General investing questions, newbie queries and thoughts megathread - Page 221

Edit: at least you aren't betting on gold by buying junior gold miners. That is a huge parlay involving labor and other input costs such as fuel and equipment direct and maintenance costs and shipping, regulatory risk, whether the miners have contracts or otherwise are hedged against the price of gold, equity market risk, debt risk, etc... One of my buddies likes to make those sorts of parlay bets for what I will generously call "reasons" despite being otherwise a pretty smart dude.

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05-09-2020 , 09:08 PM

#5502

:::grimReaper:::

veteran

Join Date: Jul 2010 Posts: 3,113

Quote:

Originally Posted by rickroll

i've lost far too much yoloing in on tanker calls with unprecedented earnings and puts on retailers with 5x more debt than total equity - seems money indeed does not grow on yolo option trading trees

I'm not an expert on retailers or tankers, but things will make a lot more sense when you realize the market doesn't care about today, it cares about tomorrow.

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05-11-2020 , 10:22 AM

#5503

rickroll

oddly catty

Join Date: Aug 2011 Posts: 22,653

finally my retail puts are paying off

won't save me from the disaster that is my tanker portfolio though

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05-19-2020 , 02:03 AM

#5504

karamazonk

Pooh-Bah

Join Date: Apr 2009 Posts: 4,626

Are major online brokerages ever willing to reduce a customer's commissions/fees for options transactions? A friend told me that his were reduced and I'm a little skeptical but if it's possible I'd like to try it after I have some more volume to show.

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05-19-2020 , 08:15 AM

#5505

BrianTheMick2

Long way to go and a short time to get there.

Join Date: May 2012 Posts: 19,410

Quote:

Originally Posted by karamazonk

Yes

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05-21-2020 , 04:02 PM

#5506

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

I have a newb options question. Lets say I buy some puts with an expiration date down the line. And they currently aren't in the money, but the app is showing they have a "mark value" of xyz, which I guess is an estimate of their value moving forward.

If I sell the out of the money at the mark value, do I get the mark value?

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05-21-2020 , 04:25 PM

#5507

karamazonk

Pooh-Bah

Join Date: Apr 2009 Posts: 4,626

Quote:

Originally Posted by Kelhus100

If you mean market value then, yes, you can get whatever they are currently valued at via a market order; you can also set a limit order, like a stock. The premiums fluctuate constantly so if you buy at say a 1.00 premium and the contract is valued at 1.05 ten minutes later you can sell for an immediate profit. Just be careful and make sure you know what you're selling at because the premiums can move quickly.

Last edited by karamazonk; 05-21-2020 at 04:33 PM.

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05-21-2020 , 04:32 PM

#5508

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

Quote:

Originally Posted by karamazonk

I don't know if "mark value" is a term but, yes, you get whatever they are currently valued at via a market order or whatever limit order you want to sell at if it fills. The premiums fluctuate constantly so if you buy at say a 1.00 premium and the contract is valued at 1.05 ten minutes later you can sell for an immediate profit.

It is the term that thinkorswim uses.

So to give an extreme real world example. If I have a complete dogshit put option that has a "mark value" of $35 (I spent 4 digits on it, LOL), I can sell it now for $35?.

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05-21-2020 , 04:36 PM

#5509

karamazonk

Pooh-Bah

Join Date: Apr 2009 Posts: 4,626

Quote:

Originally Posted by Kelhus100

I edited my original post to try to make it clearer but if that is referring to its market value like it sounds like it is then yes you can, during hours you are allowed to transact options contracts, assuming it is pre-expiration. Sounds like in this instance you would just accept a big loss and save $35 if you're that confident it has zero chance of being worth anything.

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05-21-2020 , 05:15 PM

#5510

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

Ok, thanks. Wish I had asked sooner. Have had a couple options I would have bailed on, but thought I couldn't because they weren't ITM. Live and learn.

