Hi Ryan, I like this trade management video. Quick question. Do you roll immediately when the strike price is challenged or do you wait until closer to expiration day for the short option to lose extrinsic value before rolling?
Depends, if im being tested early in the trade but I can roll out for a net credit, i roll. If it has blown way past my call strike early in the trade, I wait until week of expiration. Only for covered calls though. If you are trading spreads, early management is key.
Have a fundamental question. Say you hold a stock at $100 and sell CC for 110 strike price and get 1.00 premium (Max profit is $100). So if stock goes even .01 above 110, my stock will be sold and I get to keep $1000 (stock appreciation) + 100 (option premium ). Scenario 1: If stock tanks pretty bad, I start to see the profit in CC right away. So max profit on the CC will be only $100 correct. if I decide to close the trade bit early, may be I'll get $90. But max profit I can get from CC is $100. I think I understand, but please correct me if I'm wrong. Scenario 2: This is where I need clarification. if stock skyrockets to 110 next day, then you will see a loss in your account for CC trade. Will the max loss in that trade is $100 or can it show more than $100? Like it also shows the opportunity missed and it shows in the CC trade. My pain point in when you try to ROLL, should you look for credit more than $100 or will the actual loss will be more than $100 and the stock moved too quickly. Hope it makes sense. Thanks.
Yes you keep whole premium + stock appreciation. Double Income. Scenario 1: yes, you can close out early for $90 and miss out on $10 bucks Scenario 2: you will see a Theoretical drawdown, but as long as you hold until expiration. You won't lose anything. You will make whole premium of $100 + share appreciation. You will never take a loss on a Covered Call unless you close it at a loss. Just always wait until expiration if the Call goes in the money.
Thank you, Ryan, for another great video. I have a few questions: When is the best time to roll an option? Specifically for covered calls, should we roll as soon as the stock is far past the strike price or wait until closer to expiration? In the past, I faced a significant loss rolling a covered call with a deep ITM strike a week before expiration. I paid a high premium due to the intrinsic value, but the stock dropped the next day, and the premium to close a new call was no longer attractive. I’m trying to avoid the risk of having shares called away, but I also don’t want to roll too early and absorb high intrinsic value. I’d appreciate your professional advice on this.
Hey Nam, I personally roll once it starts getting tested early in the trade. If my covered calls are deep in the money, I let the shares just get called away. Not efficient for tax purposes, but I don't care. You may want to go 20 Delta or less on the CC's with shorter duration 15-25 day so you can manage early and get in and out of the positions.
You roll down if you sell a put and it tanks ( if you wanted to of course or just take assignment ) He rolls down when he’s selling a covered call to collect more premium not a cash secured put and not below his cost basis.
Volatility and put skew. Puts are generally more "expensive" then calls because stocks drop much faster than they typically go up. So not much premium to be collected on the call side.
Hey Ryan, do you ever do strangles? Or just wheel? Asking because on tastylive, it seems like they mostly do strangles and not much wheel... your thoughts? Great video btw, exactly what I needed...
I don't mess with naked strangles because I prefer stock ownership. Also I don't want to manage calls that are at a loss, I rather have shares as collateral so they can just get called away. I do Covered Strangles instead.
For those of us who would like to roll on Friday rather than close earlier in the week, for weekly options, when is the optimal time of day to do so? Does the price of the premium decrease significantly between friday market close and monday market open? ie do the nonn market weekend days decrease your premium? It's lower hassle and stress to let OTM calls expire and then just start again with the weekly monday morning, but i don't know how much money i'm leaving on the table by letting the weekend go
They usually pull premium out of the weekend Friday morning so I would roll Thursday before close or Friday morning so you capture weekend theta decay!
Very good episode ! Thanks for sharing your knowledge!
Glad you enjoyed it!
@ thanks for your answer!
Hi Ryan, I like this trade management video. Quick question. Do you roll immediately when the strike price is challenged or do you wait until closer to expiration day for the short option to lose extrinsic value before rolling?
