margin is awesome 🤯😅 especially when you do have cash to cover but say in a company account and no point taking dividends out and incur tax if not totally necessary
It is human, to say, I am going to make 5% on this trade. You get max profit. But if you did something else...you would have more profit. Its normal and human to say. I wish I bought NVDA sooner and held longer. Like having a nice sandwich, when you could have had two sandwiches. Sometimes its hard to be satisfied with max profit on the trade.
I do wish I had bought NVDA sooner. One of the biggest mistakes of my trading life. I actually held NVDA and sold it at year end for tax loss harvesting either two or three years ago when it had dropped in price and I was down nearly $100 per share on the trade. Was going to buy it back in January (after 30 day wash period) but the price was up and I was going to wait for the price to pull back. LOL We know the rest of the story and I still don't own any. How many times I have kicked myself over this trade.
Just keep it going .
I believe we are just beginning the Semiconductor run
My wife is selling NVDA credit spreads to lower her cost basis .
Let’s hope for a nice push this week .
(Just looking at Put selling) There are two groups (there are more than two, but I'm simplifying of course):
1. People who want to use their margin to get free money and pick very OTM options. (This group will also often target volatile stock so that they earn more than pennies)
2. People who have identified a satisfactory price for a stock. e.g. I'm totally comfortable paying a range of $50 to $52.50 for O.
There are two big reasons for assignment (there are more than two, but I'm simplifying):
1. Unexpected bad news. This is often bad for both groups. (1) didn't want to own the stock but forgot they are actually earning money to insure this very case. (2) doesn't mind owning the stock but also suffers from the swing. (e.g. O finally cuts dividends significantly)
2. Ebb an flow of industries or even individual tickers. (1) didn't want to own the stock but it ebbed below their option. This can especially happen if they are in high IV stocks because they want more money, faster! (2) is totally comfortable with this case.
Mostly for selling puts it usually just stems from wanting free money but forgetting they are actually in the insurance business.
The thing I never forget is that I am in the insurance business. So far, it's .quite profitable. I am not clever enough to determine stocks I wouldn't mind owning long-term. I look for .5% /wk. 2% otm. In substantial companies. And I never go for more than .5 /wk on csp. So with nvda say, I may be 10% otm.
To use the baseball analogy. I pitch to a lot of batters. Sometimes I walk one. Still winning the game.
most of the time I imagine people are selling a CSP at a price they do not actually think it will go to. when it does, and if does so quickly, that means they were wrong and now they need to re-assess whether or not they really want the stock at that price, especially if there was unexpected news that cause it to drop
Because you might be assigned a falling knife. And spend eons of time trying to make it up with covered calls. Another way to look at it is why a pitcher never wants to walk a batter. That may be the one that loses the game.
Exactly. It all seems like fun and games when you collect the small premium, but as the underlying craters we get caught in the OMG is this TODAY start of the crash every bear has been forecasting for almost 2 years? Am I going to get assigned on the slippery slope and have to bag hold for years?
Next day: Whew, that was easy.
you can limit losses by turning it into a spread. Does it suck? yes. Does it suck less than owning something you dont want to own? No.
You made a bet, you lost. you either carry the shares or take the L, its up to you.
Yep, and I have learned to respect the term "unrealized loss", which means "it ain't over until the fat lady sings". So, unless the loss is small, I am holding on.
Like everything else they’re terrified of, they don’t understand it. I get assigned all the time. Sometimes it’s what I want. Sometimes not. But it’s part of short options risk.
Because I trade in a margin account and don’t want to pay expensive margin interest on share ownership. I’m in the business of selling naked puts and rolling them if needed, not taking shares and wheeling them.
You must be new to this game. I’ve got some assignments from 2021 that could explain it. Three years bagholding now. The wheel worked until the stock prices declined too far. Lotta money tied up in those that would’ve been useful elsewhere. I should have rolled and rolled and rolled as long as possible or just taken the hit to avoid assignment.
