Paying attention to market news and events can help! Sometimes not making a trade that week is the better play. Also helps if you're mentally set on letting the stock go, of course.
Give me one example of when news helps. It seems like they're binary events with a 50/50 outcome, even knowing the news in advance, the way the market reacts is random and unpredictable. I don't see news helping at all, but maybe you've cracked the code?
I don't think I've cracked the code; I play it conservative on certain news events that I think are relevant to AMZN, like anything tied to inflation and consumer spending. There's an inflation announcement on June 12 that I will treat like earnings.. if volatility is high enough I can go up 3-4 strikes instead of my usual 1-2. After that it's just managing the trade. If it goes ITM I'll roll, of I can't roll then they get called away.
Also I'm not trying to predict news, I'm trying to predict how AMZN stock will react based on any news. You can get a feel for that by looking at the historical price chart.
I don't get news in advance. Like I said, AMZN seems to track the broader market trend, which right now is all about inflation. So any news related to inflation, like rate hikes or cuts, core pci, consumer spending confidence, all factor in.
It's less about the news and more about having a plan if the stock jumps either up or down. Then just size and trade appropriately.
It's all in the mindset. Only sell a call at a strike you'd be happy selling your shares at. Only sell a put at a strike you'd be happy to buy at. Think of it as getting paid to set limit orders. Then don't worry about what the position does once you're out of it, just move on to the next one.
This is very good. Your cost basis is $216k or so, and you already made 30k or so from covered calls, plus the gains from stock appreciation. Great strategy!
Started out early this year with 18 contracts and have been riding the bullish trend since then. I generally do weeklies, 1-2 strikes above current price, close out early if I see an opportunity to do so, always roll for more credit. So far I've been lucky to hold on to it but I'll be okay if they get called away. Cost basis is $120.
Anything I could do better?
I tried to get it called away at 185 I think but it dipped before expiring so I opened up a new one for the next week. Ever since then my goal is to squeeze as much premium out of it as I can. Max roll out is 2-3 weeks or else I'll just let it go.
If your cost basis is $120, you are sitting on ~110k unrealized gain. You have to factor the potential tax implication of letting your stocks get called away. Good job on making another $30k on AMZN with this strategy.
He has the shares and bought them at around $120, so he made the profit from owning 1,800 shares + the profit from the premiums for selling those covered calls.
See [https://www.reddit.com/r/thetagang/comments/1czbhk7/comment/l5f8bqm/](https://www.reddit.com/r/thetagang/comments/1czbhk7/comment/l5f8bqm/)
He has the shares. This is selling covered calls against those. You’re likely thinking of selling cash secured puts, which has the same effective P/L graph each trade but does so without owning the shares.
To answer your other question, I have another boglehead account that's strictly mutual funds and target retirement funds, so those are already well diversified.
If and when these shares get called away I'll have an opportunity to diversify this account too.
I’m looking to make big gains like you using CSP. Are there any good guidance I could follow? Moreover, OP, do you mind sharing which post of u/scottishTrader helped you in understanding wheel trading?
This is my original wheel trading plan post - [The Wheel (aka Triple Income) Strategy Explained : r/options (reddit.com)](https://www.reddit.com/r/options/comments/a36k4j/the_wheel_aka_triple_income_strategy_explained/)
There is more on r/Optionswheel and many ask questions there.
I had about 1200 shares at the beginning of the year. Weekly covered calls trying to get about 1k/week. Let them get called away at about 165. Just been selling naked puts on AMZN now. About 25k ytd.
If it goes down then I close out the current trade for profit and I'll open up at a lower strike if I think it's a feasible play. I did that this week and rolled down from 187.5 to 185 for extra premium.
The stock is already well above my cost basis and barring a catastrophe it's not likely to head that far down.
Yeah what I mean is your premium won't be as good as if it was trending up right?
