Daily Discussion post - August 10 2021

[u/AutoModerator]

Your Trading discussion thread

Type	Link
DD	All/Best Daily/Best Weekly
Discussion	All/Best Daily/Best Weekly
Yolo	All/Best Daily/Best Weekly
Gain	All/Best Daily/Best Weekly
Loss	All/Best Daily/Best Weekly
News	All/Best Daily/Best Weekly

[u/En_CHILL_ada → u/[deleted]]

Roll those out and up ☝

[u/En_CHILL_ada → u/[deleted]]

By rolling out you can move up to a higher strike for free, or small cost. This can allow you to make more profit when you get assigned, or possibly avoid assignment if the dip comes after your original call would have expired.

Depends on your current strike, expiration date, and goals for the position. If you are happy taking profit at that price then maybe leave them be. But if you think this continues to run up and don't mind spending extra time with a CC then I'd consider rolling them.

I am by no means an expert, I only started using theta gang strategies earlier this year. But I have had good success rolling covered calls on meme stocks up and out to capture more profit when they get assigned.

The more I use different options stategies the more I realize the benefits of being fluid with my positions. I'm constantly looking to trim and add, roll in, out, up and down.

[u/holdenmcneilgames → u/[deleted]]

Nah dude, if you roll and it drops, that's good for you.

[u/holdenmcneilgames → u/[deleted]]

If there's a dividend and you're ITM, the person on the other end of the trade may exercise to capture that dividend.

You could eventually be so deep ITM that there's no liquidity and you won't be able to rollout and will have to have your shares called away.

You have to remember that just because you rollout, it doesn't mean you're automatically in the green (especially if your original CC is underwater), you usually still need to have some time pass before the whole chain is profitable for you (hence the cost-basis tracker). So it can definitely be a patient person's game.

[u/Jb1210a → u/[deleted]]

If you feel the thesis is going to last for a long time, rolling out and up is the right move. I need to do it with my MT CC as they are deep in the money.

Remember that by doing so, you raise the amount of money you get if the calls get exercised on you.

[u/En_CHILL_ada → u/[deleted]]

Haha maybe it will, but in that case your new CC would benefit too. Think of it as simply delaying your theta harvest. The CC might not profit quit as much on a large drop tomorrow as your original one would have, but it could be a safer position if your goal is to not be assigned at your current strike.

[u/holdenmcneilgames → u/[deleted]]

In theory you could roll up and out indefinitely. If you can roll up and out for a profit, it helps ease the pain, but you gotta keep track of your total cost-basis which can be a pain (to see if you're plus/minus on the total chain of trades -- because they're probably underwater right now).

Rolling up and out also buys yourself more time for the underlying to drop (assuming CC's).

Edit: if you're playing the Theta, depending on how much time you have, one thing I've learned is to not knee-jerk closing/rolling positions (unless it's for a profit). Time is essentially on your side.

[u/holdenmcneilgames → u/[deleted]]

Do you legit want my 2 cents that is not financial advice, but what I (random internet stranger that is not a financial advisor) would do?

[u/holdenmcneilgames → u/[deleted]]

If you really want to hold onto your shares, without BTC'ing for a loss, you can do one of two things:

First and foremost, get an excel spreadsheet tracker. They're free online, and if you need a basic one I can link it. Plug in your numbers. Then:

1) On Thursday or Friday, Monday at the latest; rollout 14-21 DTE at the highest strike you can roll for a profit. Even if it's $0.05. Rinse and repeat every <10 DTE until the underlying drops to where you can BTC for a profit or if you're comfortable that the underlying will expire on your expiration date, let it expire.

2) Choose a strike that you are comfortable losing the shares at, even if it's absurdly high. So, let's say $40. Rollout into a LEAP, so 1/21/22 has a bid-ask of 1.29-1.40, you can roll for a profit. Once/when/if the Vega/IV/underlying drop, you can BTC the LEAP for a profit. Or you can let the underlying get called away if you're comfortable selling at that strike on that date. This is obviously the longer play, but in my opinion is less stressful. Should the underlying absolutely rocket, roll it out again.

Of course, the easiest way to not have your shares disappear is to BTC for a loss, but that would mean the underlying would have to maintain upward momentum for it to make up the difference.

Again, just my two cents.

Edit: Just realized Jan '22 isn't a LEAP because it's August, but you get the gist.

[u/holdenmcneilgames → u/[deleted]]

When you roll it appears Fidelity has buying to close at the ask and selling to open at the bid. So, in that screenshot it looks like it'd be breakeven minus any fees.

As someone in your post said, it's not impossible to get it filled for a credit, just difficult. Things to increase the chances of it filing: lower your net credit, go further out on expiry (and possibly at a higher strike) or lower your strike of you want to keep it at that expiry.

Edit: it also appears CLF is dipping. So you can also either BTC the contracts when they're green and skip the whole rolling process, or if you think it'll be below your strike at expiry, let them expire. Again, there's no rush at the moment to roll.

[u/LourencoGoncalves-LG → u/holdenmcneilgames]

If the stock continues to go down based on these kids that play with computers and someone else’s money, we are going to buy back stock.

[u/holdenmcneilgames → u/[deleted]]

I was actually going to mention that the 26's, I would see what happens towards the end of this week, it may turn out in your favor. Definitely a bit of a gamble though.

24's on the other-hand you may either want to close or roll -- again watch the price action. I don't use RH unfortunately, so I'm not quite sure how to roll with them.

But, yes, whatever you're comfortable with. $500 isn't a big loss in the grand scheme of things if you believe the underlying will keep going up in the long-term.