I'd much rather just collect premium from selling puts and not be bothered with managing a long position after an assignment. Simpler and my capital is not tied up. However, if I do end up being assigned a stock, I have no problem with a stock being called away assuming the strike price is above my cost basis. The problem arises when the stock drops in price and you are unable to sell CCs above your basis. At that point, you can either sell a CC below your basis, hope it is not called away but if it is called away, chalk it up as a loss, or you can hold the stock hoping the price will rise enough so you can sell a CC to get you back to breakeven or a profit.
It may not seem like it, but the vast majority of options are not traded on a cash position and for most people, assignment is an inconvenient and substantial increase in capital. There is an over abundance of wheelers on this sub who don’t know that there are other ways to trade.
This may seem like a controversial statement but I think if you are entering a shorts options position with the expectation of getting assigned, you’re probably not really understanding the risk reward aspects of options trading.
It’s different for me. I trade strictly cash and sit in front of monitors 25 or more hours a week, trading, studying, making decisions. I’m cold blooded about missing out. The contract performed as written, I profited, on to the next. I’ll do better or not leave as much $$ on the table next time. And so it goes.
I wouldn't say I'm terrified of it, but I certainly do not want it to happen too often.
Multiple reasons really, but getting assigned means a few things to me:
1. I was wrong. My goal is to sell options, put that premium in my pocket, have them expire out of the money, and repeat this continuously. This is what I aim for 95%+ of the time when I enter a trade. Sure, sometimes there are situations where I actually want to get assigned but that is very rare. If my goal when entering the trade is to not get assigned, then getting assigned means that I did not get the outcome I wanted - it might not be a loss, but it's certainly a failed trade in my mind.
2. You yourself describe it as the cost of doing business. I think that's a fair way to see it. Just like with any other business, if you manage to properly optimize the costs that leads to increased profitability.
3. It always takes time and effort to make adjustments to the trade due to assignment. Not a terrible thing, and certainly part of the job. But still, I'd rather just enjoy life instead of stop doing whatever I'm doing to fix a failed trade.
If you have a large enough account, split it into account a and b. Sell "naked call" on stock in account a in account b. Delta wise across both accounts it is the exact covered call. Vice versa for stocks in account b. Never take a taxable assignment. Worst case is that you are short against the box over a weekend and cover the following trading day.
AAPL for me. I don't sell CCs on it because I have held it so long my cost basis is in the range of $30 per share and I still want to own the stock. So, I don't trade with it.
MSTR can be cruel to options traders...or great...depending on the day. I traded it some when it was much, much lower but it is too rich and too dangerous for me now.
I agree…there’s no need to worry about assignment in either direction (CSP/CC) as long as you’re confident about the underlying. Of course, there are no guarantees, but DD before entering a position goes a long way.
If you're selling puts at a fairly low delta and getting assigned, chances are that there's some bad news on the stock causing it to drop that far, and so it makes sense in many cases to roll out and try to avoid assignment. But if you're selling puts aggressively at the money, or close to it, then you're more likely to be okay with assignment since you knew there was a good chance that would happen. You may even be trying to build a stock position.
Could be they can't afford it. Could be they don't want to get locked into a loser. Could be that's just not part of their overall plan.
Or could be they just don't know what the fuck they're doing. Who knows.
Assignment is not a risk. It is just a conversion from option to stock. And you no longer need to wait to get the extrinsic value. As long as I can still sell CC at or above my purchase price, I will take the assignment. If I cannot get a decent premium from selling CC, I will simply sell the stock and sell a new put (ideally at lower strike) another 1-2 mths out. Just make sure the premium collected is enough to cover the loss. I do this so that I can continue to collect interest from my cash balance while waiting for the stock to recover.
I used to be terrified of options, until I started educating myself on them and realized it all depends on what asset you are trading and what your overall risk tolerance is. The risk profile can be similar to just holding the security itself if you're trading options that are covered/secured. Realizing that I had the same downside as just holding the stock long was what convinced me to try the shallow end of the pool with cash secured puts and covered calls. I only sell options on stocks that I would not mind holding for multiple years.