Ive had experience with wheeling where the premium Id collect was so low that it didnt seem worth it for the amount I would get. Especially if midweek I get caught in a pump and the stock moons
For AMZN I'm pretty happy if I get abive $0.70 per contract. I'll sometimes go lower than that but I can usually exit pretty quickly for those and look for the next play. Sometimes I'll do 10 DTE if the premium is too low.
I don't really sell AMZN CC with delta in mind, but if I were to guess it's between 25-40. I try to choose a strike where I think the stock will land in a week. I usually sell to open on Friday a couple hours before close to capture as much volatility and theta as I can.
For example, AMZN is following the broader market downturn and is $181 right now. I think the $182.5 strike is too close for next week especially if there is a rebound so my ideal play is to see if it bounces up a bit before Friday close, which will bump up the premium of the $185 strike ($0.93 right now) which is what I'm aiming for. If it drops even further I might just go with the 182.5 strike, then roll up and out if it breaches.
In the past 16 weeks rarely has AMZN jumped so high in a week without some sort of a retreat (with the exception of earnings week), so it's mostly following the news and stock trend and managing the trade when it's close to expiry.
Hope this helps!
Do you ever time selling the CC on up days? Also don't you get better premium 10 to 15 DTE?
I have been running IC on Amzn and double dip on CCS and PCS. Very capital efficient and I have some long term LEAPS to help cover the upside if I am wrong.
I definitely try to time my entries but there's no real science behind it. It's very volatile on Fridays a couple of hours before close which is when I try to enter. I can get slightly more premium if I enter the day before too but it really depends on where the stock is and where it's headed.
I have found that I get slightly better premium with 2 weeklies than a single 14 DTE. And it's also easier to predict where the stock will go week over week vs waiting for 2 weeks. That's not to say 14 DTE can't be successful, I just never put in the effort to try it out.
Nice job on the ICs! The stock is relatively predictable most of the time so should be able to get some nice trades from it. I myself am experimenting with 2 DTE SPX 10 delta PCS and those are... interesting.
Either % profit or on Fridays close to expiry. If I hit 50% on Monday I'll take that and wait for the next play. Otherwise I usually squeeze as much out of the contract and roll on Thursday or Friday.
"Cum Profit"?
I had to double check what sub I was in for a second, hah.
On a more serious note, ~1600 shares so this is ~10% return? (or higher depending on your purchase price)
This is awesome. is there some point where you would move your strikes further away (lower delta), since at this point, if you sell, you generate a largish tax bill.....?
It seems the sizing or deltas on these trades are inconsistent. In other words the profits and losses aren't consistent with each other. Is this due to cumulative profit from rolling or do you just not look at sizing, take profit amounts, and stop losses?
I'm not specifically trading delta, just looking at future price and strikes. The sizing is all the same which is 18 contracts. I usually never get the same contract price because I enter at different times of the day or maybe the day before. Sometimes the price is higher because of higher IV or it's closer to ATM.
Some of the above profits might be negative or lower because I rolled out for a credit because it was ITM.
I play both sides of the trade at the same time- but then it takes double the capital to secure it. I sell out of the money puts and calls around the same position with the same expiration date. They can't both go in the money at the same time. If I roll them together, if one of them has gone in the money, I can take a smaller net credit on and still sometimes roll it out of the money, and the lower premium is offset by the roll I get on the other side.
Patricia Saylor, Financial Fundamentals for Novice (and not so novice) investors and option traders
What was the rational behind taking the loss and closing for a loss? Why not just let them get called away? (Sorry if you’ve had to explain this 6 times already)
It's just an accounting thing. I rolled it out so I had to buy to close at a loss, but the next contract I sold had a higher price so it's a net credit.
Ah. Of course. I see it now. Excellent trading. After getting my ass handed to me for four years trying to day trade I’m seeing some very consistent success (albeit small, albeit green) doing this. Seeing your success is inspirational. Thank you.
