IMPORTANT NOTE TO NEW (and experienced) OPTIONS TRADERS:
Close out all winning In the Money or Close To The Money Options Positions That Expire Today.
If you have a completely in-the-money-on-both-legs Vertical DO NOT let it go into expiration assuming it will auto-exercise. Pay 0.01-0.03 to go home flat. If you have an options position that is a little bit out of the money and it looks like it is going to zero sell it for 0.01 or even 0.00 to get out of the position.
Not exercising and assuming everything will auto-ex is the biggest source of trading group wipe-outs.
Yes you can open an extra Roth or non-Roth account at SpreadHunter and trade there, keeping your existing account in place. Or transfer the existing Roth over to SpreadHunter. The funds are held at Trading Block which is a FINRA Broker Dealer. The tools let you scan and execute the Portfolio Armor top picks (long & short) using calls/puts/verticals. Also the top S&P 500 / NASDAQ 100 subsets.
Hey everyone, a couple of quick addendums to this post:
1) It looks like I made a mistake with the NIO spread expiring today. Some sites were indicating that it was releasing earnings today, but it looks like today's filing was its 2022 annual report, which doesn't have a lot of new earnings info because the Q4 2022 earnings were released separately in March. So our NIO spread expiring today is probably going to be a bust. Sorry about that. The other NIO spread expires after NIO's scheduled Q1 earnings so, we should get an earnings move one way or another with that one, and I remain bearish on NIO and will continue to hold the June expiration spread.
2) David Jannello writes nearby that we should give up $0.01-$0.03 on our spreads to close them out before expiration. He runs a company that specializes in spreads, so I will defer to him on this and take his advice, and suggest you do the same.
The June earnings are the catalyst. I wouldn't worry about fluctuations between now and then. We'll either make or lose money on this trade based on those earnings.
A couple of ideas you may want to consider going forward:
1) Reduce your position sizes for future trades, until you get comfortable with them.
2) Focus on the options trades with shorter times to expiration, so you don't have to wait as long for resolutions.
Thanks for helping me with my education. Right now I am trading in the $500 range, which is a small part of my portfolio as I get up to speed, and yes to the shorter times. Appreciate your comments!
The SNAP trade gives up 0.03 to go home flat. This is absolutely critical risk control on expiration day. It is easy to forget that there are positions on and to forget to close out the position. Or to think that it is worth 0.03 to roll the dice and let both legs get exercised/assigned. Spacing Out = Wiping Out.
You could do the June expiration NIO spread today. I wouldn't do the one expiring today; I think I may have made a mistake with that one.
And FRC is down ~30% now on news that it may go into FDIC receivership, so you'll have to consider the risk-reward on the current price of those puts today.
Thank you! While I have some risk, I think I'll look at the June NIO and pass on FRC, need to be watching more during the day as by the time I saw your alerts, it was too late for market order.
Order type is “spread” and you should select “net debit”. That should show you a midpoint and you ought to be able to open the trade near there. Alternatively, you can enter the net debit I did.
IMPORTANT NOTE TO NEW (and experienced) OPTIONS TRADERS:
Close out all winning In the Money or Close To The Money Options Positions That Expire Today.
If you have a completely in-the-money-on-both-legs Vertical DO NOT let it go into expiration assuming it will auto-exercise. Pay 0.01-0.03 to go home flat. If you have an options position that is a little bit out of the money and it looks like it is going to zero sell it for 0.01 or even 0.00 to get out of the position.
Not exercising and assuming everything will auto-ex is the biggest source of trading group wipe-outs.
Hi David, thanks for your tips! David P says below you run a company that specializes in spreads, where can I get more info?
https://spreadhunter.com/
FYI we have specialized quant tools that are only for Portfolio Armor Substack Subscribers.
Nice, thanks I'll check it out, though I am using a Roth account @ Fidelity and can I work with you, or ?
Yes you can open an extra Roth or non-Roth account at SpreadHunter and trade there, keeping your existing account in place. Or transfer the existing Roth over to SpreadHunter. The funds are held at Trading Block which is a FINRA Broker Dealer. The tools let you scan and execute the Portfolio Armor top picks (long & short) using calls/puts/verticals. Also the top S&P 500 / NASDAQ 100 subsets.
Hey everyone, a couple of quick addendums to this post:
1) It looks like I made a mistake with the NIO spread expiring today. Some sites were indicating that it was releasing earnings today, but it looks like today's filing was its 2022 annual report, which doesn't have a lot of new earnings info because the Q4 2022 earnings were released separately in March. So our NIO spread expiring today is probably going to be a bust. Sorry about that. The other NIO spread expires after NIO's scheduled Q1 earnings so, we should get an earnings move one way or another with that one, and I remain bearish on NIO and will continue to hold the June expiration spread.
2) David Jannello writes nearby that we should give up $0.01-$0.03 on our spreads to close them out before expiration. He runs a company that specializes in spreads, so I will defer to him on this and take his advice, and suggest you do the same.
I ended up with the June expire and they are now:
My NIO $7.50 buy is down -2.87% & -$16.79 with a cost basis of $586.79, current value is $570.00
My NIO $5 Sell is down -32.10% & -$24.30 with a cost basis of $75.00, current value is $100.00
Its been dropping nicely last couple months, so any feedback is appreciated!
The June earnings are the catalyst. I wouldn't worry about fluctuations between now and then. We'll either make or lose money on this trade based on those earnings.
A couple of ideas you may want to consider going forward:
1) Reduce your position sizes for future trades, until you get comfortable with them.
2) Focus on the options trades with shorter times to expiration, so you don't have to wait as long for resolutions.
Thanks for helping me with my education. Right now I am trading in the $500 range, which is a small part of my portfolio as I get up to speed, and yes to the shorter times. Appreciate your comments!
STC SNAP 9-50-10.50 Put Vertical @ 0.97 exch EDGX
STC NIO 8.00 Put @0.20 exch BOX
The SNAP trade gives up 0.03 to go home flat. This is absolutely critical risk control on expiration day. It is easy to forget that there are positions on and to forget to close out the position. Or to think that it is worth 0.03 to roll the dice and let both legs get exercised/assigned. Spacing Out = Wiping Out.
I did not see this until trading was closed, is it ok to get in this morning?
No, the move on SNAP already happened.
I am asking specifically about this trade, as well as the other trade yesterday on FRC
Sorry, Big JiLm.
You could do the June expiration NIO spread today. I wouldn't do the one expiring today; I think I may have made a mistake with that one.
And FRC is down ~30% now on news that it may go into FDIC receivership, so you'll have to consider the risk-reward on the current price of those puts today.
Thank you! While I have some risk, I think I'll look at the June NIO and pass on FRC, need to be watching more during the day as by the time I saw your alerts, it was too late for market order.
David first lap at this...
Strategy: Spread
Leg 1: Buy 15 contracts Apr 28 @7.5 Put
Leg 2: Expy Apr 28 Strike 6.5 Puts
Order Type:?
If I select "Even," it says max gain is 1500, Est Max loss Zero
Net Debit and Net Credit require a price to execute the order. Any advice on what to do?
Order type is “spread” and you should select “net debit”. That should show you a midpoint and you ought to be able to open the trade near there. Alternatively, you can enter the net debit I did.
Thank you. The SNAP suggested trade worked and self-populated. NIO won't populate but you have given something to use. Thanks!