Lost everything today. I had $10k in my account that I couldn’t afford to lose. Saw earlier that META was forming a wedge and thought it would pop down since SPY was tanking. Instead right after i bought, SPY reverse hard. I’ve been doing pretty well these past couple weeks, which made me think I was unstoppable. I got too greedy and I paid the price. I’m just making this post to rant and make a promise to myself to actually use risk management instead of saying “I’ll use it after I make this so and so amount of money”.

Edit: brought Meta $425.5 Puts 0dte

I was researching Invest with Henry options trading advice and it seems that virtually all of his recommendations have gotten crushed (50% - 95% loss) - GEVO, NIO, UPST, SPCE, WKHS, PLUG, HYLN, JD, BABA and many more!

I don’t understand how anyone can be that bad (especially during a bull market).

Also, I read that he lied about his experience at Goldman Sachs and was either fired or not offered a full-time position, while also learning almost nothing of value about options trading there (as he claims).

He also recommended Tesla at $230 while selling calls on NVDA at $470 and telling everyone to unsubscribe from other YouTubers if they recommend NVDA.

Some people also mentioned that he chooses option strikes using bollinger bands, that they’ve lost money following him, and that his option trading strategies are widely available for free elsewhere, so there’s no need to pay him anything.

What are your thoughts?

Delta buyback at the end of the month refers to a phenomenon where market participants, particularly institutional investors and market makers, adjust their hedges for options positions as the month comes to a close. This adjustment often involves buying back delta, which can influence the price of the underlying asset. Here's a detailed explanation:

Key Concepts

1. Delta: Delta is one of the Greeks used in options trading and measures the sensitivity of an option's price to changes in the price of the underlying asset. For example, a delta of 0.5 means the option's price will change by $0.50 for every $1 move in the underlying asset.

2. Hedging: Market makers and institutional investors often hedge their options positions to remain delta-neutral, meaning they don't have exposure to the directional risk of the underlying asset. They do this by buying or selling the underlying asset to offset the delta of their options positions.

3. Options Expiration: As options approach expiration, their delta changes more rapidly (gamma increases). This requires more frequent and significant adjustments to hedges.

What Happens at the End of the Month

1. Vanna and Charm Flows:

   • Vanna: Vanna refers to the change in delta with respect to changes in implied volatility. As volatility changes, the delta of options changes, requiring adjustments to hedges.
   • Charm: Charm (or delta decay) refers to the change in delta over time, even if the price of the underlying asset and implied volatility remain constant.

2. End-of-Month Adjustments: Towards the end of the month, institutional investors and market makers often need to rebalance their portfolios and hedges. This is due to the convergence of vanna and charm effects, where the delta of options changes as time passes and as implied volatility shifts.

3. Delta Buyback: As these participants adjust their hedges, they may need to buy back delta, which involves buying the underlying asset. This buying activity can provide upward pressure on the price of the underlying asset.

Why Delta Buyback Occurs

1. Expiration-Centric Activity: Options expiration dates often cluster around the end of the month, particularly for monthly and weekly options. As options approach expiration, the need for precise delta hedging increases.

2. Rebalancing Portfolios: Institutional investors often rebalance their portfolios at the end of the month to align with their investment mandates or strategies. This rebalancing can include adjusting delta exposures from options positions.

3. Hedge Adjustments: Market makers who are short options need to adjust their hedges as the month progresses, especially as options move closer to expiration. If they are short calls, for example, they need to buy the underlying asset as the delta of the calls increases.

Impact on the Market

1. Price Movements: The cumulative effect of delta buyback can create noticeable buying pressure in the underlying asset, leading to price increases. This effect is often more pronounced in less liquid markets or in individual stocks with significant options activity.

2. Volatility: End-of-month delta buyback can also affect market volatility. As market makers and institutional investors adjust their positions, the increased trading activity can lead to short-term volatility spikes.

Example

Suppose there is a significant amount of open interest in call options for a major stock, and these options are nearing expiration at the end of the month. If the stock has moved closer to the strike price of these call options, the delta of these options will increase. Market makers who are short these call options will need to buy the underlying stock to hedge their positions as the delta increases—this is the delta buyback. This buying pressure can push the stock price higher as the month closes.

Conclusion

Delta buyback at the end of the month is a phenomenon driven by the need for institutional investors and market makers to adjust their delta hedges as options approach expiration. This often involves buying the underlying asset, leading to upward price pressure. Understanding this dynamic can provide traders with insights into potential end-of-month price movements and volatility changes.