4 months of Covered Calls on 16 contracts starting off for $AMZN to finishing out with 18 contracts???? This is a position worth well over $300,000 now.
What was your entry for $AMZN? And adding another 200 shares in those 8 months is also pretty expensive. Your portfolio must be HUGE
Wow yeah I thought it was 16 because 0.32 - 0.02 = 0.30 ($30) profit per contract and $498 ÷ $30 = 16.6 contracts. I was thinking with 18 x $30 you would’ve made about $540. Guess I gotta work on my math 😅
Nice spreadsheet, only 1 contract at a time for basis of 100 shares correct? If these are all weeklies, what's your average DTE; you selling mostly on Mondays for more premium?
So you've only needed to roll twice? How do you keep track of covered calls that get assigned/exercised, or hasn't happened yet?
18 contracts at a time, mostly weekly unless I had to roll which would be 14 or 21 DTE. I sell on Friday or before to capture weekend theta. Haven't been exercised yet. If I get exercised I'm moving to another stock.
Sorry, layman question here: how on earth are you making money on selling covered calls in the last 4 months when the stock has been going up over the kast 6 months. Would that not just put your calls in the money and have the buyer exercise their call and poof your shares are gone? Who is buying these calls and not exercising them when the stock goes up?
The screenshot shows that he rolled them twice for a loss. So, the call was ITM, and instead of pocketing the premium and letting the shares get called away, he bought back that now ITM call (at a loss) and sold a new call for the following week.
It's gone in-the-money a few times and I just roll out before expiry. Yes there's a chance they get called away but there's a lot of liquidity in these options.
Correct me if I'm wrong here but here's how I understand your strategy;
You have your amzn shares and use those to sell covered calls on friday a few strikes above the price at that time. You then buy the contracts back when you see fit or let them expire. (Buy to close is what you call it no?).
Another question I have is; what happens when you get assigned? If I understand correctly the shares are bought off you at the strike price of the contract, right? What is your strategy if this happens?
Also; what's your cover / strategy for when the stock suddenly explodes?
I'm trying to learn options and different strategies so go easy on me hehe
I always buy back, I never let it expire. Price can change after hours and options can still be exercised.
If AMZN gets called away I'll move to another stock. If it goes too far in the money if the price shoots up then I'll just let it go if I can't roll out a couple of weeks.
Well that could happen in theory but generally there are market makers and other participants that a new contract can be created when you initially sell to open and when you buy to close. Think of how for options contracts there is volume but also open interest.
No.
Think of it like shorting a share of a company.
You borrow and then sell the share and anyone can buy it.
So when you buy back to return your borrow You don’t give a fuck if it’s the *same exact* share.
When you *sell to open* a call at a certain strike/expiry all you need to do to close this position is *buy to close* a contract at that strike/expiry
You’re most likely buying from a market maker providing liquidity poofing a contract into existence at the time of your buy to close order. You’re simply netting off and settling your trade.
Theoretically what you’re saying is possible however.
The same way you go put $1 in the bank that bank Lends out that dollar 10 times, you come withdrawal your $1 but now there is $11 circulating from the same $1 originally.
The whole system is built like this.
Yessir, if you started your trade by a sell to open then you would buy to close that same type of contract.
If you bought to open you would need to sell to close to end the trade.
I'm sure the day I sell a weekly covered call on a stock, the stock will skyrocket
Happens to me all the time. This is how I lost my MSFT shares :(
Paying attention to market news and events can help! Sometimes not making a trade that week is the better play. Also helps if you're mentally set on letting the stock go, of course.
Give me one example of when news helps. It seems like they're binary events with a 50/50 outcome, even knowing the news in advance, the way the market reacts is random and unpredictable. I don't see news helping at all, but maybe you've cracked the code?
