TLRY trade idea

[TrustyJules 3,212]

1 minute ago, cuegis said:

I would be interested to know if anyone who sold any of these spreads, for greater than it's maximum value, has actually bought the spread back, and closed out the trade?

And, if so, at what price?

Since we know that it isn't that difficult to sell these spreads for greater than their "maximum value", everything now rests on the reliability of this specific market to allow one to close out the trade at some point prior to expiration.

It is true that "theoretically", if you sell a $10 wide spread ( any spread), for $11, there is a "theoretical" profit, of at least $1.00 "at expiration".

I haven't done any trades here so I don't know the answer to this but I suspect there might be a risk factor that is priced into any spread.

What we need to see is how easy it is, or if it is possible at all, to buy back these spreads, and at what price.

Here is an example of the kind of risk that is involved.

 

The stock is at $110, so you sell a $120/$130 call vertical for $11 with 2 weeks to expiration, to keep the spread OTM.

Well that is $1.00 of "free" money, right?

Only the market can answer that question.

Now you place an order to buy it back for $9.50 to take your profit,and not get too greedy.

A few days go by and you don't get filled, so you now bid "max value" ($10) to buy it back.

A few more days pass and you don't get filled...Uh oh!

So, you think "well of course I can buy it back for "greater" than max value, who wouldn't sell that?"....so you bid $10.25.

You can't even buy it back at a premium.

If this were to happen, the only thing you have left to give you any comfort, is that "at expiration" the spread cannot be more than $10.

But, do you really want to hold this through expiration?

 

The one thing we know with certainty is that this particular stock, at this particular time, can be at virtually ANY price at expiration (ok, maybe not $5000!)

It can easily be at $150, $90, $125 etc.

So selling spreads that are far OTM now, might be halfway between strikes in a few days, or at expiration.

 

If you hold until expiration, and the price happens to be at $125, right between your 2 strikes, what are you going to do?

Now assignment risk is very real...even worse, non assignment risk is just as real.

If you wait until the close, on expiration day, and at 4PM the stock is $125, there is automatic exercise unless the call holder ( of your short $120 calls) notifies their broker by 4:30PM that they do not want it to be exercised.

We know what can happen to this kind of stock in after hours trading.

It may close at $125 at the 4PM close, but by 4:15pm, be trading at $118.

So, what do you do?

Are you going to be assigned, or not?

Do you buy back the stock assuming that you will assigned through automatic exercise.

So you buy the stock at the (4PM) close at $125 to cover the short calls, and by 4:30 it is trading at $118 and your short ($120) calls are not exercised, and you are holding outright long stock that can easily open at $95 ( or anywhere) on Monday.

I know this might seem like a wild, far fetched, stretch of the imagination.

But this is not MSFT or IBM, it is a very unusual animal right now.

 

Given the nature of this environment, it might be possible that , because of the very real risks involved in taking any position, the market makers might have built in a "risk premium" to these trades to compensate for the risks associated with taking a given side of the trade.

 

They may have decided that .50 cents (selling a $10 wide spread for $10.50) is not enough to take on that level of risk.

So, they might have created a "market" for these spreads, and it might look something like 5% bid / 15% ask, above a spread's maximum value.

If that were the case , then a $10 spread would be $10.50 bid / $11.50 ask, just to give an example.

Like I said, I haven't taken any positions in these options, for some of the reasons I have mentioned, so I don't know the answer from personal experience.

 

Maybe there is very little risk, and I am just imagining an extreme worst case scenario.

 

This is why my initial question would put an answer to all of this.

For those of you , who have sold a spread for greater than it's "maximum value", have you been able to buy that spread back? And, if so...at what price?

We know you can sell these spreads, but how reliable is the market to be able to buy that spread back, well before expiration, because you really do not want to get anywhere near expiration with these.

 

I don't think there is any risk of "early assignment"  as there is such a HUGE amount of extrinsic value in all of them, and I doubt anyone is just going to give up $4.00 of time premium for an early exercise, but who knows.

It is the other kinds of risks that I mentioned which should be a concern.

 

What you can count on is that whatever applies to a "normal" stock, under "normal" conditions, probably does not apply in this case, at this time.

