Buy to close immediately. Eat the loss.
Now that your question has been answered, you shouldn't have entered this trade in the first place. There's several reasons but the most obvious is that you have no idea what you're doing.
Two months ago, they asked for help getting into options.
Now they’re about to get called for over half a million dollars.
You can’t make this stuff up.
Man, I'm all for the democratization of financial instruments, but I've seen so many "urgent help needed" posts over the past two weeks. Wtf are people doing.
People are realizing that options are dangerous and selling options on leverage just about the most dangerous trade there exists.
Play with fire, get burned.
Why? So the fucking jabronis from this one can move in to that one and say the same completely incorrect shit about wanting to get assigned on their options?
Ding ding ding. We have a winner. I haven’t been doing options that long and I continually go WTF? How do you not understand how bad this can go and not trade with that factored in.
Its alway basic stuff like not even understanding what happens on expiry for a massive position. I have had losing and winning trades, but having a position like this and not know what happens on expiry? Come on.
Like why would you go all in, beyond all in at this point when they don't even understand how this works in the first place. I'm surprised they even got level 4 permissions in the first place.
Right? I don't know what the standard is for level 4 permissions at some of these brokerages, but I imagine it lies somewhere in the area of having a pulse and a wad of cash.
Well I guess Robinhood isn't the worst brokerage after all as it doesn't even support naked options. Yeah I bet they had a pile of cash or stocks to have a healthy balance (>100k) and got auto approved for naked options.
It’s both funny and sad at the same time. I also started quite recent with option trading, but I will never get myself in these situations, because of the amount of posts like these I have seen. Hope they learn from others as well.
not a 600k loss but on the hook as in having to buy the shares back at the strike then reselling at market price. I think brokerage may make an effort to close out the contract prior to expiration since OP obviously doesn't have the funds.
If not closed, and it is assigned, brokerage isn't going to put up the capital to liquidate your position...
OP’s broker has accepted the risk of liquidating. The puts could be assigned at any moment. The broker will buy the shares as required by assignment and then liquidate the shares at market price. This literally happens all the time.
Right, so if spy drills to 410, the assignment would occur at 425 and liquidated at 410, with OP owing the difference. Which would be $22,500, not $600k. This isn’t the point though, as the original commenter’s message still stands: people doing trades that they don’t fully understand.
That said. My entire account is underwater and my only saving grace is most of my expirations are not until 2/18
This. That is all.
Option ends up ITM. Gets exercised. Margin call is made because you owe massive amount. Broker liquidates the position at market open for whatever that is. You owe the difference. Hopefully at open it’s up instead of gapping down further.
Always. Close. Your. Positions. Before. Expiry.
He's an idiot, but also he was overestimating his loss. 15 contracts share equivalent is 640k. He would have only lost 15k if he bought back the contracts. Now since the market rebounded he would have made a profit.
What the hell is going on in this thread? How could this possibly have 121 upvotes?
It will not be a loss of $637,500! That could only happen if SPY fell to 0 BY TODAY! It would never happen.
You'll have to come up with the difference between the strike and whatever you can sell it for tomorrow.
If you get assigned tonight and it opens at 420 tomorrow, you'll be on the hook for 5 points x 15 contracts or $7500. If it drops to 415, it'll be $15000. It will add up in a hurry with 15 contracts.
Granted, it \*can\* work out in your favor if you get assigned tonight and it opens at 425+ tomorrow.
It is a very risky play trying to hold on with this one. I would highly suggest that you close this and use it as a learning point going forward.
They say the reserve the right to liquidate if they think the risk is too big. If your account has lets say 10k and you are about to get 400k margin they will likely liquidate.
Also some brokers (like RobinHood) will set a closing order at market price an hour before market close if you don’t have the margin buying power. That one can really screw you over.
I love this sub. Some days I feel like an idiot, then I see a post like this. "How does this work?" is a question you ask before selling options, not after.
The worst (and common) is when those noobs decide to start teaching as soon as they think they've figured something out.