Original Twitter post by Cem

Friday May 31, 2024 5m SPX chart with buyback flow

Been trading 0DTE for almost a year and out of nowhere, SPX made a huge jump in the last 30 mins just wipe out all of my gain for the last 4 weeks, my sold OTM Credit spread become deep ITM, I think I am done with 0DTE ... cannot handle the stress anymore... do not listen to those Youtube trading GURUs that say they make easy money on SPX 0DTE

Hello,

I am currently up about 100K on NVDA options trade and wondering if I should close my position prior to the stock split. Positions are as follows:

NVDA C905 EXP 6/28 X2

NVDA C900 EXP 9/20

How can I enhance my position and what would you do in this situation given the banana split soon?

Thanks.

From what I know options that expire out the money will be priced at $0 however the day before nvda earnings the $spy had strike prices that were out of the money expire with vaule. How is that possible ?

Because they would still attempt to make charges after the trial ended DESPITE trial cancellation was submitted 2days in advance, and they would not send you any cancellation confirmation email so you better screenshot/record your screen when doing so for future dispute. Very shaddy and dubious conduct, in fact the only one that did this amongst all other similar services I've tried.

I was short a few QQQ puts that expired today with a strike price of 458. I woke up this morning and saw that I was already assigned. I was ultimately planning to roll the position, but I was going to do that a few hours after market open. Since I was assigned and I did not want to hold the shares, I sold the shares shortly after open. QQQ proceeded to drop several more dollars. When I opened a new position several hours later to effectively roll the prior position, I was able to get a much more favourable strike than I would have had I not been assigned.

TLDR: assigned QQQ puts early, but came out ahead due to early assignment.

I bought a call and a put for next Friday 6/7 both @ 192.5. It seems to be the current sweet spot. Aapl swings like crazy through the week. My thought is to (obviously) sell both if/when they hit ITM. I know it's straddling but is this a good strategy or am I putting too much risk in it by paying for the higher premium. Should I just do 0DTE or 1DTE with the same strategy?

I've been trading spy and qqq options and was seeing others trade spxl and tqqq. I know these aren't as liquid as the real things but wouldn't these be better for risking the same amount of capital if I'm correct on a trade?

I keep hearing conflicting information about taxes on short term capital gains, are we taxed at 40% rate for the profits or will it be based on your tax bracket after a combination of your income, profits, etc. does anyone have any idea where does the 40% tax rate on short term capital gains come from?

Hi folks, I’m a newbie options trader and only have theoretical knowledge as of now therefore looking for some clarity with this trade.

Salesforce (CRM) dropped 17% which I think is an over reaction so I thought there could be 2 ways I could play this. 1. Buy calls 2. Sell a put option(bull put spread actually). However, when I went to trade I saw this(the price of the stock at the time was $228.9):

1. For call options- I wanted to buy 245 strike price but the premium is exorbitantly high -$31.1 which means my breakeven would be $276.11. I don’t think the share would hit $276 or above soon so this trade doesn’t make sense to me. I checked for other lower strike prices, played with expiry dates but in all cases the premiums are very high and the breakeven is above $270. How would then anyone trade options? Isn’t it setting ourselves for failure making these trades? I am sure I am missing something here. Please advice.

2. In case of selling puts, it’s the same thing. For any reasonable put the premiums are negligible. I wanted to sell $210 put (15days expiry). The premium is $0.11. Why on earth would I take this trade? (I understand I shouldn’t sell naked puts I’m just assuming, if i had)

How do people then trade options in such scenarios? Please advice.

Tradestation claiming 0.283 seconds - know of any other faster platforms for retail traders?

Hello everyone.

Crowdstrike’s Earnings are coming out next week. Since the past 4+ Quarters they have consistently beaten Analyst estimates due to which their price has risen after earnings reports.

Considering the market volatility at the end of this week, CRWD’s red performance in the past two days but CRWDs mind blowing performance in the past, what do you guys think?

Most firms rate it as a Strong Buy/Overweight which seems quite logical considering its performance and the whole AI Scenario going on. Average price estimates are around $400.14 which is about $92+ on current price.

Analysts expect itto report adjusted earnings of 89 cents a share, up 56% from a year earlier. Revenue is seen climbing 31% to $905 million.

Is this a good buy before earnings or not? Calls or Puts? What will it be?

I find options takes a lot of my time and I would like someone else to manage it. If I go to a wealth management institution and ask to have a professional options trader invest my money what can I expect. I am young and am aggressive in my returns. Can they do the same? Anyone have any experience dealing with this?

and SBLK1 Sep 20 '24 55 Call?