 

 

I hate to link to elite trader but there are two threads that those in TLRY should read:

https://www.elitetrader.com/et/threads/tlry-options.324953/

but particularly the comments of Robert Morse in this thread:

 

https://www.elitetrader.com/et/threads/tlry-borrow-rate-at-ib-is.324770/page-3#post-4728524

 

Robert is a decent guy and a broker. He underlines early exercise is a problem for those holding spreads. His recommendation is to check for OI ITM further out - if they have no open interest you have to wonder in his opinion. I also recall but cannot find an example of a hard to borrow stock where someone shorted the ITM or ATM calls and went long the OTM ones. 1 mn after he sold the spread the MM exercised the short side leaving him short of shares that could not be borrowed. I recall the post had been added to later to the effect that whilst this was an 'unfriendly''  (lets avoid expletives here - the original referenced someone's backside) thing to do it was quite legal.

Your big problem is the need to hold to expiration.

[cuegis 683]

2 minutes ago, TrustyJules said:

I hate to link to elite trader but there are two threads that those in TLRY should read:

https://www.elitetrader.com/et/threads/tlry-options.324953/

but particularly the comments of Robert Morse in this thread:

 

https://www.elitetrader.com/et/threads/tlry-borrow-rate-at-ib-is.324770/page-3#post-4728524

 

Robert is a decent guy and a broker. He underlines early exercise is a problem for those holding spreads. His recommendation is to check for OI ITM further out - if they have no open interest you have to wonder in his opinion. I also recall but cannot find an example of a hard to borrow stock where someone shorted the ITM or ATM calls and went long the OTM ones. 1 mn after he sold the spread the MM exercised the short side leaving him short of shares that could not be borrowed. I recall the post had been added to later to the effect that whilst this was an 'unfriendly''  (lets avoid expletives here - the original referenced someone's backside) thing to do it was quite legal.

Your big problem is the need to hold to expiration.

This really is a very unusual situation.

Logistically , if you are short a call, and the call is exercised, you now have short stock in your account.

But, what does the brokerage do if there is no stock available to borrow?

How do they honor that assignment?

Someone had mentioned, near the early part of this thread...I think it was djtux, the interest rate that the brokerages are charging for short stock in this case. Assuming you can even get any short stock....I think it was something like 350%.

 

Maybe I read it incorrectly.

[TrustyJules 3,212]

They will make you buy the stock at the going price - this is certain as they MUST honour their obligations. This is what worries me with the volatility of this stock.

[cuegis 683]

11 minutes ago, TrustyJules said:

They will make you buy the stock at the going price - this is certain as they MUST honour their obligations. This is what worries me with the volatility of this stock.

Or maybe it will just be an "automatic" stock purchase which is done by the brokerage, since there can't even be a moment when there is short stock placed in your account.

Maybe, in this situation, the process is automated.

[TrustyJules 3,212]

Well I am pretty sure that the matter can be resolved - I was accidentally short MA myself not two weeks ago and that didnt pose a problem. I got lucky after market but certainly that is 50/50 - fingers crossed for those whose half spreads were exercised.

[greenspan76 332]

15 hours ago, cuegis said:

I would be interested to know if anyone who sold any of these spreads, for greater than it's maximum value, has actually bought the spread back, and closed out the trade?

And, if so, at what price?

Since we know that it isn't that difficult to sell these spreads for greater than their "maximum value", everything now rests on the reliability of this specific market to allow one to close out the trade at some point prior to expiration.

It is true that "theoretically", if you sell a $10 wide spread ( any spread), for $11, there is a "theoretical" profit, of at least $1.00 "at expiration".

I haven't done any trades here so I don't know the answer to this but I suspect there might be a risk factor that is priced into any spread.

What we need to see is how easy it is, or if it is possible at all, to buy back these spreads, and at what price.

Here is an example of the kind of risk that is involved.

 

The stock is at $110, so you sell a $120/$130 call vertical for $11 with 2 weeks to expiration, to keep the spread OTM.

Well that is $1.00 of "free" money, right?

Only the market can answer that question.

Now you place an order to buy it back for $9.50 to take your profit,and not get too greedy.

A few days go by and you don't get filled, so you now bid "max value" ($10) to buy it back.