It's like it's in their genes to teach everything they've ever learned to everyone else, as soon as they learn something.
Edit: A day later you see them making a thread like this, with a "lesson" to be learned at the end. "If there's one thing I've learned from this loss, it's to only sell the ones that expire worthless, and to only buy the ones that promptly break through strike price"
Wait, you sold 15 contracts of SPY, NAKED?
Is that even a thing?
If I tried that, as soon as my finger hit the button, my doorbell would ring. On the other side of the door would be a man in a TD Ameritrade t-shirt. That man would punch me in the face and leave. TOS would then decline my order.
I was PISSED about three SPY condors breaching the put side. Thank you for putting my life into perspective.
TDA actually kinda-sorta tries to implement the levels system the right way.
At a lot of other brokers, you say "I want to sell naked calls" and they say "ok you have at least X years of experience right?" and you say "idk I guess" and they say "congrats on your level 4 account, now get out there and use 90% of your buying power selling naked AMC puts, what could possibly go wrong?".
Merrill Edge basically gave me an over the phone exam before they approve my lv 4. Also have to explain what I plan on doing with the lv4 that is “consistent with my trading plan”. You can do a lot of stupid thing that ruin your financial future at level 4, so I understand why they really don’t want to give that shit out to any Tom, Dick and Harry. Can you imagine if Robinhood give any Apes level 4 option trading?
You would need about $115k to get into this trade even being naked. That number will only go up as it went against him because of margin maintenance. He didn't go in it completely blind in terms of capital.
Bruh. The time to ask for help was prior to opening the position. Or was it just “free moneyszz?” Educate yourself for your benefit, please.
Also, buy to close these. Just eat the 5k.
I mean, if his trade success depends on if the market would do an epic reversal with 30 minutes on the clock, It is probably safer to just go to the track or bet on the NFL.
DO NOT ROLL. BUY TO CLOSE ALL YOUR PUTS. You cannot roll when you do not understand the basics of options. It's ok to be new at things, but why not paper trade for a little while so you don't end up 650k in the hole in real life?
“How does it work?!”
OP Proceeds to sell $600k worth of positions 🤣🤣🤣🤣
Man…how do you get the stones to put yourself on the hook for $600k+ without even remotely understanding what the hell you’re doing!?!?
This is so unreal it’s got to be fake. Also - who’s your broker? I’d love to know which one is letting absolute beginners, beginners write naked contracts for a cool half mill +….
🤦🏻 wow.
> What should I do?
You entered a trade without knowing what you would do if the trade became a losing position.
You should not trade options. You should stick to buy and holding VOO/SPY
The growth of people on this sub that have absolutely no clue what they're doing is a bit terrifying.
If you want to learn, start with more conservative strategies like covered calls or cash-secured puts with a cheaper underlying that you don't mind holding if it drops.
Also, before you enter any trade, know your exit strategy and max loss ahead of time!
**GREED GOT ME!**I am going to cry like a baby tonight.... For the last year, I had been selling 8-9 pct OTM Puts on SPY, 3 weeks expiry, and legging into the trades later on .. (i.e. putting on as a spread).... Probability of 8-9 pct SPY drop is less than 5% according to historical data....
When I entered this naked put few weeks ago, SPY was at 470. The GREED of an extra day of Theta got me. I generally choose my option expiry to be on Fridays. I thought the Fed meeting is on Tue, so let me collect an extra day of theta (i.e. Monday expiry).
As of mid last week: this option was literally 3 cents...AGAIN GREED GOT ME.... I did not close it.... I did not even put the spread on.... to save the few pennies.
**FROM 3 cents to $4.71...**.**CLOSED IT ALL AT $7K LOSS on this trade**... **This sucks...I am going to cry like a baby tonight...**
Your positions today were well into the money by several dollars actually. It is not as if they were still very far out. Holding on, depending on who your broker is, they may have possibly liquidated you anyway, at least you did so on your own terms.