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05-28-2020 , 01:00 PM

#5511

deucedeuces

old hand

Join Date: May 2007 Posts: 1,730

Dumb question ahead, proceed at your own risk. The CARES act has made it possible to withdraw up to $100K from retirement plans with the usual 10% early withdrawal fee waived. This is of course taxable income. Am I wrong to think that if you were to withdraw $100K you would owe somewhere in the neighborhood of $25-30K in taxes on that withdrawal?

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05-28-2020 , 02:53 PM

#5512

jefkve

old hand

Join Date: Mar 2009 Posts: 1,453

Quote:

Originally Posted by deucedeuces

Depending on your tax rate, yes. Many people are doing this and rolling 401ks over to Roth IRAs in anticipation of higher taxes in the future...Proceed at your own peril.

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05-28-2020 , 09:32 PM

#5513

:::grimReaper:::

veteran

Join Date: Jul 2010 Posts: 3,113

Quote:

Originally Posted by jefkve

Depending on your tax rate, yes. Many people are doing this and rolling 401ks over to Roth IRAs in anticipation of higher taxes in the future...Proceed at your own peril.

You're likely to be in higher tax bracket working than retired, so to me it makes sense to avoid taxes now.

Quote:

Originally Posted by deucedeuces

I believe you also need to prove that you were financially impacted. I don't know the details though or how they'll determine proof.

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06-05-2020 , 03:56 PM

#5514

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

I have a newbie options question.

Lets say I bought an option and then I create a closing order and sell it.

Normally I hit confirm and it just sells immediately. But sometimes it just sits there for for a few minutes. When that happens what is going on and what should I do?

For example should I cancel the order and then try to resend it, or just leave it open? If I just leave it open will someone buy it eventually or can it just go unbought and I lose all the $$?

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06-05-2020 , 04:16 PM

#5515

rickroll

oddly catty

Join Date: Aug 2011 Posts: 22,653

options aren't nearly as liquid as normal stocks so there literally may not be any people with buy orders even if you set it to market price - but that's generally never a good idea

for some more popularly traded options i can usually sell instantly at fair value, on some lesser traded ones it can sometimes be up there all day, even setting it a little cheaper than the average rate just to move it and yet no takers unless i just dump it at a silly price

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06-05-2020 , 05:30 PM

#5516

BrianTheMick2

Long way to go and a short time to get there.

Join Date: May 2012 Posts: 19,410

Quote:

Originally Posted by Kelhus100

Limit orders get filled when someone wants to buy what you are selling at the price you asked to sell it for (your offer price). Presumably your broker defaults to limit orders, since they don't hate you. You can change your offer price by pressing some buttons if you want to.

If you place a market order to sell, it will get sold really quickly at whatever price someone feels like bidding. This is often OK, but sometimes you will make a sad face when your stuff sells for a penny (or some other unreasonably low price).

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06-05-2020 , 05:56 PM

#5517

rickroll

oddly catty

Join Date: Aug 2011 Posts: 22,653

brian to follow up:

i've gotten burned before on itm low volume options having to punt like 30% value right before expiration because no buyers and i can't execute

so now if there are some options i really like but don't have much volume i only get in if i'm prepared to execute them myself, you think this is reasonable or i just had a bad experience over low sample size causing me to be uber nitty

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06-05-2020 , 07:54 PM

#5518

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

So, lets say I buy a couple of 1 day put options. And do the default of selling them at limit price.

If I wait until the last few minutes of the day to sell them, I am risking that nobody buys them and they are worthless?

This is what I was worried was going to happen today. I had some SPY 320 puts that I tried to sell at 3:50 pm, and they sat there for several minutes. So I cancelled the order and tried to sell them again (at a lower profit for me because the market had gone up) and they sold.

So does that mean it is a bad idea to hold onto options until the last minute because then there is a chance nobody will buy them and you are screwed?

Last edited by Kelhus100; 06-05-2020 at 08:03 PM.