A few more days pass and you don't get filled...Uh oh!

So, you think "well of course I can buy it back for "greater" than max value, who wouldn't sell that?"....so you bid $10.25.

You can't even buy it back at a premium.

If this were to happen, the only thing you have left to give you any comfort, is that "at expiration" the spread cannot be more than $10.

But, do you really want to hold this through expiration?

 

The one thing we know with certainty is that this particular stock, at this particular time, can be at virtually ANY price at expiration (ok, maybe not $5000!)

It can easily be at $150, $90, $125 etc.

So selling spreads that are far OTM now, might be halfway between strikes in a few days, or at expiration.

 

If you hold until expiration, and the price happens to be at $125, right between your 2 strikes, what are you going to do?

Now assignment risk is very real...even worse, non assignment risk is just as real.

If you wait until the close, on expiration day, and at 4PM the stock is $125, there is automatic exercise unless the call holder ( of your short $120 calls) notifies their broker by 4:30PM that they do not want it to be exercised.

We know what can happen to this kind of stock in after hours trading.

It may close at $125 at the 4PM close, but by 4:15pm, be trading at $118.

So, what do you do?

Are you going to be assigned, or not?

Do you buy back the stock assuming that you will assigned through automatic exercise.

So you buy the stock at the (4PM) close at $125 to cover the short calls, and by 4:30 it is trading at $118 and your short ($120) calls are not exercised, and you are holding outright long stock that can easily open at $95 ( or anywhere) on Monday.

I know this might seem like a wild, far fetched, stretch of the imagination.

But this is not MSFT or IBM, it is a very unusual animal right now.

 

Given the nature of this environment, it might be possible that , because of the very real risks involved in taking any position, the market makers might have built in a "risk premium" to these trades to compensate for the risks associated with taking a given side of the trade.

 

They may have decided that .50 cents (selling a $10 wide spread for $10.50) is not enough to take on that level of risk.

So, they might have created a "market" for these spreads, and it might look something like 5% bid / 15% ask, above a spread's maximum value.

If that were the case , then a $10 spread would be $10.50 bid / $11.50 ask, just to give an example.

Like I said, I haven't taken any positions in these options, for some of the reasons I have mentioned, so I don't know the answer from personal experience.

 

Maybe there is very little risk, and I am just imagining an extreme worst case scenario.

 

This is why my initial question would put an answer to all of this.

For those of you , who have sold a spread for greater than it's "maximum value", have you been able to buy that spread back? And, if so...at what price?

We know you can sell these spreads, but how reliable is the market to be able to buy that spread back, well before expiration, because you really do not want to get anywhere near expiration with these.

 

I don't think there is any risk of "early assignment"  as there is such a HUGE amount of extrinsic value in all of them, and I doubt anyone is just going to give up $4.00 of time premium for an early exercise, but who knows.

It is the other kinds of risks that I mentioned which should be a concern.

 

What you can count on is that whatever applies to a "normal" stock, under "normal" conditions, probably does not apply in this case, at this time.

 

 

I could never get $10.50 or above like some others, but I opened 100 iron flies for $10.25 on Thursday. After thinking it through overnight, I decided that was a higher risk than I wanted, so I closed half of them Friday for $10.15. After commissions, the total gain was just below $240. Not sure that's what you're looking for since both prices are above the width of the spread. But, my plan with the remainder is to try to close 25 of them for $9-$10 as soon as possible. Assuming that's possible, I'll look to close another 15 for $8-9 and keep 10 until expiration or very close to it.

[cuegis 683]

5 hours ago, greenspan76 said:

I could never get $10.50 or above like some others, but I opened 100 iron flies for $10.25 on Thursday. After thinking it through overnight, I decided that was a higher risk than I wanted, so I closed half of them Friday for $10.15. After commissions, the total gain was just below $240. Not sure that's what you're looking for since both prices are above the width of the spread. But, my plan with the remainder is to try to close 25 of them for $9-$10 as soon as possible. Assuming that's possible, I'll look to close another 15 for $8-9 and keep 10 until expiration or very close to it.

That's great to hear.

Which expiration did you use, and how far OTM did you go?

You can understand why I asked the question.