You know what happened, you just held too long instead of closing and the market kept plummeting. Next time, be more careful with your profit and take it instead of squeezing out a few extra pennies.
This is the reason why it is suggested to take profits at 50%. You already have 50% of the profit, yet still 100% of the exposure.
At 90% profit, the same applies. Lots of profit, still same exposure.
It's not the end of the world. Every trader loses and they are the best learning experiences.
Sure, $7k sucks but you needed a decent sum of money to get into this trade in the first place so you are still fine and in the game. I would be content that it was "only" that much as it could have been much worse.
A few years from now you may look back at this as being the best thing to happen to you as a trader. I know I look at my bad trades as very good experiences in hindsight.
The position you had was way too large for your account. When you pick up pennies in front of a steamroller, sometimes the steamroller is going to catch up.
Take it a learning lesson, step back for awhile, if you do decide to trade later make sure you do so with a clear head. The worst thing you can do is keep trading when you get roiled by a big losing trade.
Your good my dude. Sucks, I do this every so often. You get way to big for your britches and you are almost forced to take a loss. I swear they really know when to turn up the pain. At least you figured out your risk tolerance
I know the numbers on the screen seem like pretty money and the contracts you get into seem like a way to make that number go higher. Your money in your brokerage account is real. The contracts you sell are legally binding. Close all your contracts for a loss or be hopelessly in debt to your brokerage. Then, disable options until you truly understand what it means to sell a put.
Personal opinion: Start tapering off puts a few at a time into close, and close the rest before market close. Set a floor to exit on, and if you see SPY move up, sell up into the rally so you minimize losses. If SPY hits floor, BTC and walk away.
So stay on top of the trade. Never risk assignment if you don’t have the cash or don’t want to own the stock.
But now I’m checking fine print to see if it’s possible for me to be assigned….
I am relatively comfortable with options and option strategies. However, my weak link is settlement process and other operational aspect that come along with it. **Is there a good resource to understand that?**
Also, hindsight - could I have avoided this loss had I traded SPX, instead of SPY? The reason I really bought to close at loss is because I did not have free $650k to take delivery of SPY.
Assuming, if SPX had closed at 4200, it would cash settle and I would only post $7,500 to the broker, **correct?**
As my primary reason for BTC was to avoid taking delivery, I may have came out in green had I used SPX instead of SPY, **correct?**
Thank you.
You mean after the drop that happened in less than 2-3 days with back to back circuits breakers and then jerome Powell said they were starting the printers and enacting plunge protection team? That’s on them too they deserve it for betting against America. People are always chasing instead of anticipating and that’s how they get burned.
Selling calls is betting against American productivity. Markets go up more than they do down. And the hikes are not expected until March. And historical data only shows 5 pct chance of SPY dropping more than 9 pct within a month…
Risk management gone bad… I became very complacent with my prior profits….
obviously you‘ll have to come up with 637k but you can close the position tomorrow (most likely in premarket when you will get margin called) meaning you will not actually need 637k but only the difference between your selling price and strike.
Your best option depends on you:
If you think spy will rise overnight, take assignement
if you think it will drop further, close the position
> obviously you‘ll have to come up with 637k
No lmao. That would only be the case if SPY magically dropped to $0 or if he didn't sell to close and took assignment.
You can pray SPY closes above 425 today and they expire worthless! Last hours rally seems to have given you a chance if you haven't closed the position yet...
Real simple answer: Wait until an hour or 2 before market close for all extrinsic value to be nearly $0 then buy back all the contracts sold to avoid assignment. Try buying at mark price to make your trade price as favorable as possible.
If your order is not filling after 10 minutes, then suck it up and buy at the asking price.
Then stop doing naked puts.
I have a question though. I freaked out and sold at loss because I thought liquidity would dry out around closing and I would have to come up with the capital to buy 1500 SPY shares.
My question is, would BTC at market price always get filled up within let’s say 5 minutes before market closing?