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06-05-2020 , 08:05 PM

#5519

Mr Spyutastic

Carpal \'Tunnel

Join Date: May 2012 Posts: 15,132

Quote:

Originally Posted by Kelhus100

So, lets say I buy a couple of 1 day put options. And do the default of selling them at limit price.

If I wait until the last few minutes of the day to sell them, I am risking that nobody buys them and they are worthless?

This is what I was worried was going to happen today. I had some SPY 320 puts that I tried to sell at 3:50 pm, and they sat there for several minutes before they sold (at a lower price then when I closed because the market went up). But I was legitimately wondering if I was going to get stuck with worthless options if no one bought them before 4:00 pm.

Yeah pretty much. Liquidity is very important so you can exit your position. Typically I won't buy/sell anything that doesn't have sufficient volume.

As a seller there are some short term ones that I don't mind having low liquidity because I know the company very well.

Like I sold a SNX Put at a $75 strike 4 wks back and have 2 wks left on it to time out. I likely won't be able to exit early because there's pretty much no volume on it at the price I want to close it out at. But I knew that going in and didn't mind holding the stock at $75 if I got exercised.

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06-06-2020 , 12:35 AM

#5520

BrianTheMick2

Long way to go and a short time to get there.

Join Date: May 2012 Posts: 19,410

Quote:

Originally Posted by rickroll

That is not uber nitty.

You should be looking at bid/ask spreads and bid/ask sizes (including level 2 quotes) instead of volume, but keep in mind that these are not constant, and keep in mind that when you want to head for the exit that spreads are likely to widen and sizes are likely to drop.

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06-06-2020 , 02:42 AM

#5521

rickroll

oddly catty

Join Date: Aug 2011 Posts: 22,653

thanks brian, yeah i go by the bid ask spread, recently bought some puts on LTM after they
surged up a bit when it became 2nd most bought stock on robinhood after they filed for bankrupcty (people saw price drop and figured value without knowing they are bankrupt) was frustrated that the only ones with a narrow spread were OTM so now requiring the market adjusts enough in time before expiration

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06-06-2020 , 03:03 AM

#5522

:::grimReaper:::

veteran

Join Date: Jul 2010 Posts: 3,113

Kelhus, always trade liquid options (SPY is good), always use limit orders and start around mid price. Is that what you did? If so, we need more info. What was bid/ask, and what was your order type and price?

And if you don't filled instantly, you can make your price more aggressive by a tick, though SPY 320 should have very tight spreads.

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06-06-2020 , 09:42 AM

#5523

Kelhus100

banned

Join Date: Mar 2020 Posts: 2,504

Quote:

Originally Posted by :::grimReaper:::

I have hitherto just used think-or-swim and done whatever the default is: Right click mouse -- create closing order -- sell.

I guess I need to get a little more sophisticated and knowledgeable in what I am doing.

Thanks for advice. Appreciated.

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06-06-2020 , 09:55 AM

#5524

FallawayJumper

adept

Join Date: Nov 2019 Posts: 1,103

.........................

I wonder if anybody has any experience or knowledge of trading binary options
this is basically pure gambling - betting on whether a security is higher or lower than a certain point at a certain time

I haven't traded them but it seems like there would be a method of gaining an edge

the last time I checked you could bet as little as $100

it definitely seems like it's much easier to control risk compared to having an open position on a stock

it also seems to have a much better risk/reward profile than traditional options

I haven't traded them - I'm a buy and hold guy - but I've been tempted

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06-06-2020 , 02:13 PM

#5525

Mr Spyutastic

Carpal \'Tunnel

Join Date: May 2012 Posts: 15,132

Quote:

Originally Posted by FallawayJumper

Can you explain more why you think they would have a better risk/reward?

Just from a cursory look, they look like a scam. And if they're not I would assume you will be paying a lot of rake somewhere.

I just don't see what advantage they would offer other then provide a very easy way for someone to bet money because they don't know how options work.

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