Once you are able to do something that is pretty much impossible in a normal, stable, established type of stock, the first thing you have to know is if the market is there to allow you to be able to buy back the trade.

Once you have some sense of security about that, then you can dive in further.

You were very smart to close out some as soon as possible, just for that reason.

Now, depending on the expiration, you can try to get more out of what you have left.

But you do see some of the possible risks that I mentioned?

Edited September 17, 2018 by cuegis

[cuegis 683]

5 hours ago, greenspan76 said:

I could never get $10.50 or above like some others, but I opened 100 iron flies for $10.25 on Thursday. After thinking it through overnight, I decided that was a higher risk than I wanted, so I closed half of them Friday for $10.15. After commissions, the total gain was just below $240. Not sure that's what you're looking for since both prices are above the width of the spread. But, my plan with the remainder is to try to close 25 of them for $9-$10 as soon as possible. Assuming that's possible, I'll look to close another 15 for $8-9 and keep 10 until expiration or very close to it.

Another question...why did you choose to do iron fly's?

Once you sell something for more than it's maximum value (the distance between the strikes), there is zero directional risk.

So why add on 2 more legs (and commissions) to the trade when any 2 leg trade would have done the same thing?

[greenspan76 332]

43 minutes ago, cuegis said:

That's great to hear.

Which expiration did you use, and how far OTM did you go?

You can understand why I asked the question.

Once you are able to do something that is pretty much impossible in a normal, stable, established type of stock, the first thing you have to know is if the market is there to allow you to be able to buy back the trade.

Once you have some sense of security about that, then you can dive in further.

You were very smart to close out some as soon as possible, just for that reason.

Now, depending on the expiration, you can try to get more out of what you have left.

But you do see some of the possible risks that I mentioned?

 

27 minutes ago, cuegis said:

Another question...why did you choose to do iron fly's?

Once you sell something for more than it's maximum value (the distance between the strikes), there is zero directional risk.

So why add on 2 more legs (and commissions) to the trade when any 2 leg trade would have done the same thing?

I used October monthly 105/115/125 iron butterflies. They were near ATM at the time of the trade and expire a couple days after legalization of marijuana in Canada. I believe someone had posted that exact trade on the forum and I looked at it. I looked at a few other possible trades, but didn't see any 2-leg trades that would have allowed me to collect more credit than the width of the spread. Assuming all the craziness in this stock is legalization-related, the October expiry gives enough time for the fervor to subside just a little, in which case IV decreases and there is a good chance of closing for less than the spread width. But if that doesn't happen and IV stays this high, the risk of early exercise is pretty small, leaving me with just the risk of after-hours trading on the Friday of expiration. I'm still having a hard time assigning enough risk to that scenario to worry about it, but I do think its prudent not to put a large amount at risk if it is possible to avoid that risk and take a still nice gain.

[clipsnation183 84]

Hey guys, I would stay really small on this trade of avoid it period. The reason why the iron fly is more than $10 cr is because the short call has huge cost to carry. Assignment is devastating.  I found out the hard way : (. 

[cuegis 683]

It looks like all of the craziness has disappeared today.

Prices have become more "sane".

For example, the Oct 120-125-130 call butterfly is around $1.00, with bid / ask around .50/1.50.

Spreads are generally 1/3 the width between strikes.

So, even with such insanely high IV ( above 100%), this spread is 1/5 the distance between strikes.

No more prices that are greater than maximum value.

 

[cuegis 683]

4 minutes ago, clipsnation183 said:

Hey guys, I would stay really small on this trade of avoid it period. The reason why the iron fly is more than $10 cr is because the short call has huge cost to carry. Assignment is devastating.  I found out the hard way : (. 

How did you find out? Were you assigned on any?

[akito 184]

5 minutes ago, clipsnation183 said:

Hey guys, I would stay really small on this trade of avoid it period. The reason why the iron fly is more than $10 cr is because the short call has huge cost to carry. Assignment is devastating.  I found out the hard way : (. 

You were assigned this early already? What happened?

[clipsnation183 84]

I was assigned. I was dumb to sell the an IF with deep ITM call and didn't pay attention. Biggest mistake of my trading life. I would watch the premium on your short call if you are in the trade. I have massive losses right now, but not as bad as worse case and my broker is saving me.  There is no free lunch. 