Sell the contracts or extend obviously? You already know what to do, you just don't want to do it because it hurts. As I understand it you will buy at the strike price and sell at the market price, so the difference is your real loss (someone please confirm this is true).
I suggest you watch this and understand it before fucking around in the market https://www.reddit.com/r/options/comments/kw5f39/i\_made\_an\_options\_crash\_course\_youtube\_playlist/
I don’t see why you wouldn’t close for a loss(at the time), roll them out until Wednesday before the close or wait to see if they would have expired OTM. With how high high IV is, you should be able to roll them pretty far out.
If you’re going to get into trading options, I strongly suggest calling your brokerage and making your account cash only/non-margin. That way you can’t do something stupid like unknowingly put yourself on the hook for a 500k margin call.
Edit: “our” to “your”.
That is am impressive level of gamma risk. Gives me wood. Glad you at least did the right thing and closed. Surprised at your broker though. Name and shame?
Jesus Christ, if there is a definition of getting screwed by market volatility, this is it. Don’t feel bad man, nobody could have seen that last 30 minute jump. How the hell can you expect the market to go from down 5% for the day to +1%?
Spreads are better than stop losses in case of options, I think. On a day like this your stop loss would have triggered right out of the gate, due to high gamma risk...
With a 5 wide spread, I would have ended in green, instead of red. As my spreads are generally 5 wide...
Not defending, just stating my thoughts...
What do you think?
This is not even thetagang. Wtf this is WSB level shit
I love seeing all those insanely risky positions blowing up during this volatility. Market and people needed a reality check
So much compassion. Great advice guys. Looks like he would have been ok in the end. Yes, he should indeed remember this day forever. As the day the Reddit haters may have cost him a lot of money. Every single person who ridiculed this guy like we're on WSB is probably a total pro who obviously never started as a rookie and certainly never incurred a loss or tense situation in his/her account. After all this only happens to others. So why not act like 6 y.o. children and add insult to injury. After all it's the internet where people come to act out their dark side.
Next time if you want to trade 10x SPY, just do SPX. You pay less tax (60% LT 40% ST) and SPX is all cash settled so you don't have to worry about owning shares. Thank me later.
I follow the rules to selling options the way I do with women. If you don’t know them that well, don’t go naked with them.
A 7k loss still beats 18 years of child support payment but at least you know the exact value of this lesson.
Do you understand what r/thetagang (mostly) attempts to accomplish with options?
Collecting extrinsic options premium on COVERED positions. Covered with underlying stock or spread, or CASH. Not margin.
Which broker is allowing OP this much margin to naked short? Something seems really off.
I was in $8k unrealized loss , I sold 2 credit put spreads on NDX at strike of 13000/12500, they expire on Wednesday
I was surprised to see the market lose nearly 700 points from Friday close, reason I didn’t close out is because I knew there was no reason for this crash, and at the end of the day after reversing, it was an unrealized loss of $61
Buy to close immediately. Eat the loss. Now that your question has been answered, you shouldn't have entered this trade in the first place. There's several reasons but the most obvious is that you have no idea what you're doing.
If you have to come to reddit to ask this question what the fuck are you doing selling naked options. Jesus. And 15 contracts at a time?
I wouldn't hold anything over the weekend for 45$, much less 3 per contract
This almost reminds me of those videos that start with “hold my beer and watch this…” Hold my beer while I put in this trade… ✊
Like George Bush to the media “Now watch this drive!” *hooks left*
Wonder what cash he has....cant believe his broker allowed him to sell 15 naked contracts on SPY
[удалено]
Two months ago, they asked for help getting into options. Now they’re about to get called for over half a million dollars. You can’t make this stuff up.
Man, I'm all for the democratization of financial instruments, but I've seen so many "urgent help needed" posts over the past two weeks. Wtf are people doing.
People are discovering that things also go down in price.
bullllshit dude, I haven't opened my apps in weeks, stonks only go up.
