What Are Your Moves Tomorrow, November 30, 2020

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Weekend Discussion Thread for the Weekend of November 27, 2020

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Options Explained - A Quick Beginners Guide

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  1. You want to exercise it to get the shares (right before deal gets approved) and then your shares will convert into cash + CRM shares. Otherwise you just have to sell those calls and take a hit on the spread.

  2. The biggest problem is this. You are trying to tie the two stocks together but there is just very small chance the deal falls through, in which case all correlations break. You are only trading under one assumption: which is deal goes through with 100% chance with the agreed terms. That's ok go do so (and if you think it's 100%, there's some small edge here vs current market). But just keep in mind in reality it isn't 100%.

  3. Won't be that huge if you can get 25% margin maintaince on naked options though (it's like the 20-15 spread there). Not sure if OP is putting up full cash though. Then sure it'll be different but expectation doesn't change though.

  4. Why buy the 16.5 put? Just sell only the 20 strike put. The 16.5 put almost serves no purpose.

  5. Goddamn, so if I purchased today, I wouldn’t get the dividend? Is that why there’s a sell off happening?

  6. Yes you don't get the special 10 dollar dividend today if you bought today. You need to have it on 11/30 end of day.

  7. Ah I see, thanks very much! I was a bit confused because I'd actually misread your post and thought the stock price would drop on the payment date, not the ex-dividend date...

  8. Ah actually I mistyped that and then corrected it. You didn't misread - that part (one line) I mistyped, although later on I had it correct so sorry for the confusion. Anyways everything should have happened now so you can see it play out. The most annoying part is on some websites if you look at the monthly chart it shows this huge drop yesterday that technically should not be factored in % change since it's just the dividend adjustment change of the stock price.

  9. I have 5 more of these Thankful awards to give out, if you want one, just let me know and I'll give out to the first 5 responders before turning my attention to the Packers game.

  10. You were #6 sorry, but I felt bad so you can have one too as my final one.

  11. No you do. I don't know what broker you are using, but once the market opens, if you go to like the options page where you can put in orders through your broker, you have the option to "sell to close" this contract at whatever price you want (preferably it needs to be a limit sell order that's close to the market bid if you want a good price). You just have to retype in the ticker info. Some brokers are nice and you can like right click on the option and then easily go to the page without retyping in everything.

  12. I am from the UK, I bought the contracts via IG. They don’t do options on their app so you have to ring up and a trader orders them for you.

  13. Phone orders? Yea ok I guess then you have to ask someone who uses IG. Usually it's super easy to do electronically with any broker.

  14. Can you provide a link where you got all of these numbers from?

  15. Even for American options, they can be but it's highly unlikely. The most likely case is when there's a dividend coming up.

  16. Salesforce has potential Slack news. It could be made during their earnings is people's guess (since the WSJ article said it would be announced soon). So that could be a potential side play. Obviously, nothing is certain and they might not even talk about it.

  17. Ask yourself this: Do you want to lose $100k? Because that’s how you lose $100k. I’ve seen people do just that from writing naked Zoom calls.

  18. This response isn't very informative by just making that blanket statement. Anytime you sell a naked call, you can technically lose some "infinite" amount, but that doesn't make the play bad. It's all about probabilities. First, he cannot lose 100k selling 2 naked ZM calls. That's just not realistic. If he loses 100k selling just 2 naked ZM 550 strike calls on this earnings, I'll give you Reddit gold as a freeroll for you (this would mean ZM would go to 1050 immediately, which is not realistic).

  19. I have $0 in my RH account but I check in a few times a week just to see the RH sentiment. Helps me a lot IMO, and it doesn’t hurt to have more data in your arsenal haha.

  20. So you can only see that if you have an RH account? I knew there was a website called RH tracker, but it seems to be gone.

  21. Nope need a login, but thanks for the link. Yea I was just curious and I'll look more into it. Thanks.

  22. Option MMs are the counterparties to mass retail call buying and growing momentum call buying and stock replacement strategies in the professional space. The risk from the option convexity has to be warehoused somewhere, and MM delta hedging is arguably the most transparent, predictable, safe way for it to be done. Unhedged convexity with the current high volume option environment would risk serious havok that far outstrips the gamma meltups we see from MM hedging now. Remember vol funds in March? At least MM hedging feedback loops aren't hurtling towards insolvency for the players involved.