Depends, if im being tested early in the trade but I can roll out for a net credit, i roll. If it has blown way past my call strike early in the trade, I wait until week of expiration. Only for covered calls though. If you are trading spreads, early management is key.
Have a fundamental question. Say you hold a stock at $100 and sell CC for 110 strike price and get 1.00 premium (Max profit is $100). So if stock goes even .01 above 110, my stock will be sold and I get to keep $1000 (stock appreciation) + 100 (option premium ).
Scenario 1: If stock tanks pretty bad, I start to see the profit in CC right away. So max profit on the CC will be only $100 correct. if I decide to close the trade bit early, may be I'll get $90. But max profit I can get from CC is $100. I think I understand, but please correct me if I'm wrong.
Scenario 2: This is where I need clarification. if stock skyrockets to 110 next day, then you will see a loss in your account for CC trade. Will the max loss in that trade is $100 or can it show more than $100? Like it also shows the opportunity missed and it shows in the CC trade.
My pain point in when you try to ROLL, should you look for credit more than $100 or will the actual loss will be more than $100 and the stock moved too quickly. Hope it makes sense. Thanks.
Yes you keep whole premium + stock appreciation. Double Income.
Scenario 1: yes, you can close out early for $90 and miss out on $10 bucks
Scenario 2: you will see a Theoretical drawdown, but as long as you hold until expiration. You won't lose anything. You will make whole premium of $100 + share appreciation.
You will never take a loss on a Covered Call unless you close it at a loss. Just always wait until expiration if the Call goes in the money.
great show, some honest talk thanks
appreciate you! how long have you been trading options?
What edition of TOS is this? Are you using a PC? Looks slightly different than mine
using Mac, its the web version.
Thank you, Ryan, for another great video. I have a few questions:
When is the best time to roll an option? Specifically for covered calls, should we roll as soon as the stock is far past the strike price or wait until closer to expiration?
In the past, I faced a significant loss rolling a covered call with a deep ITM strike a week before expiration. I paid a high premium due to the intrinsic value, but the stock dropped the next day, and the premium to close a new call was no longer attractive.
I’m trying to avoid the risk of having shares called away, but I also don’t want to roll too early and absorb high intrinsic value. I’d appreciate your professional advice on this.
Hey Nam, I personally roll once it starts getting tested early in the trade. If my covered calls are deep in the money, I let the shares just get called away. Not efficient for tax purposes, but I don't care.
You may want to go 20 Delta or less on the CC's with shorter duration 15-25 day so you can manage early and get in and out of the positions.
@ thank you, Ryan. Much appreciated for your response.
Ryan , question, if sell put , if the stock tank, why would you rolling up ?
You roll down if you sell a put and it tanks ( if you wanted to of course or just take assignment )
He rolls down when he’s selling a covered call to collect more premium not a cash secured put and not below his cost basis.
@@Kk-iw4ck thanks
spot on
How come on some stocks you can roll out for a credit yet sometimes if you roll out it will be barely break even. Why is there such a skew sometimes?
Volatility and put skew. Puts are generally more "expensive" then calls because stocks drop much faster than they typically go up. So not much premium to be collected on the call side.
Hey Ryan, do you ever do strangles? Or just wheel? Asking because on tastylive, it seems like they mostly do strangles and not much wheel... your thoughts? Great video btw, exactly what I needed...
I don't mess with naked strangles because I prefer stock ownership. Also I don't want to manage calls that are at a loss, I rather have shares as collateral so they can just get called away.
I do Covered Strangles instead.
@OptionsWithRyan got it. Thanks for the reply!
For those of us who would like to roll on Friday rather than close earlier in the week, for weekly options, when is the optimal time of day to do so? Does the price of the premium decrease significantly between friday market close and monday market open? ie do the nonn market weekend days decrease your premium? It's lower hassle and stress to let OTM calls expire and then just start again with the weekly monday morning, but i don't know how much money i'm leaving on the table by letting the weekend go
They usually pull premium out of the weekend Friday morning so I would roll Thursday before close or Friday morning so you capture weekend theta decay!
Watched once
thank you
First!
I appreciate you! do you know how to roll options?