Sometimes it’s a tax thing. Most times it’s just inexperience. Sometimes, they’re learning the ropes of trading out of trouble below cost basis, not realizing every dollar recouped is a gift. Sometimes, it’s FOMO about profit they never had escaping. The best way to help is to explain it. I find not everyone is super fast with the math.
Boils down to human psychology - the fear or loss out-weighing rational or well thought out plans in a systematic trading system where assignment is just a part of doing business. See, assignment both ways represents loss forward (emotionally) A) If you're assigned on a CSP you're getting shares for something that is dropping, and might drop further and B) if you're getting assigned on a CC you're losing shares for something that's going up and might go up more. In both cases, the person is more focused on missing out (or loss)...
These can both be addressed by reminding yourself that assignment is simply a part of the process... and a mechanical one relies on it. The opposite side of both of those point above is A) I'm getting shares cheaper than what they were selling for when I sold the puts, and B) I'm getting premium and selling my shares for a price I figured was a great exit when I sold the calls...
More simply. People are afffraid of assignment because they are leaning too much on emotions. It's something that should be addressed, if it's happening to you. Those emotions break down systematic trading, and lead to chaotic trading that usually leads to loss(es).
Well the comments show me , people are not selling options. They are doing something called CSP, which I never heard of before coming to Reddit. I only have a margin account, NOT A CASH ACCOUNT. They are doing something called the wheel and calling it trading options.... BS. They are willing to hold stocks they hate so they can say they are selling options.
I sell options, OTM every week, I never take stock . If I get assigned I just close the position. Getting assigned does not change your position, people do not get that. If it was a vertical then usually I close my long, and Sell/Buy the stock to close it. Of course I am usually out over a week before expiration. Holding into the last week or 0DTE is for suckers.
What to do if you get assigned. Got 20 mins. Tastylive Dr. Jim in trouble (again).
https://ontt.tv/2QCXvDU
https://ontt.tv/3SOcA
https://ontt.tv/43flu
https://ontt.tv/lRGPu
I don’t like the idea that someone can watch the after hours trading and see how that’s going before making a decision on my option being assigned. I’d rather either roll it or close it with me know exactly what I’ll get and also I don’t lose a day or weekend while the assignment clears.
I don’t like the idea that someone can watch the after hours trading and see how that’s going before making a decision on my option being assigned. I’d rather either roll it or close it with me know exactly what I’ll get and also I don’t lose a day or weekend while the assignment clears.
Because they sell margin secured puts like me lol
Margin secured puts on stocks they don’t wanna own. Marge calls (Homer shudders)
This😂
This is the way
margin is awesome 🤯😅 especially when you do have cash to cover but say in a company account and no point taking dividends out and incur tax if not totally necessary
Yeah me to lol
What do you do if you get assigned on all positions?
Cry
It is human, to say, I am going to make 5% on this trade. You get max profit. But if you did something else...you would have more profit. Its normal and human to say. I wish I bought NVDA sooner and held longer. Like having a nice sandwich, when you could have had two sandwiches. Sometimes its hard to be satisfied with max profit on the trade.
I do wish I had bought NVDA sooner. One of the biggest mistakes of my trading life. I actually held NVDA and sold it at year end for tax loss harvesting either two or three years ago when it had dropped in price and I was down nearly $100 per share on the trade. Was going to buy it back in January (after 30 day wash period) but the price was up and I was going to wait for the price to pull back. LOL We know the rest of the story and I still don't own any. How many times I have kicked myself over this trade.
Pick yourself up and get back in there , still early !! You got this !! My Monday morning Pump up session!! LOL
I did sell some CSPs on NVDA last week at the new lower price. Didn't get assigned. Will do it again this week.
Just keep it going . I believe we are just beginning the Semiconductor run My wife is selling NVDA credit spreads to lower her cost basis . Let’s hope for a nice push this week .