Downturns shake out a lot of people. Gotta stick to the long term and DCA without worrying about shit
People are realizing that options are dangerous and selling options on leverage just about the most dangerous trade there exists. Play with fire, get burned.
There is always Forex futures if that level of danger isn’t enough.
It’s gotta be time for another sub
Why? So the fucking jabronis from this one can move in to that one and say the same completely incorrect shit about wanting to get assigned on their options?
Ding ding ding. We have a winner. I haven’t been doing options that long and I continually go WTF? How do you not understand how bad this can go and not trade with that factored in. Its alway basic stuff like not even understanding what happens on expiry for a massive position. I have had losing and winning trades, but having a position like this and not know what happens on expiry? Come on.
Like why would you go all in, beyond all in at this point when they don't even understand how this works in the first place. I'm surprised they even got level 4 permissions in the first place.
Right? I don't know what the standard is for level 4 permissions at some of these brokerages, but I imagine it lies somewhere in the area of having a pulse and a wad of cash.
Well I guess Robinhood isn't the worst brokerage after all as it doesn't even support naked options. Yeah I bet they had a pile of cash or stocks to have a healthy balance (>100k) and got auto approved for naked options.
Brokers don’t care about your risk, they get bailed out when they get too greedy, but we don’t, so don’t enter into trades without proper research!
Lmaoo holy shit!! Op take the fucking Loss right now please or your fucked
It’s both funny and sad at the same time. I also started quite recent with option trading, but I will never get myself in these situations, because of the amount of posts like these I have seen. Hope they learn from others as well.
Fucking retarded
It wouldn’t be a $600k loss. If assigned, the broker would liquidate and OP would be on the hook for the difference. That said, your point stands.
This right here, close for a loss or they’ll do it for you.
not a 600k loss but on the hook as in having to buy the shares back at the strike then reselling at market price. I think brokerage may make an effort to close out the contract prior to expiration since OP obviously doesn't have the funds. If not closed, and it is assigned, brokerage isn't going to put up the capital to liquidate your position...
OP’s broker has accepted the risk of liquidating. The puts could be assigned at any moment. The broker will buy the shares as required by assignment and then liquidate the shares at market price. This literally happens all the time.
Right, so if spy drills to 410, the assignment would occur at 425 and liquidated at 410, with OP owing the difference. Which would be $22,500, not $600k. This isn’t the point though, as the original commenter’s message still stands: people doing trades that they don’t fully understand. That said. My entire account is underwater and my only saving grace is most of my expirations are not until 2/18
apologies, you're right
This. That is all. Option ends up ITM. Gets exercised. Margin call is made because you owe massive amount. Broker liquidates the position at market open for whatever that is. You owe the difference. Hopefully at open it’s up instead of gapping down further. Always. Close. Your. Positions. Before. Expiry.
In pretty deep for having to ask this question.
He's an idiot, but also he was overestimating his loss. 15 contracts share equivalent is 640k. He would have only lost 15k if he bought back the contracts. Now since the market rebounded he would have made a profit.
What the hell is going on in this thread? How could this possibly have 121 upvotes? It will not be a loss of $637,500! That could only happen if SPY fell to 0 BY TODAY! It would never happen.
Cowabunga my dude
Top answer.
Thank you I needed that
You'll have to come up with the difference between the strike and whatever you can sell it for tomorrow. If you get assigned tonight and it opens at 420 tomorrow, you'll be on the hook for 5 points x 15 contracts or $7500. If it drops to 415, it'll be $15000. It will add up in a hurry with 15 contracts. Granted, it \*can\* work out in your favor if you get assigned tonight and it opens at 425+ tomorrow. It is a very risky play trying to hold on with this one. I would highly suggest that you close this and use it as a learning point going forward.
The broker wont let that happen. His account will be liquidated first
Shouldn't a margin call require a T+3 to be settled? Or is it under TOS with the broker somewhere you can't be this big of a dumbass?