Edited September 17, 2018 by clipsnation183

[Yowster 9,180]

2 minutes ago, clipsnation183 said:

I was assigned. I was dumb to sell the an IF with deep ITM call and didn't pay attention. Biggest mistake of my trading life. I would watch the premium on your short call if you are in the trade. I have massive losses right now, but not as bad as worse case and my broker is saving me.  There is no free lunch. 

what expiration and what strike were you assigned on, it would seem you would have to be really deep ITM to be assigned early?

[clipsnation183 84]

70, I was so dumb.

[clipsnation183 84]

I will never trade without asking my broker if its a good idea again. 

[Yowster 9,180]

1 minute ago, clipsnation183 said:

70, I was so dumb.

was it Sep14 expiration (ie, got assigned because it was ITM at expiration)?   Even this week's 70 strike still has around 0.40 time value.

[clipsnation183 84]

oct 19 expiration 

[Noah Katz 90]

4 minutes ago, clipsnation183 said:

I have massive losses right now, but not as bad as worse case and my broker is saving me.

 

Sorry to hear that.

 

You're not the only one to make dumb mistakes; last week I lost a couple $k because I forgot about a GTC for double MU calendars and got filled while it was tanking.

 

If you don't mind my asking, how is your broker helping you?

[clipsnation183 84]

Just now, Noah Katz said:

 

Sorry to hear that.

 

You're not the only one to make dumb mistakes; last week I lost a couple $k because I forgot about a GTC for double MU calendars and got filled while it was tanking.

 

If you don't mind my asking, how is your broker helping you?

Just liquidating my positions and managing losses. Making sure fills are decent.

[clipsnation183 84]

I wanna reiterate that if you are still in the trade then make sure you are very small. I was going for a retirement making trade, which always goes wrong. Added like another few years to working a desk job, but at least its not bankruptcy.  

[Yowster 9,180]

6 minutes ago, clipsnation183 said:

oct 19 expiration 

The Oct19 70 call had like $9.00 of time value it at at Friday's close, so let me get this right.... you got assigned early on a short Oct19 70 call despite that call still having like $9.00 of time value in it???

[clipsnation183 84]

Just now, Yowster said:

The Oct19 70 call had like $9.00 of time value it at at Friday's close, so let me get this right.... you got assigned early on a short Oct19 70 call despite that call still having like $9.00 of time value in it???

yup. 

[akito 184]

Wow, that is really scary. So apparently that $50 dollar bill on the ground was actually a ticking landmine in disguise. I hope you get through this. I'm already starting to sweat a bit from the GS and MCD trades (my allocations are even smaller than the official half allocations, but still) so I can't even imagine going through all that assignment chaos you're going through.

[Yowster 9,180]

@clipsnation183 Actually, I made a mistake in my calculations.   There was basically no time value left in the short call - this is because the IV of the Oct19 calls (around 70%) is about a quarter of the put IV (around 280%).  

[Rogers 263]

Are there any adjustments that can be made/added to help a position in a similar state or would closing out the position(s) be the only choice?

 

[cuegis 683]

17 minutes ago, clipsnation183 said:

70, I was so dumb.

That's interesting because the Oct 70 put is $7.50, which is obviously all time premium.

But the $70 calls seem to be trading around intrinsic value.

That is a $7.50 difference between, same strike, call and put.

[cuegis 683]

I'm looking at Friday's closing prices.

The stock closed around $109, and the Oct $70 calls closed at $38.95.

But, you never know if this reflects the "real" values as of the closing, or whether it was just the "last" on the call.

If these prices are correct, then that $70 call did close right around intrinsic value.

So that would explain the assignment.

[cuegis 683]

36 minutes ago, akito said:

Wow, that is really scary. So apparently that $50 dollar bill on the ground was actually a ticking landmine in disguise. I hope you get through this. I'm already starting to sweat a bit from the GS and MCD trades (my allocations are even smaller than the official half allocations, but still) so I can't even imagine going through all that assignment chaos you're going through.

I was assigned on a 1 lot of MCD Friday morning. 