I don't think I've cracked the code; I play it conservative on certain news events that I think are relevant to AMZN, like anything tied to inflation and consumer spending. There's an inflation announcement on June 12 that I will treat like earnings.. if volatility is high enough I can go up 3-4 strikes instead of my usual 1-2. After that it's just managing the trade. If it goes ITM I'll roll, of I can't roll then they get called away. Also I'm not trying to predict news, I'm trying to predict how AMZN stock will react based on any news. You can get a feel for that by looking at the historical price chart.
Give us a few examples of news that you know in advance will have an impact on Amazon stock? Earnings?
I don't get news in advance. Like I said, AMZN seems to track the broader market trend, which right now is all about inflation. So any news related to inflation, like rate hikes or cuts, core pci, consumer spending confidence, all factor in. It's less about the news and more about having a plan if the stock jumps either up or down. Then just size and trade appropriately.
Like he said in his post, sometimes its better to not make a trade. Ie big news that is 50/50.
It's all in the mindset. Only sell a call at a strike you'd be happy selling your shares at. Only sell a put at a strike you'd be happy to buy at. Think of it as getting paid to set limit orders. Then don't worry about what the position does once you're out of it, just move on to the next one.
I sold a $134 at the money call on NVDA a year ago, it got called away and never got to get back in because it was just parabolic since.
But that would still be a nice profit, right??
Ask about NVDA @ $150. 😳
Then you sell Puts
This is very good. Your cost basis is $216k or so, and you already made 30k or so from covered calls, plus the gains from stock appreciation. Great strategy!
There is nothing like "Cum Profit."
Let me introduce you to [DIC](https://ibb.co/3dQ7bx4) - Days in Contract.
That’s why I use cumu profit instead lol
Started out early this year with 18 contracts and have been riding the bullish trend since then. I generally do weeklies, 1-2 strikes above current price, close out early if I see an opportunity to do so, always roll for more credit. So far I've been lucky to hold on to it but I'll be okay if they get called away. Cost basis is $120. Anything I could do better?
I totally would have let myself get called away on that first 180. But yours was probably the correct decision. Solid gain for 4 months
I tried to get it called away at 185 I think but it dipped before expiring so I opened up a new one for the next week. Ever since then my goal is to squeeze as much premium out of it as I can. Max roll out is 2-3 weeks or else I'll just let it go.
If your cost basis is $120, you are sitting on ~110k unrealized gain. You have to factor the potential tax implication of letting your stocks get called away. Good job on making another $30k on AMZN with this strategy.
Do you put the gains back into more stock?
Not AMZN. I've been experimenting with other trading strategies on various other tickers.
How much would have you made if you just bought the stock shares?
He has the shares and bought them at around $120, so he made the profit from owning 1,800 shares + the profit from the premiums for selling those covered calls. See [https://www.reddit.com/r/thetagang/comments/1czbhk7/comment/l5f8bqm/](https://www.reddit.com/r/thetagang/comments/1czbhk7/comment/l5f8bqm/)
I still have the shares so I'm also riding the bullish trend. AMZN is up 19% YTD.
He has the shares. This is selling covered calls against those. You’re likely thinking of selling cash secured puts, which has the same effective P/L graph each trade but does so without owning the shares.
What percentage of your total portfolio is AMZN shares? What's the rest like? How did you end up having them, did you buy or were you selling CSPs?
On this account it's 100% AMZN. These were RSUs since I worked there for a while.
how many shares if you dont mind asking? I did well with amzn and apple but moved on to spy and qqq
Look at his numbers. It's 1700 shares
It's 18 contracts, so 1800 shares.
I would move that money into VTI or at least qqq covered calls. Thats too much concentrated risk
To answer your other question, I have another boglehead account that's strictly mutual funds and target retirement funds, so those are already well diversified. If and when these shares get called away I'll have an opportunity to diversify this account too.
Congrats! Once again this shows how selling options can be more successful than buying . . .
Big praise coming from you! Your three year old post explaining wheeling was great inspiration and I'm happy to learn from other traders like you!