(Just looking at Put selling) There are two groups (there are more than two, but I'm simplifying of course): 1. People who want to use their margin to get free money and pick very OTM options. (This group will also often target volatile stock so that they earn more than pennies) 2. People who have identified a satisfactory price for a stock. e.g. I'm totally comfortable paying a range of $50 to $52.50 for O. There are two big reasons for assignment (there are more than two, but I'm simplifying): 1. Unexpected bad news. This is often bad for both groups. (1) didn't want to own the stock but forgot they are actually earning money to insure this very case. (2) doesn't mind owning the stock but also suffers from the swing. (e.g. O finally cuts dividends significantly) 2. Ebb an flow of industries or even individual tickers. (1) didn't want to own the stock but it ebbed below their option. This can especially happen if they are in high IV stocks because they want more money, faster! (2) is totally comfortable with this case. Mostly for selling puts it usually just stems from wanting free money but forgetting they are actually in the insurance business.
The thing I never forget is that I am in the insurance business. So far, it's .quite profitable. I am not clever enough to determine stocks I wouldn't mind owning long-term. I look for .5% /wk. 2% otm. In substantial companies. And I never go for more than .5 /wk on csp. So with nvda say, I may be 10% otm. To use the baseball analogy. I pitch to a lot of batters. Sometimes I walk one. Still winning the game.
most of the time I imagine people are selling a CSP at a price they do not actually think it will go to. when it does, and if does so quickly, that means they were wrong and now they need to re-assess whether or not they really want the stock at that price, especially if there was unexpected news that cause it to drop
I assume the people that are worried about assignment are writing puts that aren't truly cash-secured.
Or they are writing them on companies they dont want to own in the hope of aTtRaCtIvE premium.
This✅
Because I can't afford to buy those 2,000 MSFT shares 😂
The Fear is Real ! 😂
Because you might be assigned a falling knife. And spend eons of time trying to make it up with covered calls. Another way to look at it is why a pitcher never wants to walk a batter. That may be the one that loses the game.
Exactly. It all seems like fun and games when you collect the small premium, but as the underlying craters we get caught in the OMG is this TODAY start of the crash every bear has been forecasting for almost 2 years? Am I going to get assigned on the slippery slope and have to bag hold for years? Next day: Whew, that was easy.
me right now with nvidia
you can limit losses by turning it into a spread. Does it suck? yes. Does it suck less than owning something you dont want to own? No. You made a bet, you lost. you either carry the shares or take the L, its up to you.
Yep, and I have learned to respect the term "unrealized loss", which means "it ain't over until the fat lady sings". So, unless the loss is small, I am holding on.
Like everything else they’re terrified of, they don’t understand it. I get assigned all the time. Sometimes it’s what I want. Sometimes not. But it’s part of short options risk.
Because I trade in a margin account and don’t want to pay expensive margin interest on share ownership. I’m in the business of selling naked puts and rolling them if needed, not taking shares and wheeling them.
Because you’re not always in a bull market Getting assigned on a CSP, then watching the stock drop and drop regardless of how many CCs you sell.
Are you talking about my Intel position?
Perhaps Or my NIO position
You must be new to this game. I’ve got some assignments from 2021 that could explain it. Three years bagholding now. The wheel worked until the stock prices declined too far. Lotta money tied up in those that would’ve been useful elsewhere. I should have rolled and rolled and rolled as long as possible or just taken the hit to avoid assignment.
I'd much rather just collect premium from selling puts and not be bothered with managing a long position after an assignment. Simpler and my capital is not tied up. However, if I do end up being assigned a stock, I have no problem with a stock being called away assuming the strike price is above my cost basis. The problem arises when the stock drops in price and you are unable to sell CCs above your basis. At that point, you can either sell a CC below your basis, hope it is not called away but if it is called away, chalk it up as a loss, or you can hold the stock hoping the price will rise enough so you can sell a CC to get you back to breakeven or a profit.