That was done based on Thursday's closing price of $162.

I have no idea why someone would give up that much time premium.

It dosn't make any sense.

 

But, there is no "assignment chaos" with something like MCD.

Also, because I was assigned on a short put, I ended up with "long" stock.

This is a very different situation than being given short stock in TLRY

 

Edited September 17, 2018 by cuegis

[4REAL 110]

4 minutes ago, cuegis said:

I was assigned on a 1 lot of MCD Friday morning. 

That was done based on Thursday's closing price of $162.

I have no idea why someone would give up that much time premium.

It dosn't make any sense.

 

But, there is no "assignment chaos" with something like MCD.

Also, because I was assigned on a short put, I ended up with "long" stock.

This is a very different situation than being given short stock in TLRY

 

what was the strike and how much time premium was given up ?

[clipsnation183 84]

Update: Almost out of my 950 spread position  (not even a hedge fund would trade that big). Just 350 more to go. I should have done like 5 to 10 max. 

[cuegis 683]

11 minutes ago, 4REAL said:

what was the strike and how much time premium was given up ?

$165, so based on the $165 call, it was more than $1.25 of time premium.

It really dosn't make any sense.

It was only a 1 lot.

[cuegis 683]

This is posted next to the stock symbol...it says that SEC Rule 201 will be in effect from Fri 9:30 AM through 4PM today..

"Short selling involves the selling of a security that an investor does not own or has borrowed. ... The alternative uptick rule (Rule 201) imposes restrictions on short selling only when a stock has triggered a circuit breaker by experiencing a price decline of at least 10 percent in one day."

[akito 184]

15 minutes ago, cuegis said:

But, there is no "assignment chaos" with something like MCD.

Also, because I was assigned on a short put, I ended up with "long" stock.

This is a very different situation than being given short stock in TLRY

My sentence was "assignment chaos you're going through" with "you" being clipsnation as my comment was directed towards him/her. This means I was referring to the assignment chaos clipsnation is going through with the TLRY position. It can in no way be seen as referencing back to the MCD trade. The sentence I wrote also doesn't suggest that the situation between MCD and TLRY positions are similar.

[cuegis 683]

1 minute ago, akito said:

My sentence was "assignment chaos you're going through" with "you" being clipsnation as my comment was directed towards him/her. This means I was referring to the assignment chaos clipsnation is going through with the TLRY position. It can in no way be seen as referencing back to the MCD trade. The sentence I wrote also doesn't suggest that the situation between MCD and TLRY positions are similar.

I guess I misinterpreted what you were saying.

I saw this....

" I'm already starting to sweat a bit from the GS and MCD trades",.......

and just assumed you were concerned about assignment on these 2 stocks, since that is what you said.

[Azov 20]

15 minutes ago, clipsnation183 said:

Update: Almost out of my 950 spread position  (not even a hedge fund would trade that big). Just 350 more to go. I should have done like 5 to 10 max. 

That’s terrifying - so sorry you’re going through this! I decided to try a couple of bull put spreads in near-terms expirations to dip my toe in the water. The assignment risk on calls is more than my nerves could take. 

[clipsnation183 84]

3 minutes ago, Azov said:

That’s terrifying - so sorry you’re going through this! I decided to try a couple of bull put spreads in near-terms expirations to dip my toe in the water. The assignment risk on calls is more than my nerves could take. 

I thought about moving to another country and starting over. At the end of the it's only one year's salary. 

Edited September 17, 2018 by clipsnation183

[clipsnation183 84]

Again and good broker will help you through this as they are at risk also. 

[akito 184]

2 minutes ago, cuegis said:

I guess I misinterpreted what you were saying.

I saw this....

" I'm already starting to sweat a bit from the GS and MCD trades",.......

and just assumed you were concerned about assignment on these 2 stocks, since that is what you said.

I see, no worries. My comment didn't say I was concerned about assignment on those two stocks. All I said was that I was starting to get concerned about them. If you're unsure of something, please feel free to simply ask for confirmation or something. Taking assumptions as fact without any hint of doubt in situations where there should be doubt because information is lacking can often hit the wrong nerves.