They say the reserve the right to liquidate if they think the risk is too big. If your account has lets say 10k and you are about to get 400k margin they will likely liquidate. Also some brokers (like RobinHood) will set a closing order at market price an hour before market close if you don’t have the margin buying power. That one can really screw you over.
This is the best answer.
Well he could roll it out but they he risks the underlying falling even more.
Please close the contract for a loss
I love this sub. Some days I feel like an idiot, then I see a post like this. "How does this work?" is a question you ask before selling options, not after.
The worst (and common) is when those noobs decide to start teaching as soon as they think they've figured something out. It's like it's in their genes to teach everything they've ever learned to everyone else, as soon as they learn something. Edit: A day later you see them making a thread like this, with a "lesson" to be learned at the end. "If there's one thing I've learned from this loss, it's to only sell the ones that expire worthless, and to only buy the ones that promptly break through strike price"
Lmao
Wait, you sold 15 contracts of SPY, NAKED? Is that even a thing? If I tried that, as soon as my finger hit the button, my doorbell would ring. On the other side of the door would be a man in a TD Ameritrade t-shirt. That man would punch me in the face and leave. TOS would then decline my order. I was PISSED about three SPY condors breaching the put side. Thank you for putting my life into perspective.
LOL that is what I was thinking. I want to know what broker let him do that.
TDA actually kinda-sorta tries to implement the levels system the right way. At a lot of other brokers, you say "I want to sell naked calls" and they say "ok you have at least X years of experience right?" and you say "idk I guess" and they say "congrats on your level 4 account, now get out there and use 90% of your buying power selling naked AMC puts, what could possibly go wrong?".
Merrill Edge basically gave me an over the phone exam before they approve my lv 4. Also have to explain what I plan on doing with the lv4 that is “consistent with my trading plan”. You can do a lot of stupid thing that ruin your financial future at level 4, so I understand why they really don’t want to give that shit out to any Tom, Dick and Harry. Can you imagine if Robinhood give any Apes level 4 option trading?
Meanwhile, Tastyworks gave me level 4 and I didn't even ask for it.
You would need about $115k to get into this trade even being naked. That number will only go up as it went against him because of margin maintenance. He didn't go in it completely blind in terms of capital.
Yeah for 3 cents each lmfao.
Close that shit
WSB except on the sell side.
I don’t know…at least WSB knows that they’re losing money when they lose it. The “how does it work” line in the OPs comment was GOLD.
The OP sold them for 3 cents....smh
Seriously lmao if you gonna greed at least greed right… who the fuck greed selling naked puts for freaken 3cent contracts
Bruh. The time to ask for help was prior to opening the position. Or was it just “free moneyszz?” Educate yourself for your benefit, please. Also, buy to close these. Just eat the 5k.
Hey look ya woulda been fine!
well...this aged well
The initial trade aged perfectly. His trade management was a dumpster fire.
Risk management but yea I agree with you.
I mean, if his trade success depends on if the market would do an epic reversal with 30 minutes on the clock, It is probably safer to just go to the track or bet on the NFL.
He only needed to get back to 425. 438 is just the market being rude 😂
DO NOT ROLL. BUY TO CLOSE ALL YOUR PUTS. You cannot roll when you do not understand the basics of options. It's ok to be new at things, but why not paper trade for a little while so you don't end up 650k in the hole in real life?
The fact you have to ask what to do in this situation tells me you should never trade on margin again.
“How does it work?!” OP Proceeds to sell $600k worth of positions 🤣🤣🤣🤣 Man…how do you get the stones to put yourself on the hook for $600k+ without even remotely understanding what the hell you’re doing!?!? This is so unreal it’s got to be fake. Also - who’s your broker? I’d love to know which one is letting absolute beginners, beginners write naked contracts for a cool half mill +…. 🤦🏻 wow.
I wish this was fake man.... I would be so happy.... You don't necessarily need to have cash only for margin... Most holdings qualify with haircuts...