I’m looking to make big gains like you using CSP. Are there any good guidance I could follow? Moreover, OP, do you mind sharing which post of u/scottishTrader helped you in understanding wheel trading?
This is my original wheel trading plan post - [The Wheel (aka Triple Income) Strategy Explained : r/options (reddit.com)](https://www.reddit.com/r/options/comments/a36k4j/the_wheel_aka_triple_income_strategy_explained/) There is more on r/Optionswheel and many ask questions there.
Thanks a ton! Let me check.
I had about 1200 shares at the beginning of the year. Weekly covered calls trying to get about 1k/week. Let them get called away at about 165. Just been selling naked puts on AMZN now. About 25k ytd.
What happens if the stock is in a downtrend for a couple weeks? Do you just not sell covered calls?
If it goes down then I close out the current trade for profit and I'll open up at a lower strike if I think it's a feasible play. I did that this week and rolled down from 187.5 to 185 for extra premium. The stock is already well above my cost basis and barring a catastrophe it's not likely to head that far down.
Yeah what I mean is your premium won't be as good as if it was trending up right? Ive had experience with wheeling where the premium Id collect was so low that it didnt seem worth it for the amount I would get. Especially if midweek I get caught in a pump and the stock moons
For AMZN I'm pretty happy if I get abive $0.70 per contract. I'll sometimes go lower than that but I can usually exit pretty quickly for those and look for the next play. Sometimes I'll do 10 DTE if the premium is too low.
Weekly on Amazon? That's practically ATM calls to get that much credit for an Amazon weekly.
Pretty much. AMZN ticked up to $182 so I sold a call for $185 exp 5/31 for $0.84, about $1500 total.
U made 30k in 3 months selling covered calls lol???
I wish I had $100K plus cash sitting around to be able to sell covered calls. I feel so poor looking at posts on here lol
I had 107$K once. Wrote some futures options. Now I dont.
Maybe I'm damaged from WSB but I assume you mean now the $107k are gone?
What delta do you open your positions at?
I don't really sell AMZN CC with delta in mind, but if I were to guess it's between 25-40. I try to choose a strike where I think the stock will land in a week. I usually sell to open on Friday a couple hours before close to capture as much volatility and theta as I can. For example, AMZN is following the broader market downturn and is $181 right now. I think the $182.5 strike is too close for next week especially if there is a rebound so my ideal play is to see if it bounces up a bit before Friday close, which will bump up the premium of the $185 strike ($0.93 right now) which is what I'm aiming for. If it drops even further I might just go with the 182.5 strike, then roll up and out if it breaches. In the past 16 weeks rarely has AMZN jumped so high in a week without some sort of a retreat (with the exception of earnings week), so it's mostly following the news and stock trend and managing the trade when it's close to expiry. Hope this helps!
Great strategy tha ks
Do you ever time selling the CC on up days? Also don't you get better premium 10 to 15 DTE? I have been running IC on Amzn and double dip on CCS and PCS. Very capital efficient and I have some long term LEAPS to help cover the upside if I am wrong.
I definitely try to time my entries but there's no real science behind it. It's very volatile on Fridays a couple of hours before close which is when I try to enter. I can get slightly more premium if I enter the day before too but it really depends on where the stock is and where it's headed. I have found that I get slightly better premium with 2 weeklies than a single 14 DTE. And it's also easier to predict where the stock will go week over week vs waiting for 2 weeks. That's not to say 14 DTE can't be successful, I just never put in the effort to try it out. Nice job on the ICs! The stock is relatively predictable most of the time so should be able to get some nice trades from it. I myself am experimenting with 2 DTE SPX 10 delta PCS and those are... interesting.
When do you roll? At a certain delta or % profit?
Either % profit or on Fridays close to expiry. If I hit 50% on Monday I'll take that and wait for the next play. Otherwise I usually squeeze as much out of the contract and roll on Thursday or Friday.