  23. I mean your first paragraph isn't wrong, but where did you get the idea that retail is doing so much call volume they are the ones responsible for causing MM to hedge all of that delta? For example, one large fund like Softbank will cause a MM to hedge a lot more delta (across a whole bunch of names) than all of WSB. Not saying retail doesn't play a role, but why make the assumption that it's only retail. For like Tesla, for example, a lot of quant funds are taking advantage of the convexity on the calls (the IV is totally mispriced at times), and they buy a ton of these calls (volatility arbitrage), and then this vicious cycle starts. MM are exacerbating this by mispricing these calls and then having to desperately delta hedge/or go long AH to prepare for the next day. Simply blaming retail for every single move is quite lazy imo and is the easy way out for most news outlets.

  24. That's just an excuse or lazy research. Retail definitely not causing all this volatility the way CNBC and Bloomberg is describing. Options MM are responsible for a lot of it, as well as probably a few quant funds.

  25. Not really, that one is in my post history. Got a long post about this. But it has some relationship. Options played a bigger role though.

  26. This actually is what caused the VW squeeze. Most of the float was locked up. There was not enough shares for the shorts to even buy back.

  27. Boomer stocks like DE are even going parabolic lol. I just realized how much DE and CAT have gone up...don't really ever look at those.

  28. Damn this is long, I'll give you something for this even if I didn't read most of it. Here's an award.

  29. It should definitely beat (this is obvious to anyone), but the thing is this time, it's actually priced for perfection. It would need to crush and also raise guidance for it to go up a ton.

  30. I would give you Reddit gold but you can already afford that.

  31. So when AD finally got a healthy #2 option with holiday going into the playoffs they manage to beat lillard (who you believe to be a clear #1 option)

  32. He had a healthy Holiday for so many years before and they won nothing. One year means nothing (he also had Rondo and Mirotic that year). Jokic made the WCF this year for example, which AD did not ever as a #1...does that mean Jokic is better? No obviously, but one season means nothing. The next year, Dame lead his team to the WCF...doing H2H stuff is useless since Dame has a way better track record in the playoffs as a #1 option. Also why does AD "need" a healthy Holiday (and Rondo, Mirotic) to win 1 playoff series if he's that good? Btw, if you read my post, you clearly see I have AD > Luka and Dame, so I don't even know what we are arguing about here. I was just saying Dame isn't that far behind and can be considered a better #1 option but not as a better player.

  33. I bought the call from someone else I’m not the original writer. Who gets assigned? Me or the writer?

  34. I think you are confusing selling to close versus selling to open the transaction. If you are selling contracts you previously bought then the transaction is done. If you are selling the calls first, then you are on the hook to sell the 100 shares at $20 and buy them back at whatever price the market is at, at the time.

  35. Yea reading his posts again, it does look like what he thinks will happen is if he sells an existing long call position, he thinks he then is somehow "short" vs. his new counterparty and then gets assigned vs. that counterparty. But of course this is not the case.

  36. You own the call, as in you are net long these calls? You don't get assigned. You can exercise the call (it will auto exercise if it's ITM at expiration) and get 100 shares/option.

  37. You are going to have to pony up some cash if you want to go long Tesla. Any (OTM call) spread that's going to cost you less is either going to have less time duration or the strikes are closer together so there's less potential profit. Or you can just buy shares. Like 20 shares is not a bad holding long term. If you bought just 20 shares (so that's 4 shares before the split) beginning of this year, it's up 10k. Yea I know 2020 is unique and won't repeat, but still long term it isn't bad.

  38. So what you are saying is they have 1 billion dollars more to put into calls soon?

  39. Important to note that CRM has an earnings next week. This is very important to how it'll move in the short term, along with the possible WORK (Slack) speculation.

  40. Your AAPL is probably going to be safe and stable as it gets for an options play. I would just say buy shares lol, but that's not what you want to hear.

  41. What do you think about the Greeks on my contracts? Also the break even is $123.75. I should’ve paid more attn to that.

  42. Yea if it's long dated like that, I would just be paying attention more to the AAPL spot price. Theta, vega, all that is not super relevant tbh vs. spot. If it starts trending like to the 120s my mid December, you'll be in great shape. Even if it sticks around here (maybe a bit higher) like around the 118-120 range by mid-December, you'll be in ok shape. However, if we get a super sharp selloff again (like the entire market crashes, which will crash AAPL) and AAPL falls to sub 110, then it's a bit worrisome.

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