/biz/ - Business & Finance

[Anonymous No.11505016]

How does margin work when trading options? About to get margin called lol.

>-20k liablility in naked puts
>$120k cash
>$5k margin maintenance left
>If all assigned will have value of $227k.
>1:3 margin with my brokerage. $300 - $360k.

[Anonymous No.11505095]

>>11505016
not sure but am playing around with out of money vix options and it's a wild ride.

I knew it would be volatile but damn this is insane. there is no replacement for learning the hard way. Also buy nmr

[Anonymous No.11505388]

>>11505016
Oh, forgot to add. It's a put spread, so if it goes to 0 I'd still have cash to cover.

>>11505095
lots of people blow up their accounts trading vix haha.

[Anonymous No.11505515]

>>11505016
Were you writing options?

[Anonymous No.11505540]

>>11505515
Yeah. I think my brokerage is trying to fuck with me.

[Anonymous No.11505572]

>>11505540
Holy shit. How's your position so far? What made think it was a good idea to do this?

[Anonymous No.11505607]

>>11505540
>>11505572
Writing options is the way to make money off option trading. Companies have departments dedicated to writing them
Definitely need to hedge well or else it's just stupidly dangerous

[Anonymous No.11505634]

>>11505016
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAHHHHH

[Anonymous No.11505642]

>>11505607
The only way I'd even think about writing an option is if I were piggybackin a large institutions position. Game is way to fucky in my opinion.

[Anonymous No.11505659]

>>11505607
i've been considering writing options for coca cola because it seems to hate being above $47 but looking at the risk to profit ratio, it just doesn't seem feasible. Maybe it's just KO but what stocks are best to write for in general?

[Anonymous No.11505689]

>>11505659
Why not just buy puts instead of writing calls?

[Anonymous No.11505697]

>>11505689
I-I need that delicious premium a-anon san. BAKA.

[Anonymous No.11505714]

>>11505697
Yeah but if the market doesn't slide before the end of this month then chances are equities are going higher. Sounds like a dangerous trade to me.

[Anonymous No.11505858]

>>11505572
>75 AMD contracts at $25, Nov 16th expiry.
>10 MU contracts at $40, Nov 2nd expiriry.

I knew I was going to get caught eventually but now it seems my brokerage won't let me hold through a dip.

[Anonymous No.11505890]

>>11505572
>>11505858

I've made a lot of money in the past year writing put options.

http://www.optionsprofitcalculator.com/

[Anonymous No.11505918]

>>11505659
Absolutely no clue. I am going off what an old professor told me but I don't remember his company. He managed the largest derivative portfolio in the world at that time and all he did was write options. Made a killing too
Again though, he was working for a company that could simply sell shares they already have as a way to hedge

I haven't checked prices but stuff like Coke or McDonald's will simply always be strong. Can't imagine options would sell for a lot.
Personally I think Amazon would be a fun one to write options for, once their quarterly earnings report comes in

[Anonymous No.11505943]

>>11505858
Those were both puts that you sold? Do you sell options based on technicals?

[Anonymous No.11506019]

>>11505943
Yeah both puts. No, not based on "technicals." They're both "high risk" stocks so the premium is pretty high on both. I'm just a believer in AMD as a company over the long term, lots of market-share up for grabs.

For ex, if you were okay buying AMD at $25 you could get a 13.4% return simply for agreeing to purchase it at that price. Premium isn't usually this high but earnings is today.

[Anonymous No.11506046]

>>11506019
So it's basically got a high volatility premium? Just based on market conditions, interest rates, the time of year and technicals I wouldn't have sold any puts higher than $15. Just looks like a risky trade. If AMD bounces then you might be alright though I'd think. What was the date when you wrote and sold them?

[Anonymous No.11506086]

>>11506046
Yeah, got greedy. Wasn't going to write any above $22 or past earnings but I broke my own rules.

I earned an average of $1.06 per share writing over a 4 week period when it was in the 32-28 range.

[Anonymous No.11506134]

>>11506086
Well do you got the money to cover any margin calls?

[Anonymous No.11506160]

>>11506134
Yes, more that enough. I can just close my position. But what I don't get is why I seem to be getting margin called prematurely. I have $120k and I'll get "called" on a negative $25k option liability.

[Anonymous No.11506166]

>>11506160
>>11506134
I assumed I would get called or force to liquidate when my liability approaches my full equity level.

[Anonymous No.11506182]

>>11506160
My limited understanding of margin is that they can raise margin rates at any time.

[Anonymous No.11506228]

>>11506166
Well if you just cover the margin then you might be alright I suppose. If AMD doesn't miss on their earnings you'll prolly make money still. It'll be a gamble though.

[Anonymous No.11507296]

>>11505016
is that taylor swift?

[Anonymous No.11507383]

>>11505016
This woman is perfect I don't even care what your thread is about.

[Anonymous No.11507495]

>>11507296
Yes, she's chilling on my yacht and as you can see it's pretty hot in there.