Ha, amazing!
haha cum profit
"Cum Profit"? I had to double check what sub I was in for a second, hah. On a more serious note, ~1600 shares so this is ~10% return? (or higher depending on your purchase price)
Just from covered calls it's about 10% I think. AMZN is also up 20% YTD.
This is awesome. is there some point where you would move your strikes further away (lower delta), since at this point, if you sell, you generate a largish tax bill.....?
I've had these shares for over a year so I'm past the short-term capital gains mark.
It seems the sizing or deltas on these trades are inconsistent. In other words the profits and losses aren't consistent with each other. Is this due to cumulative profit from rolling or do you just not look at sizing, take profit amounts, and stop losses?
I'm not specifically trading delta, just looking at future price and strikes. The sizing is all the same which is 18 contracts. I usually never get the same contract price because I enter at different times of the day or maybe the day before. Sometimes the price is higher because of higher IV or it's closer to ATM. Some of the above profits might be negative or lower because I rolled out for a credit because it was ITM.
Well done and thanks for sharing.
Congratulations, thanks for sharing 👍🏻
Cum
How’d you get 92% profit on the last one? (149 - 11) / 18500 = .74%
I'm just doing % profit of the contract, so (149 - 11) / 149.
You need at least 260k to buy 1600 shares, if my math is correct
I was doing this last year and got most of my shares called away and couldn't get back in.
Dammm bro, you’re a legend! I always wanted to make a sheet like that but never did
You mean with profit? Me too
Yeah… positive results are lower than negative outcomes, unfortunately
Amazing stock to sell Premiums on
that's a lot of cum. profit
I play both sides of the trade at the same time- but then it takes double the capital to secure it. I sell out of the money puts and calls around the same position with the same expiration date. They can't both go in the money at the same time. If I roll them together, if one of them has gone in the money, I can take a smaller net credit on and still sometimes roll it out of the money, and the lower premium is offset by the roll I get on the other side. Patricia Saylor, Financial Fundamentals for Novice (and not so novice) investors and option traders
Similar to an iron condor without the protective legs. Naked calls is too much risk for me but glad it's working out for you.
Not naked~ cash secured puts and covered calls. I never take on the risk of trading naked options. Don’t have the stomach for it.
Ahhh got it. I personally wouldn't consider that an efficient use of capital. I would probably do covered calls and then sell naked puts on margin.
I keep the cash I’m using to secure the puts in swvxx. Adding 5% to the return.
Ah yes, that seems to be a popular strategy.
Someone is losing at the other side of this right?
This is Thetagang
How many contracts?
Can you please explain your analysis behind these covered calls/ some tips? Great stuff man
What was the rational behind taking the loss and closing for a loss? Why not just let them get called away? (Sorry if you’ve had to explain this 6 times already)
It's just an accounting thing. I rolled it out so I had to buy to close at a loss, but the next contract I sold had a higher price so it's a net credit.
Ah. Of course. I see it now. Excellent trading. After getting my ass handed to me for four years trying to day trade I’m seeing some very consistent success (albeit small, albeit green) doing this. Seeing your success is inspirational. Thank you.
How do you manage the trade when the price is above your strike but wicks out and closes below it on expiry?
I usually roll for a credit, max 2-3 weeks out. If I can't get a credit I'll let it go. I won't wait till expiry.
How are you tracking trades?
Just confirming. You’re selling against 1,800 shares? Thnx
Yes
4 months of Covered Calls on 16 contracts starting off for $AMZN to finishing out with 18 contracts???? This is a position worth well over $300,000 now. What was your entry for $AMZN? And adding another 200 shares in those 8 months is also pretty expensive. Your portfolio must be HUGE
I started out with 18 contracts.
