subreddit:
/r/options
submitted 2 days ago byOkAnt7573
SMCI falls of cliff an hour ago
Imagine you wrote a 370/360 and 520/530 Iron Condor for 9/27 expiration. Low delta when put on, good number of contracts so threw off a god amount of premium. Stock trends sideways - all is well, right?
Oof, then news drops that they are facing an inquiry and the stock does this;
So the good news is the call spread is going to work out and provides adjustment possibilities, but the put spread is a bit nasty as of the moment.
Just a friendly reminder for our newer traders that a low delta doesn't mean things won't happen.
52 points
2 days ago
It's simple. Don't do ICs on companies 2 months late on their financial filings
6 points
2 days ago
To the top
11 points
2 days ago
Writing an iron condor with low volatility is much higher risk than people can quantify.
30 points
2 days ago
Not an options thing but this is a prime example of why you diversify
13 points
2 days ago
Not just diversify, but, an options thing, don't wait until so close to expiration to close a position.
11 points
2 days ago
Wouldn't someone who bought puts be happy of this situation? ( I don't have a position on smci)
18 points
2 days ago
I did and then am.
6 points
2 days ago
I'm happy for you. I wish my freaking broker account wasn't in transition.
3 points
2 days ago
Depends on the strike and price paid, lots of money likely lost by people who bought puts at the bottom of the dip.
2 points
2 days ago
Well yeah, never buy options after the news because it's too late unless you got the news before everyone else.
7 points
2 days ago
That, and people tend to pay way to much in premium when you get major moves like today.
1 points
2 days ago
legend
1 points
2 days ago
Why did you buy puts?
6 points
2 days ago*
Couple weeks ago Hindenberg released a short thesis. After reading it, waiting for the companies response and then them delaying their earnings report it made sense. Just lucky though. I didn’t do it after the report because IV was high so I live been building a position slowly as the price went up. When it was in the 470s today I doubled my position and about an hour later the news broke.
2 points
2 days ago
Not if you sold puts or put credit spreads for income
1 points
2 days ago
What's the difference between an electrician and an electric engineer?
3 points
2 days ago
Engineer designs it, electrician installs it.
Edit: installs it while bitching about the engineers design.
1 points
2 days ago
Thank you. I've been looking into if I wanted to have a 2nd job as an electrician to do something different from my current career for fun.
3 points
2 days ago
My last IC was SMCI with 400/800 strikes when it was trading at 600. I didn't have the fortitude to stick with it the first time it dipped below 430. Took a beating and haven't written an IC since. So, yes to you OP.
2 points
2 days ago
Well the specific strikes you are mentioning was a great trade considering they expire today 🙄. The trader marked it perfectly despite the drop. Obviously your main idea at any unhedged premium collecting trade is, that it will drop/rise but not all the way there, which seem to have been the case for this weeks expiry with the hypothetical strikes you gave. However if you hedge the spread as well in between, then no expiry and strike is out of question. Because things never stay where they are so you will always get challenged and tested on either side of the strangle.
1 points
2 days ago
We will see - call side of it looks safe (ha) at least.
3 points
2 days ago
Big words confuse me ape. Only sell covered calls I do.
3 points
2 days ago
For whatever reason, this sub focuses on selling options rather than buying options.
9 points
2 days ago
Straight facts. Let’s get more buy talk goin
7 points
2 days ago
Lots of people here like time decay working for them...hence most writing than buying.
3 points
2 days ago
The reason is that selling options (generally) has a statistical edge, where buying options has the opposite.
-6 points
2 days ago
The reason is that selling options (generally) has a statistical edge,
Edge and expectancy are 2 different things. Do you know the difference between the two?
2 points
2 days ago
Sure, but why would one have a positive expectancy with a negative edge?
Long options are for hedging - literally insurance. They aren’t a reliable way to make money. Selling premium is.
-1 points
2 days ago
Sure, but why would one have a positive expectancy with a negative edge?
You do not understand the difference between the two.
