/biz/ - Business & Finance

then there was this crazy play which i didnt actually buy, just kept an eye on for the past week until it expired today, it would have paid you a $195 credit to take it (but you need to give about $700 collateral) and if you closed earlier today you would have gotten paid ANOTHER $127 credit to close it for a total profit of $322

then there's this crazy chart which is the best of all but the max profit is only 12%, but the max loss is 0% so why not

How does this even work?

>>53247084
im not entirely sure since im not an expert. but robinhood's charts said it would work so to be sure i plugged it into an advanced options calculator and it also said the same thing, all profit no risk.

i think it has something to do with Implied Volatility, because last week i was able to find all these plays from just experimenting combining different random options together, but now today i cant find any that are this good, i guess because IV changed

>>53247126
problem is i dont remember what Implied Volatility was last week when i took these screenshots, so im not sure if it was lower or higher than today. if it was lower last week then presumably these good plays will appear when IV is low

>>53246902
You're basically just hedging SPY options?

>>53247141
am i? im not even sure all i know is it worked and all the available tools said it would work

all these screenshots were taken on Jan 6th btw in case that helps anyone eventually recreate it

>>53247140
Are these traded options? Then it could work, yes. When people sell them for a low price

Interesting OP. I didnt see your previous thread can you give a breakdown of what this strategy is and how much collateral does it take

I cant tell if op is genius or retarded. him not seeming to know what is even happening makes me think retarded though

>>53246946
I remember this one.
>>53246902
Don't remember this one. But what this is is a short iron condor, so nothing special. The increases at the tails must be because of the week delay between those contracts, which is interesting.

These are always few and far between. It's mostly based on the fact that the mid price is not what you will get when you enter the trade most of the time

>>53248678
There's no free lunch, otherwise the big bois would be doing this all the time. There are conceivable ways that OP loses on his positions, it's just that if the price forecast is Gaussian like that, the risk is rather low. It's all dice rolls in the end though.

You're basically risking $39,000 to make a nearly safe $20-$100 every two weeks. It's super retarded and not sustainable in the long run. It's literally as simple as SPY moving heavily in one direction one week and then the opposite direction the next. I don't think OP understands how leveredged this "Free" money is. You're just one bad luck away from liquidation. I mean the EV of your trade isn't that bad, it's porbasbly just minus a few dollars, but if shit went wrong it would go really wrong very quick

>>53248446
His strategy seems to be to buy/sell calls and puts so that his maximum profit is always better than maximum loss.
To sell puts, he needs 100 shares of the stock, which looks like SPY. To sell calls, he needs to have enough cash as collateral for 100 shares.
So at $390/share for 200 shares, he needs to have $78,000.
>>53248678
It's not necessarily retarded, it's just so overly low risk/low reward as to be a waste of time. He's tying up a large sum for gains in the tens or hundreds of dollars.
He'd literally be better off just holding SPY and collecting the dividends. instead of tying up the shares and cash as collateral.

>>53248752
>To sell puts, he needs 100 shares of the stock, which looks like SPY. To sell calls, he needs to have enough cash as collateral for 100 shares.
Yes, I got that backwards. Leave me alone, I'm tired.

>>53248718
>otherwise the big bois would be doing this all the time.
Sigh. Plenty of algorithmic day trading systems WOULDN'T work when big players do them and ONLY work on a small scale. You know NOTHING.

Nice trade OP - what is really neat about it, is if/when the shorts expire, you have the long positions for another week for free to possibly let run, or write another round of shorts against

I would recommend you to continue learning, read, watch some videos etc, you need to understand what you are doing a little more

>>53248891
Kek Dunning Kruger midwit detected
There is no riskless trade other than straight arbitrage, and that's only profitable these days with HFT. If you understand what those contracts mean, you could easily see in which situations they would fail. Evidently, you don't understand shit.

>>53246902
what the fuck lmao.

that cant be a good sign

>>53249003
Anon, OP has simply opened an iron condor with no potential loss on the put side. The trade isn't "riskless", it simply has a finite risk that is really low on the call side.
>>53248753
The only situation in which that trade can bring a loss of more than $27 is if somehow either the ITM call or put cannot be executed, i.e. if there is a failure to deliver from the clearing house. On SPY.

covered calls? you're being fleeced in fees and as long as you are making little money the app won't shut off your account. Things get interesting when you do make some good number and you loose control of "your assets".

>>53246902
It’s not completely arbitrage, here’s some ways it can fail

>you get assigned on your sold call/put, somehow you don’t get liquidated, SPY crabs until the 23rd of January and you don’t have your longs to cover for your mistake as volatility fucks you in the ass. Huge loss.
>you get assigned early, you get liquidated just above the credit collected, but not high enough to activate longs or make them a profitable sell, and you take a loss in the hundreds when it crabs back in between until the 20th. Minimum loss.
>you fucking die unexpectedly. Grave loss.
>get sent to prison for whatever
>you run out of internet
>you break robinhood’s terms of service and they keep your money

There really is no such thing as a free lunch, you’re subject to the whims of time, the market, the world, and your own mortality. Thanks for coming up with this, though, it seems interesting.

Shouldn't the max loss on a credit spread be the difference between the option you sold and the option you bought to limit your risk, in this case $1000? Say spy closed tomorrow at or above $400, the put leg of this spread would expire in your favor, but the call you sold would require 1k to close.

>>53246902
Alright I don’t care how it works, how do I set it up?

>>53249802
Get your own fucking spread, this guy had to work to get his.

>>53249775
The P&L chart only accounts for what happens when the earliest options meet their expiration, it doesn’t take into account what’ll happen beyond the sold strangle.

>>53249775
Also, you don’t CLOSE sold options, that’s beta shit, you ROLL the motherfuckers, assignment be damned