[cuegis 683]

2 minutes ago, Azov said:

That’s terrifying - so sorry you’re going through this! I decided to try a couple of bull put spreads in near-terms expirations to dip my toe in the water. The assignment risk on calls is more than my nerves could take. 

That's right. It's because there is no "safe haven".

What is far OTM now can easily be ITM at any time soon!

And then the list of potential risks is so long......put/call parity is at many multiples, unable to borrow stock,350% cost of borrowing even if you could etc.

The .30 -.50 so called "free money", above the width of the strikes is not nearly enough to compensate for the risks to claim that money, even if you could.

[cuegis 683]

1 minute ago, akito said:

I see, no worries. My comment didn't say I was concerned about assignment on those two stocks. All I said was that I was starting to get concerned about them. If you're unsure of something, please feel free to simply ask for confirmation or something. Taking assumptions as fact without any hint of doubt in situations where there should be doubt because information is lacking can often hit the wrong nerves.

My apologies....

[akito 184]

5 minutes ago, cuegis said:

My apologies....

No need to apologize, lol

Edited September 17, 2018 by akito

[Yowster 9,180]

59 minutes ago, cuegis said:

$165, so based on the $165 call, it was more than $1.25 of time premium.

It really dosn't make any sense.

It was only a 1 lot.

Very interesting, but you wind up in better shape on that 1 lot than what the calendar spread is currently at (because the short was exercised with time value still in it).   Instead of the 1 lot of the calendar being down by about -35%, it can be closed at a -6.6% loss.    Here's why.

1. Oct19/Nov16 MCD 165 put calendar opened for 1.50 debit. 
2. You get assigned on short 165 put, buying the stock at 165.
3. With stock price at $158.45, sell your stock for that price and at the same time sell your long Nov16 195 put for 7.95 (important you close both at the same time).

Total debits:  $150 to open calendar + $16,500 on put assignment = $16,650

Total credits:  $15,845 to sell stock + $795 to sell long put = $16,640

Net loss = -$10. compared to calendar spread which is current down = -$55 (1.50 open - 0.95 current value).

 

[TrustyJules 3,212]

On another site the recommendation was to watch whether further out ITM options have anywhere near the OI of closer ones or ATM ones. If not then you have to fear assignments are occurring.

[cuegis 683]

7 minutes ago, Yowster said:

Very interesting, but you wind up in better shape on that 1 lot than what the calendar spread is currently at (because the short was exercised with time value still in it).   Instead of the 1 lot of the calendar being down by about -35%, it can be closed at a -6.6% loss.    Here's why.

1. Oct19/Nov16 MCD 165 put calendar opened for 1.50 debit. 
2. You get assigned on short 165 put, buying the stock at 165.
3. With stock price at $158.45, sell your stock for that price and at the same time sell your long Nov16 195 put for 7.95 (important you close both at the same time).

Total debits:  $150 to open calendar + $16,500 on put assignment = $16,650

Total credits:  $15,845 to sell stock + $795 to sell long put = $16,640

Net loss = -$10. compared to calendar spread which is current down = -$55 (1.50 open - 0.95 current value).

 

Yes, that's just what the process would have been if it happened this morning.

But it was Friday morning that I woke up to 100 shares in my account.

This was around 8AM.

So I just placed the Nov 165 put on my watchlist, and waited for the (9:30 AM) opening, which was somewhere around $162.50-ish.

There was no hurry because I had the long Nov $165 put against the stock.

Since I had to leg out of the trade, I waited until around 9:40 for the opening activity to settle down.

The stock is very liquid so I just offered the Nov put as high as I could until it was taken , then hit the stock.

I wish they all went this smoothly!

 

[clipsnation183 84]

950 spreads done. See what the damage is after the dust settles.

[cuegis 683]

8 minutes ago, clipsnation183 said:

950 spreads done. See what the damage is after the dust settles.

Good Luck! I hope you get out of this fully unscathed.

[clipsnation183 84]

10 minutes ago, cuegis said:

Good Luck! I hope you get out of this fully unscathed.

One year's salary exactly. BTW, I would consider getting out if you have the 105 strikes if you have them. My broker just ban all trading in TRLY thanks to me.

[TrustyJules 3,212]

Ouch - position sizing remains difficult when one sees a good thing.