessarily mean that's best for net worth growth. It's kind of trade-off: for example selling a put could go wrong in the short-term, likewise with selling a covered call could miss further gains. BUT... if you're planning on either buying something today at X price, or willing to sell something at Y price within the future you can use options to generate income on that. Both cases seem to hedge your bets: limit downside and potential upside, but it seems to favor income generation because you're selling time/liquidity. I make stupid decisions day-trading anyway so I might as well collect premium doing nothing.

Now watch the stock market blow up as I figure this all out thanks to GME!

@ponyo, how much capital is required to reliably generate $10k/mo off options? You're right about the taxes part too, though I'm thinking about using this strategy to try to grow a portion of my retirement tax free or deferred accounts too.
 
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The bottom line is - when it comes to playing options it depends on if you have a knack for it or you suck at it.

If you suck at it your account will either quickly be filled by stocks currently going down in value or you'll spend more money than you want buying back puts headed in the wrong direction.

If you sell $45 puts for $1000 on a $50 stock and the stock drops to $47 its might cost you $2500 to buy them back. And if you don't buy them back, take on the stock, and it drops to $40 the covered calls at your entry price ($45) might only be $300. If you wanted to sell calls in that case you'd either have to go WAY out or risk selling them at a lower price.

Unless you're just selling simple covered calls for some extra cash it's NOT as easy as it would seem. And what's that $38 stock paying out $6000 for 10 March contracts?
 
I get it. Like I said, not looking to trade, but generate income on holdings I'd like to remain long on.

dasherHampton said:
Unless you're just selling simple covered calls for some extra cash it's NOT as easy as it would seem. And what's that $38 stock paying out $6000 for 10 March contracts?
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CRSR, $45 March 19th calls are paying about that.
 
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ponyo said:
I sell covered calls and cash secured puts for income. I'm not usually super aggressive like some here. But I generate about $10k to $100k a month from my options selling depending on how aggressive I am or how volatile the stock or market is. It's why I don't care about dividend stocks. I make my own dividend like income from option selling. Sometimes I only sell covered calls. Sometimes just cash secured puts. Or sometimes both at the same time. Or nothing at all. It's why I love TSLA. The IV on TSLA averaged about 80-90% all last year so its options were very expensive. TSLA can have crazy swings. TSLA option prices have come down some since it joined the S&P 500 but the IV is still way higher than something like Apple.

You can sell shorter dated covered calls if you have deep ITM leap call options and use that like stock. So it doesn't just have to be stock your holding.

If you're planning to hold the stock, the big risk is you cap your max gain by selling covered calls and the stock moons. You can try to minimize the pain by buying higher strike option and basically creating a spread. You can also roll the option to further out expiration and higher price and try to ride out the temporary spike and possibly make even more money. You can also sell cash secured puts to collect premium to offset some of the potential money lost. Remember, stock can only go up or down. It can't do both at the same time. So if your calls expire in the money, the puts you sold should expire out of the money unless you did straddle option. Or you could simply buy the call option back higher and take the loss instead of losing your stock. I do that if I have lot of capital gain in the stock and want to try to keep the stock for long term capital gains. If your stock gets called away because the call expired ITM, then the money you lose to short term capital gains tax by selling your stock could be lot higher than any loss you take on buying back the call you sold. I've done everything above and the only time I really buy back the calls at a big loss is when I don't want to lose the stock because of the massive short term capital gains on the stock.

But be careful and always be mindful of the risk and don't overextend yourself. Selling covered calls and cash secured puts are not free money people will try to lead you to believe. It carries lot of risks but you can kind of control how much risk you want to take with strike prices and expiration dates you pick. You can't account for craziness like we have seen recent week with shorted stocks all going crazy.

I sold Jan 2022 TSLA $1,400 covered calls. I normally don't sell covered calls that far out but I felt I would be ok with letting my TSLA shares go at that price. I got paid over $140 per share it's really like selling it for $1,540 by Jan 2022. I sold 10 of the $1,400 calls so I got paid over $140,000 in premium. I also sold some $1,000 calls too which I'm little more nervous about but I just look at it as partial downside protection. The covered calls I sold shielded me from lot of the TSLA drop on Thursday and Friday.

And I sometimes sell naked calls. That's the riskiest of all but sometimes the call prices can go absolutely crazy when TSLA is on one of its crazy runs. People here shouldn't do it. I really shouldn't do it. I've been burned badly before. But it's tempting sometimes when you see crazy premium you can collect on super far out options that's expiring like in 1 or 2 days. But don't do it. Or you'll end up like Melvin Capital with their GME short. Just get killed if Black Swan event happens.
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Do you get to pick the counterparty to these covered calls or adjust the premium if you think the other party is more squirrelly than you'd like?
 
dasherHampton said:
Not bad at all. Solid buy rating, earnings going up.

I like the 3/19 30 puts at 3.55. Thanks for the tip.
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I haven't done a thing with options just yet, I did try to sell a CSP on $PLTR end of last year which would have paid out for me at the time (I.E expired worthless). But I was restricted due to not having a margin account.

Any idea why a CASH secured put requires margin? Seems they could just reserve the cash until the put expires. Wondering if that's just my broker or if that's a standard thing.
 
ponyo said:
I've always been in the camp of pay off your mortgage and debt as fast as possible. Even today with low rates, I still think people should pay off their mortgage aggressively if they can. It's weird because I always had high risk tolerance for investments and taking risks but yet hated and despised debt. It's like I'm walking contradiction.
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I probably have despised debt more than you. Me and debt are pretty much unacquainted. My risk tolerance is less than it was because when I was spending a lot of time trying to figure out "How to Make Money in Stocks," (yeah, I tried Wm J. O'Neill's methodologies) I just never got anywhere. Same thing using Investools. I would have been better off just riding the general market, which is what I'm doing now being all in on SPY.
 
njdevilsfan87 said:
CRSR, $45 March 19th calls are paying about that.
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I also realized I didn't actually answer your specific question. The catch is that you don't usually get those splits. CRSR is obviously very volatile and that works in your favor. Usually if you sell options on a "safe" stock like BAC you won't get near that. If you go out to March with BAC with the same call you'll only get like .45.

But I say 100% go for it and sell those calls.


Tweak155 said:
I haven't done a thing with options just yet, I did try to sell a CSP on $PLTR end of last year which would have paid out for me at the time (I.E expired worthless). But I was restricted due to not having a margin account.

Any idea why a CASH secured put requires margin? Seems they could just reserve the cash until the put expires. Wondering if that's just my broker or if that's a standard thing.
Click to expand...

They want to keep people from going crazy. But if you're serious about trading options you really need non-cash secured puts. LVL3 I believe.
 
ponyo said:
I forgot another and one of the biggest downside to covered call selling. It's all considered short term gain so you will pay ordinary income tax on any covered call you sell. And since you're in CA, that means you can lose over 50% of your profits to taxes depending on your income bracket. So be mindful and pay your quarterly estimated taxes.
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Lucky for me, I'm in a state with no income tax. I may need to look into covered call selling.

I know nothing about options because Saved by the Bell scared me away from options/margin, etc...

So if I owned 100 shares of APPL, for instance. If I think the price might stay below $140, I could sell this option to profit $111.33 like this...and if it goes above $140/share, I get $111.33 + $800 more profit (but nothing above if it goes upwards). Even moreso...if it shoots up and back down before the buyer notices, I still keep the $111.33 if they don't exercise it. Right?
1612052763674.png

I saw a strategy for covered call too, but that appears to be if you're buying the stock in the same transaction. I would already own APPL in my example..... If I'm right, yeah...this seems like a way to hedge risk if your option sells.
 
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