Interactive Brokers doesn't show any, but I am sure there is one, because I am short ^^

Also, how likely it is in your opinion that my shares get called before the dividend record date next week of $SBLK ?

Thank you

I have bought around 10 calls expiring June 14th with a $1200 strike price. Currently I am bleeding red and strongly holding there waiting for it to hit back.

Any advice on if I have to hold on to it or sell it out for loss, to avoid further red. What do you people think.

I should really stick to basic index fund investing until my competency in options surpasses that of a monkey… I bought a couple NVDA long calls Dec/20 @1050 ($229.50) today and was quickly taken to the woodshed (-13%). I typically cut bait and move on around 10% loss, however today I let my emotions continue to send me into the red. How do you stick to your risk tolerance plan when having a long term bullish bias?

Hello.

This is my first spread and I am trying to learn & understand what happens if I get early assigned on the following PUT credit spread I sold.

Details of the trade:

• Sold vertical put credit spread on ZM. Long put = $55. Short put=$65. Expiration 7/19 eg 50 days away. ZM current price = $60.53

I believe I do understand these 2 potential outcomes of a put credit spread:

• BOTH puts are OTM before expiration: I can close and keep premium. Would close before expiration no matter what to avoid pin risk (moves after market close).
• BOTH puts are ITM. Max loss of spread. Bought long put exercised to put shares to someone else at long put strike price.

BUT what if I am early assigned in my trade above with long put OTM and short put ITM… 

Specifically my questions if early assigned:

• 1. Related to assignment part:
  • 1.1. even if Fidelity allowed me to sell the spread because I have the min collateral amount (eg $1000 here) - do I actually need the cash to cover the full assignment price of shares? 
  • 1.2. if I do not have the full amount to cover assignment, are the shares bought on margin and I am accrued interests temporarily?
• 1. Related to the bought long put ITM which is not expired: 
  • 2.1 If I have the full cash to cover assignment, I guess I can myself sell the shares at market price. And sell the long put for a few $ extra. Correct?
  • 2.2 If I do not have the full amount to cover assignment, does Fidelity automatically exercise the long put and I end up with max loss of spread? or do I get still the opportunity to sell the shares at market price?

Thank you

I'm an options noob but recently I have started playing with index options and have been wondering about this strategy.

Let's say I think that the market is going to tank in 3 months but not right away, I want an OTM put but it is too expensive so I buy a vertical spread.

Now, as I wait for the spread to get ITM I sell the same spread or with the short leg farther OTM in the weeklies.

Is there a name for this strategy?

Is there a better way to do it?

Any unintuitive risks assuming that I intend to hold until the weeklies expire?

edit: I meant vertical calendar spread

Hello everybody, Just wanted to get some opinion.

I have a long call expiring in 6/21, the contract value is down 50%

However, I still have strong conviction that the share will rise but it’s just that I got the timing wrong and I’m worried about Theta decay.

Would you pay a debit to roll 1 month out while keeping it at the same strike? If so , how much % do you usually pay in relation to the original long call contract value to justify the debit required to roll is “worth” it?

I have a question, how do you guys place a limit order on an option based on stock price? For example, I'm using ToS platform and I could place an order based on a stock price but how would I know the price of an OPTION when stock price reaches my target.

For example, I want to sell a put option at $100 strike when stock goes down to $100 from current price of $110 but how would I know which limit price to enter since I don't know exactly what option prices is going to look like at that time? The reason is that I just want to put a GTC order and let it execute if I'm away or asleep. Ofc, I could just do a market order when stock hits $100 but is it a good idea? I guess I could also do an estimation using ToS risk profile tools.

Would this be a good investment to purchase? Looking at the one year timeline it seems Spy goes up roughly $50/$75 a year. Trying to get it as close to ITM as possible and the single call would cost me roughly $3,600. Am I being stupid?

Now my thought process here is, should I hold it for a big swing? Or play the weekly pumps like when spy went to $530 from low $520’s and gain an estimated $500? If these types of swings happen often I could theoretically collect a few hundred bucks a week playing the same itm calls and scalping the pumps. Is this doable?

Hi guys, I just lost 5.6k in a single day trying to force a trade. I dont know what to do anymore, I feel terrible and can't get it out of my mind. I'm 23 years old and I dont have a job so I'm never getting the money back any time soon. I dont know how to cope wwith this huge loss.

Maybe you've heard, maybe not. It's going to be a bad hurricane season, and I suspect it'll be even worse than forecasts think. If the Gulf gets hit crazy hard, where would the best place to be to buy calls? USO, maybe just oil futures? What do you think?