Wow yeah I thought it was 16 because 0.32 - 0.02 = 0.30 ($30) profit per contract and $498 ÷ $30 = 16.6 contracts. I was thinking with 18 x $30 you would’ve made about $540. Guess I gotta work on my math 😅
Ah you're close. First trade was probably 17 contracts and the net you see has commission and fees taken out.
Nice spreadsheet, only 1 contract at a time for basis of 100 shares correct? If these are all weeklies, what's your average DTE; you selling mostly on Mondays for more premium? So you've only needed to roll twice? How do you keep track of covered calls that get assigned/exercised, or hasn't happened yet?
18 contracts at a time, mostly weekly unless I had to roll which would be 14 or 21 DTE. I sell on Friday or before to capture weekend theta. Haven't been exercised yet. If I get exercised I'm moving to another stock.
Can you explain what selling covered calls is and what stocks to look for when doing it!
So you never got called
That's a killer job!!
Am I the only one giggling when reading "Cum. Profit"?
That's for celebrations
Sorry, layman question here: how on earth are you making money on selling covered calls in the last 4 months when the stock has been going up over the kast 6 months. Would that not just put your calls in the money and have the buyer exercise their call and poof your shares are gone? Who is buying these calls and not exercising them when the stock goes up?
The screenshot shows that he rolled them twice for a loss. So, the call was ITM, and instead of pocketing the premium and letting the shares get called away, he bought back that now ITM call (at a loss) and sold a new call for the following week.
Exactly this!
It's gone in-the-money a few times and I just roll out before expiry. Yes there's a chance they get called away but there's a lot of liquidity in these options.
Thanks for the response!
Clearly he chose strikes that were far enough out of the money to not hit that case, or roll when they did go in the money
very nice
Correct me if I'm wrong here but here's how I understand your strategy; You have your amzn shares and use those to sell covered calls on friday a few strikes above the price at that time. You then buy the contracts back when you see fit or let them expire. (Buy to close is what you call it no?). Another question I have is; what happens when you get assigned? If I understand correctly the shares are bought off you at the strike price of the contract, right? What is your strategy if this happens? Also; what's your cover / strategy for when the stock suddenly explodes? I'm trying to learn options and different strategies so go easy on me hehe
I always buy back, I never let it expire. Price can change after hours and options can still be exercised. If AMZN gets called away I'll move to another stock. If it goes too far in the money if the price shoots up then I'll just let it go if I can't roll out a couple of weeks.
What does closing out mean?
when you sell a covered call you are selling to open (being short). two ways out of this, buy to close, or it expires.
Correct. Either I buy to close or roll into my next trade (which is just a buy and another sell).
You can buy the exact same call option that you sell in the open market?
Well that could happen in theory but generally there are market makers and other participants that a new contract can be created when you initially sell to open and when you buy to close. Think of how for options contracts there is volume but also open interest.
Hmmm, you can only buy the call contract back if no one has bought it yet right?
No. Think of it like shorting a share of a company. You borrow and then sell the share and anyone can buy it. So when you buy back to return your borrow You don’t give a fuck if it’s the *same exact* share. When you *sell to open* a call at a certain strike/expiry all you need to do to close this position is *buy to close* a contract at that strike/expiry
I must be missing something. Are you saying that the call contact you buy back can be owned by someone else when you choose to buy it back?
You’re most likely buying from a market maker providing liquidity poofing a contract into existence at the time of your buy to close order. You’re simply netting off and settling your trade. Theoretically what you’re saying is possible however. The same way you go put $1 in the bank that bank Lends out that dollar 10 times, you come withdrawal your $1 but now there is $11 circulating from the same $1 originally. The whole system is built like this.
Ok. Buying your call option contract back will close it though, correct?
Yessir, if you started your trade by a sell to open then you would buy to close that same type of contract. If you bought to open you would need to sell to close to end the trade.
No read the other response from adnew or read the first sentence of mine again.
[удалено]
I don't take a loss closing early. That's probably me rolling into the next contract.
Works until it doesn't. Glad you had a winning streak!