Coach Mak | Know Your Money Profile picture
May 1 โ€ข 4 tweets โ€ข 2 min read Twitter logo Read on Twitter
Selling Cash Secured Puts are not without risks

A hidden risk is LOST OPPORTUNITY

An example:

I had sold a $129 CSP on $AAPL in December that I rolled down a couple of times to $126

A brief thread ๐Ÿงต

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

#OptionsTrading #Optionselling Image
I received $220 in premiums

In 4 weeks

I never let the $AAPL shares get assigned to me at $129

I rolled down to $126

$AAPL then went up beyond $129 and never came down to $126

I LOST MY OPPORTUNITY to buy $AAPL at $129

#OptionsTrading #optionselling
Today $AAPL is above $165

I made 1.7% in premiums in 4 weeks

$220 on $12,900 collateral

But thatโ€™s nothing compared to the lost opportunity in Capital Gains in $AAPL

Maybe $AAPL comes back down to the $120s again?

But who knows ๐Ÿคทโ€โ™‚๏ธ
If you really want to buy the shares and not miss an opportunity then just be firm in your decision and let the CSP get assigned

Or just outright buy the shares

โ€ข โ€ข โ€ข

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More from @wealthcoachmak

Apr 30
I have 800 shares of $AMZN for long term

On Aug 1, 2022 I started selling Covered Calls against these shares

โœ… My objective: To get premiums without losing my shares

โœ… 9 month summary:

Premiums: $9,780
No shares lost
No active calls

A brief thread ๐Ÿงต

๐Ÿ‘‡

#OptionsTrading
The premiums received in the amount of $9,780 is on top of the capital gains or losses in the $AMZN stock since Aug 1

I was going to hold these shares anyway

I donโ€™t try to time the market with my core stocks by getting in and out of the stock

#OptionsTrading #Optionselling
It wasnโ€™t a smooth ride up in this journey of selling $AMZN Covered Calls

There were a few times where the stock spiked up beyond my strike price

I had to carefully maneuver and manage through the Rollovers

Had to stay patient a LOT

#OptionsTrading #Optionselling
Read 6 tweets
Apr 29
$PLTR Covered Call Update

A brief thread ๐Ÿงต on the ups and downs of $PLTR and all the maneuvering I had to do with my Call Option

Premium: $528
Risk: $9600

5.5% return in ~4 months

16.5% annualized return

#OptionsTrading #Optionselling

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡
Sold a 1/27 $PLTR $7.5C on Jan 9

12 contracts (1200 shares)

Premium added: $72

#OptionsTrading #Optionselling

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡ Image
On Jan 27 I rolled over the $PLTR call

$PLTR was above $7.6 and I didnโ€™t want to lose my shares

Rolled the call over by one week to:

- 2/3 $7.5C
- Premium: $216 Image
Read 7 tweets
Apr 25
๐Ÿ”ฅ $SQ Covered Call Journey๐Ÿ”ฅ

A thread ๐Ÿงต on two separate calls that I had sold against my 200 $SQ shares

Cost Basis: $69 per share

Initial calls sold on Jan 17 and 20:

1/27 $77C
1/20 $78C
Premiums: $123

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

#OptionsTrading #Optionselling ImageImage
On Jan 20 $SQ reached beyond my strike price of $78 expiring that day

So to protect my shares I rolled over the call

To 2/3 $80

Added premium: $111 Image
By Jan 27 $SQ was almost at $84

I could let my 1/27 $77C expire and take the capital gain loss

But I wanted to capture the upside in the stock so I didnโ€™t want to lose the shares

No idea how far up $SQ would go

So I rolled way up and over: 6/16 $97.5

Premium: $78 Image
Read 13 tweets
Apr 24
When you sell a Covered Call you always make money

Right?

Wrong

But you always get PAID for selling that call so HOW do you lose money?

If the stock runs up way beyond your strike price you LOST capital gains

Itโ€™s important to account for such losses when you sell CCsโ€ฆ twitter.com/i/web/status/1โ€ฆ
Technically yes not LOST money but gains limited. But the CC lost you money compared to if you hadnโ€™t done anything. At least for the time being.

If you buy the shares back at exactly the same price as you lost them, then you erased your losses
My point is that you need to account for this LOST OPPORTUNITY somewhere

If it was a stock that you would have sold anyway, then yes doesnโ€™t matter and no need to account for that
Read 5 tweets
Apr 23
Looking to sell Options?

Like Covered Calls or Cash Secured Puts?

Then knowing the Greeks can help you make more informed decisions

The Greeks are a set of metrics that measure different aspects of options contracts

A brief thread ๐Ÿงต on the Greeks

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

#OptionsTradingโ€ฆ twitter.com/i/web/status/1โ€ฆ
What is Delta?

Delta measures how much the price of an option changes in relation to a change in the price of the underlying asset

A high delta means the option is more sensitive to changes in the underlying asset's price
What is Theta?

Theta measures how much the price of an option declines as time passes

It's also known as the "time decay" of an option

A high theta means the option's value will decrease rapidly as time passes
Read 7 tweets
Apr 22
All rollovers are NOT the same when you Sell Options

What are rollovers?

You BUY back an option that you sold and then you SELL another option at a different strike price and/or expiry

Here are a few different types of rollovers

๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

๐Ÿงต

#OptionsTrading #Optionselling
Forced Rollover

Your option is already at a LOSS

Your option is about to be called or assigned

But you donโ€™t want that

So you are FORCED to roll it over to the future at the same strike price or higher

Example: $AAPL Image
The price of $AAPL is above the strike price of the call option

To prevent my shares being called at a value below my strike price I ROLLOVER the option

I kept the same strike price and only went out by a week

I could have chosen a higher strike and more distant expiry
Read 8 tweets

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