Week 23 // "Broker Risk" + Final Closes | Options Strategies Message Board Posts

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Msg  1584 of 1614  at  1/11/2019 4:43:41 PM  by

sandiegodude2000


 In response to msg 1583 by  sandiegodude2000
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Re: Week 23 // "Broker Risk" + Final Closes

There's a thing with TD ..whereby (if you cannot stand assignment on open option
positions), they want you to close any short positions with no less than 10 minutes to go.
Thus I had to close out my NVDA 149/150 call spread.  That spread ended up OTM, 
costing me that .51 in premium.
 
I often occasionally predicate my thesis on 'afternoon' sell-offs in the stock. I 'knew' that
NVDA was not going to close above 149, given all the call buying that occurred today,
because those traders had to sell them back into the market. They just did so with 
about 8 minutes left. NVDA closed at $148.83 -- right where I wanted it to, but 2 minutes
too late. I'm expending oxygen telling you this because this is a risk I don't discuss
enough: the "broker risk", whereby you are forced to close a position before it has
enough time to expire OTM. 
========================================================
Other closes: with 15 minutes to go:
 
My trade 2 (BA). Closed the 350/357.50 put spread for -.05 
Rolled the 11 Jan BA 350/352.50 call spread into the 18 Jan BA 345/347.50 call
spread for -.55. So my thesis for BA next week is down. (Note: anytime you execute
a vertical roll from one week to the next, you will pay a lot to do so if rolling into the
same strikes late in the day. Thus, to cut down on the amount paid, I sold  a deeper
ITM call spread. (The option identity is "Vertical Roll" in ThinkorSwim).
 
------------------------------------------------------------
 
Trade 1 (short AMZN 1640/1642.50 call spread and short 1640/1637.50 put spread).
 
I couldn't have played this one any better as AMZN closed at $1640.56. Since the pps
was close to $1640, closing either one would cost at anywhere from .70 - 1.10. Thus, I rolled each over to the same strikes for next week:
 
Rolled short 11 Jan AMZN 1640/1640.50 call spread to 18 Jan AMZN 1640/1642.50
call spread for a net credit .55. 
 
Rolled short 11 Jan AMZN 1640/1637.50 put spread to 18 Jan AMZN 1640/1637.50 
put spread for a net credit of .67.
 
This time, rolling into identical strikes makes a profit since you get more for selling
the longer dated spread than it takes to close the 'hardly ITM' open spread. Next week
I'll be faced with the same scenario as this week (both open).
 
Trade 4 (CMG) close outs: even though CMG closed at $506.95, TD forced me to
close both OTM spreads (510/512.50 call and 505/502.50 put) for -.15 each with
10 minutes to go. So here I lost a net 30 cents due to the broker risk. (closing quote
was 0.0 for each spread). 
 
Trades 3 and 5 (AMZN). If you ended up selling any puts that ended up OTM but
within 10 dollars of the pps, TD forces you to close these out as well. With 10 minutes
to go, the 1637.50/1635 put spreads for .-12 each.
 
Finally tally of today's wins and losses coming later this evening. 
 
 


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Msg # Subject Author Recs Date Posted
1585 Re: Week 23 // How You Can Get Screwed by Algos (Read this if you want to learn) sandiegodude2000 8 1/11/2019 5:15:13 PM


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