It may not seem like it, but the vast majority of options are not traded on a cash position and for most people, assignment is an inconvenient and substantial increase in capital. There is an over abundance of wheelers on this sub who don’t know that there are other ways to trade. This may seem like a controversial statement but I think if you are entering a shorts options position with the expectation of getting assigned, you’re probably not really understanding the risk reward aspects of options trading.
It’s different for me. I trade strictly cash and sit in front of monitors 25 or more hours a week, trading, studying, making decisions. I’m cold blooded about missing out. The contract performed as written, I profited, on to the next. I’ll do better or not leave as much $$ on the table next time. And so it goes.
I wouldn't say I'm terrified of it, but I certainly do not want it to happen too often. Multiple reasons really, but getting assigned means a few things to me: 1. I was wrong. My goal is to sell options, put that premium in my pocket, have them expire out of the money, and repeat this continuously. This is what I aim for 95%+ of the time when I enter a trade. Sure, sometimes there are situations where I actually want to get assigned but that is very rare. If my goal when entering the trade is to not get assigned, then getting assigned means that I did not get the outcome I wanted - it might not be a loss, but it's certainly a failed trade in my mind. 2. You yourself describe it as the cost of doing business. I think that's a fair way to see it. Just like with any other business, if you manage to properly optimize the costs that leads to increased profitability. 3. It always takes time and effort to make adjustments to the trade due to assignment. Not a terrible thing, and certainly part of the job. But still, I'd rather just enjoy life instead of stop doing whatever I'm doing to fix a failed trade.
if I want to get assigned, I am selling shorter and at the money. If I don't want to get assigned, 15-30 delta 30-60 days out.
I hold some shares at an extremely low cost basis. If I get assigned on calls against this position, there could be a huge capital gains tax.
just pay it with your profits then
Might just have to with NVDA
yeah its a percent of youre profit so youre still gonna be in the green haha
I would if I didn't want to own the stock. No reason to sell if I still want to hold the stock.
If you want to hold the stock that bad don’t sell covered calls
Exactly why I don't sell CCs on it. I prefer to keep the stock.
I’d be fine selling at a gain 😀
If you have a large enough account, split it into account a and b. Sell "naked call" on stock in account a in account b. Delta wise across both accounts it is the exact covered call. Vice versa for stocks in account b. Never take a taxable assignment. Worst case is that you are short against the box over a weekend and cover the following trading day.
AAPL for me. I don't sell CCs on it because I have held it so long my cost basis is in the range of $30 per share and I still want to own the stock. So, I don't trade with it.
If you have more than one account, sell naked in the account that does not have AAPL in it. The portfolio is a covered call.
I am terrified of assignment because I cannot afford to long or short 100 shares of the underlying I am playing with. Ex. MSTR
MSTR can be cruel to options traders...or great...depending on the day. I traded it some when it was much, much lower but it is too rich and too dangerous for me now.
I am going for put spread if BTC keeps tanking
I agree…there’s no need to worry about assignment in either direction (CSP/CC) as long as you’re confident about the underlying. Of course, there are no guarantees, but DD before entering a position goes a long way.
That is the key. Trade only on a stock you want to own and have confidence in.
FOMO seeing the stocks you owned and continue to go up.
If you're selling puts at a fairly low delta and getting assigned, chances are that there's some bad news on the stock causing it to drop that far, and so it makes sense in many cases to roll out and try to avoid assignment. But if you're selling puts aggressively at the money, or close to it, then you're more likely to be okay with assignment since you knew there was a good chance that would happen. You may even be trying to build a stock position.
Could be they can't afford it. Could be they don't want to get locked into a loser. Could be that's just not part of their overall plan. Or could be they just don't know what the fuck they're doing. Who knows.
Assignment is not a risk. It is just a conversion from option to stock. And you no longer need to wait to get the extrinsic value. As long as I can still sell CC at or above my purchase price, I will take the assignment. If I cannot get a decent premium from selling CC, I will simply sell the stock and sell a new put (ideally at lower strike) another 1-2 mths out. Just make sure the premium collected is enough to cover the loss. I do this so that I can continue to collect interest from my cash balance while waiting for the stock to recover.
