Just got filled on some 13Jan25Calls @3.10. Have had better entry point but I am back with some Roys.
I couldn't pass up an open order filled today on the 12Jan26/27Put spread for a credit of $1000 on a .40/contract buy/write of 25 contracts. BE @ 26.60 by Jan OPEX. Risk $1500 if close @ 26.00 or lower.
I have only done this by shorting the shares, then exercising. I call the broker when I do this and tell them to use the short shares to exercise -- though that may not be necessary with some brokers.
Some people just exercise, buy the shares, then sell them.
That article suggests a third method: selling shares you don't own, in which case the broker expects you to deliver them by settlement date (3 days after the trade). They say that if you give the right instructions to the broker, the delivery will be done via the exercise. Never tried it, and I would check this with the broker before attempting it. I don't know if the online order taking systems allow you to do it anyway, so it may involve higher fees.
The main point of posting that link was that many people devise ways to avoid losses from the deep ITM bid/ask spreads. Evidently there is more than one way to do it. BTW have found that bids sometimes move significantly below intrinsic on opex day, which is when I have had to go the short-and-exercise route. It is possible that this does not happen so much with AGNC -- I have not been trading AGNC options long enough -- but it definitely happens with other stocks.
Happy Thanksgiving Terr,
Thank you for your gracious words. I did feel like we were either in Tron or Wonderland as we curved through the almost 80 posts. I learn also through it all. I am still waiting for clarification on Epfhort's link re. the difference between selling shares you do not own and shorting the same.
Have a good one,
Sorry, I lost this thread for almost 24 hours.
Just reading this last post Doc, and I must say I feel more like the Cheshire Cat than the Mad Hatter.
Don't get your dander up too much, your efforts are well appreciated and effective. And this journey would have been over in three posts, not 77 or so, and we would all have been the less informed for it.
Good link Ephort,
In the article they draw a distinction between selling shares and shorting a stock. They are talking in both instances about shares you do not already own. Can you explain the difference they are making between the two actions?
I admire Sherrif Ephort for his epic efforts to bring control and balance to the fights in the AGNC OK option corral.
I am not saying everyone is in the gang, but I am particularly enjoying reading the fighting amongst those who once agreed.
Now, there is no prey left to pounce with regard to opposing views on the stock and its fundmentals, so the gunslingers are in the okay option coral starting to shoot at themselves, as they disagree over their six shooters.
The Indian predicts without harmony, respect and emphathy exists great discord. On a declaration day into the future, there may be hay bales blowing through once was a vibrant western town.
I can see "Doc" holiday in the picture. Tombstone was a great film.
Hi Ben, Yes ephort did his best, but what happens when you try to break up a fight between heavyweighths? You get punched. I almost launched into my civility police mode too, but there were too many suspects to round up and so I just let them punch themselves out. They were evenly matched and willing participants, not a case of a big bully beating on old frail man, and they seem to love to scrap so let them have their fun.
>>" ... We have found that the near 24's can be had for the same BE( there Dr Theta)"
Finally, you see the light, even while protesting.
>>" ... Anybody believing this should be discredited, committed, or shot...;-)"
And people like you vote.
"To me, that's the interesting discussion -- but so far it hasn't happened here."
Well check the air time. I think the risk discussion is costing the sponsor more than the definition clarification.
You are begging the question and being disingenuous when ignoring my legitimate discussion of Delta. Yes on deep ITM options when Delta equals one between strikes they move in unison as PPS changes.
That again is begging the original question that ITM options will lose/gain more dollars than ATM or OTM and vice versa in re. to percentage win/loss. That was my point ....to obfuscate this with two deep ITM egs. was cheap and away from my point and an attempt to disparage my one sentence description and replace it with your rant.
..."including whether the positions you are comparing have equal numbers of contracts or equal entry cost (capital)"
Most of us who have traded AGNC this past two years have discovered that this stock trades in a predictable channel discussed at length here. Many have discovered that ITM LEAPS can be had for less or equal premium than near months. Your bid/ask remarks are wrong re. this stock which have been refuted by Rim, Taymere and myself. Yet you persist in suggesting the sale of these involves risk or exercise.
We have found that the near 24's can be had for the same BE( there Dr Theta) as the leap 25's. Most of us trade out of these leaps every Q and many of us have traded out of them 3 times this past Q, using BATESAT.
The only risk is in the number of contracts you wish to trade. This, as in all trading, depends on risk tolerance, size of your account, ability to replace lost funds, therefore age, job, divorce( if wife finds out) , health and many factors that have filled more books than I can or care to discuss.
Why do we trade AGNC should be your question...easy answer...because it is a channel dweller which eliminates or greatly reduces risk.
That was tedious....
Here's your best Malaprop tonight:
"Which, I believe, ... AL was......making valid points."
Anybody believing this should be discredited, committed, or shot...;-)
When I say "not delta related" I mean it does not have to do with with continuous variations in delta. Yes, below the strike there is a delta as well, which near expiration gets to be zero. I should not have used those words.