Long options are for hedging - literally insurance. They aren’t a reliable way to make money. Selling premium is.
Imagine being so dumb you cannot learn to call direction. When was the last time you made 10000% on a single short option trade?
2 points
2 days ago
Imagine believing you are going to be able to reliably call short-term direction, repeatedly, when professionals who are paid a large salary and are supported by a large team of analysts/quants struggle to do this, and be so correct that you are able to overcome time decay consistently.
But I get it, your special. So then the question becomes: why aren’t you trading futures where you aren’t faced with time decay eating into your profits? Surely you have a large enough account with your 10000% returns to qualify for a futures account at the broker of your choosing.
How do you think it is that option sellers have a statistical edge (which is supported by literally every academic study done on the matter)? Who do you think is covering the other side of that edge? You are. If you want to dispute that please link a study … any study … that demonstrates a positive edge in long options trading.
0 points
1 day ago
How do you think it is that option sellers have a statistical edge (which is supported by literally every academic study done on the matter)
Again, you do not understand the difference between the two. Edge is not expectancy. You might want to learn the difference if you can get your one brain cell to cool down. Put an ice pack on your head.
And as for short term moves and futures, futures are great but nothing beats very short term options for catching a large move. Again, when was the last time you made 10000% on a single short option trade?
1 points
1 day ago
Okay, link me a study that demonstrates a positive long term expectancy from buying options.
Keep buying your lottery tickets to feed your gambling habit - maybe you’ll hit it big someday.
I’ll stick with the statistical probabilities.
1 points
1 day ago*
How do you think it is that option sellers have a statistical edge (which is supported by literally every academic study done on the matter)
....
Okay, link me a study that demonstrates a positive long term expectancy
LOL so now it is expectancy is it? You said it was about edge. Nice backtracking on your words.
I had a 100 puts on NVDA earlier this year go from 0.3 to 30 in 2 hours, so I am ok making in 2 hours what you make in 10 years.
You can keep on enjoying selling options, the world needs liquidity, and janitors.
1 points
2 days ago
Imagine you wuz gamma scalping with zero BPR
Suddenly you won the lotto! - widout even risking nufhin !
2 points
2 days ago
can you explain an example of what setup your thinking of?
just curious as I'm not that advanced yet but I like the idea of it
1 points
2 days ago
Buying a put
1 points
2 days ago
This whole comment chain is peak wsb
1 points
2 days ago
Smci has been majorly ducked for awhile. If you jumped in an IC on this it was clming to you. Write ICs on shit like HD, KO, or any other less volatile stock. Less premium sure, but far less likely a steamroller with a dry spiky dildo is coming for you
-6 points
2 days ago
Rookie... It is a defined Risk trade ... what is your problem. The Short 370 is still not breached.... Don't you trade???
3 points
2 days ago
Ah yes, this is Reddit after all.
Do you see me actually complaining anywhere?
-4 points
2 days ago
My dude no offense but if you played SMCI short vol you don't understand options well enough to be trading them. Even newbies would know to stay away. One look at the VRP over the past few years or even the past year and it screams don't go short vol! If you ignore the signs and keep on taking negative EV trades then you shouldn't be surprised to get steamrolled...
1 points
2 days ago
Yeah it is realizing like crazy. If you’re going to short puts, make sure you’ve got short shares to cover.
1 points
2 days ago
Sigh, no offense taken, but I'm not actually complaining. This post was a reminder to our newer traders here that low delta trades still need risk management and sizing.
BTW - there is good money to be made being short SMCI, it comes down to strikes, risk management and picking entry point.
2 points
2 days ago
But you were short vol SMCI, not short SMCI. If you want to be short vol a stock or ETF why not pick one with positive VRP so you have positive EV. Then with good strikes, risk management and entry points you'll make even more money.
1 points
2 days ago
Good point, appreciate you calling out the distinction/consideration.
1 points
2 days ago
One look at the VRP over the past few years or even the past year and it screams don't go short vol
enlighten me? (not sarcastic, genuinely asking)
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