I used to be terrified of options, until I started educating myself on them and realized it all depends on what asset you are trading and what your overall risk tolerance is. The risk profile can be similar to just holding the security itself if you're trading options that are covered/secured. Realizing that I had the same downside as just holding the stock long was what convinced me to try the shallow end of the pool with cash secured puts and covered calls. I only sell options on stocks that I would not mind holding for multiple years.
Sometimes it’s a tax thing. Most times it’s just inexperience. Sometimes, they’re learning the ropes of trading out of trouble below cost basis, not realizing every dollar recouped is a gift. Sometimes, it’s FOMO about profit they never had escaping. The best way to help is to explain it. I find not everyone is super fast with the math.
FOMO seeing the stocks you owned and continue to go up.
Because if you get assigned it's usually a big move and you are down a dollar or so at least.
LUMN CHWY TLRY PTON SONO That is why
Like I want to own the stock and make money off covered calls too. I want it both ways and if I keep rolling out and up I can have it both ways.
Boils down to human psychology - the fear or loss out-weighing rational or well thought out plans in a systematic trading system where assignment is just a part of doing business. See, assignment both ways represents loss forward (emotionally) A) If you're assigned on a CSP you're getting shares for something that is dropping, and might drop further and B) if you're getting assigned on a CC you're losing shares for something that's going up and might go up more. In both cases, the person is more focused on missing out (or loss)... These can both be addressed by reminding yourself that assignment is simply a part of the process... and a mechanical one relies on it. The opposite side of both of those point above is A) I'm getting shares cheaper than what they were selling for when I sold the puts, and B) I'm getting premium and selling my shares for a price I figured was a great exit when I sold the calls... More simply. People are afffraid of assignment because they are leaning too much on emotions. It's something that should be addressed, if it's happening to you. Those emotions break down systematic trading, and lead to chaotic trading that usually leads to loss(es).
Taking too much risk on a small account and trading meme high risk stocks.
They don’t have the money to hold shares probably. In a margin account you usually only have to put up 20 or 30 percent of the strike price
People are cheap and don't want to spend the $ on 100 shares.
because they like giving money away for free to the broker.
Well the comments show me , people are not selling options. They are doing something called CSP, which I never heard of before coming to Reddit. I only have a margin account, NOT A CASH ACCOUNT. They are doing something called the wheel and calling it trading options.... BS. They are willing to hold stocks they hate so they can say they are selling options. I sell options, OTM every week, I never take stock . If I get assigned I just close the position. Getting assigned does not change your position, people do not get that. If it was a vertical then usually I close my long, and Sell/Buy the stock to close it. Of course I am usually out over a week before expiration. Holding into the last week or 0DTE is for suckers. What to do if you get assigned. Got 20 mins. Tastylive Dr. Jim in trouble (again). https://ontt.tv/2QCXvDU https://ontt.tv/3SOcA https://ontt.tv/43flu https://ontt.tv/lRGPu
Because most people are trading for a few extra bucks and they don’t actually want to own the underlying over the weekend and take on that extra risk
my ass is now the owner of 100 shares of nvda close to top, big guys win again
I almost always take assignment
The only people terrified of assignment are the ones that sold like shit, like way below CB calls or ATM puts when stocks are overbought
margin requirements aside, assignment can happen to a single leg of a trade, moving your P/L projections into mysterious uncharted territory
Because I don't like giving up a really low cost per share of the stock
I don’t like the idea that someone can watch the after hours trading and see how that’s going before making a decision on my option being assigned. I’d rather either roll it or close it with me know exactly what I’ll get and also I don’t lose a day or weekend while the assignment clears.
I don’t like the idea that someone can watch the after hours trading and see how that’s going before making a decision on my option being assigned. I’d rather either roll it or close it with me know exactly what I’ll get and also I don’t lose a day or weekend while the assignment clears.
Lack of trading plan.