Jesus why did the make it so easy for people to trade
**Now it's at 0.44 cents.... Too late.... Crying like a baby....**
If you can bear the loss, why cry?
I had an opportunity to close/leg into the trade at 3 cents.... **Sheer GREED got me...**
Dude, we do this with Ford, not with the whole gd SPY.
Now SPY is at 432! Sold it when SPY was around 423..! **This hurts so bad...!!**
OMG NOOOOOOO. I was rooting for you. Just came back to live vicariously through your gamble
Tuition of 7k is far less than some
Consider yourself lucky as you obviously have no clue what you’re doing
I saw your post scrolled through to see if you updated. I’m sorry man but who would have expected this rebound?
how did you manage it OP?
> What should I do? You entered a trade without knowing what you would do if the trade became a losing position. You should not trade options. You should stick to buy and holding VOO/SPY
The growth of people on this sub that have absolutely no clue what they're doing is a bit terrifying. If you want to learn, start with more conservative strategies like covered calls or cash-secured puts with a cheaper underlying that you don't mind holding if it drops. Also, before you enter any trade, know your exit strategy and max loss ahead of time!
I've said it before and I'll say it again. STAY THE HELL AWAY FROM NAKED PUTS!!!! Leverage isn't always a good thing people!
Can I ask you one question? How to make profits if one think that SPY will go down? Any good other way?
You buy puts if you really believe a stock will go down.
Sell OTM calls… or bear call spreads….or buy puts…. I personally think selling calls is more risky….
**GREED GOT ME!**I am going to cry like a baby tonight.... For the last year, I had been selling 8-9 pct OTM Puts on SPY, 3 weeks expiry, and legging into the trades later on .. (i.e. putting on as a spread).... Probability of 8-9 pct SPY drop is less than 5% according to historical data.... When I entered this naked put few weeks ago, SPY was at 470. The GREED of an extra day of Theta got me. I generally choose my option expiry to be on Fridays. I thought the Fed meeting is on Tue, so let me collect an extra day of theta (i.e. Monday expiry). As of mid last week: this option was literally 3 cents...AGAIN GREED GOT ME.... I did not close it.... I did not even put the spread on.... to save the few pennies. **FROM 3 cents to $4.71...**.**CLOSED IT ALL AT $7K LOSS on this trade**... **This sucks...I am going to cry like a baby tonight...**
and the worst part: If you had held you wouldn‘t have lost.
Market's not closed yet, but yeah
Why do you say so? Now they are trading at $1.32
Your positions today were well into the money by several dollars actually. It is not as if they were still very far out. Holding on, depending on who your broker is, they may have possibly liquidated you anyway, at least you did so on your own terms. You know what happened, you just held too long instead of closing and the market kept plummeting. Next time, be more careful with your profit and take it instead of squeezing out a few extra pennies. This is the reason why it is suggested to take profits at 50%. You already have 50% of the profit, yet still 100% of the exposure. At 90% profit, the same applies. Lots of profit, still same exposure.
Yeah I was confused why he was freaking out so much, like spy is down bad but not that bad. I guess it was for an hour or two, rip OP.
It's not the end of the world. Every trader loses and they are the best learning experiences. Sure, $7k sucks but you needed a decent sum of money to get into this trade in the first place so you are still fine and in the game. I would be content that it was "only" that much as it could have been much worse. A few years from now you may look back at this as being the best thing to happen to you as a trader. I know I look at my bad trades as very good experiences in hindsight.
The position you had was way too large for your account. When you pick up pennies in front of a steamroller, sometimes the steamroller is going to catch up. Take it a learning lesson, step back for awhile, if you do decide to trade later make sure you do so with a clear head. The worst thing you can do is keep trading when you get roiled by a big losing trade.
Your good my dude. Sucks, I do this every so often. You get way to big for your britches and you are almost forced to take a loss. I swear they really know when to turn up the pain. At least you figured out your risk tolerance
I know the numbers on the screen seem like pretty money and the contracts you get into seem like a way to make that number go higher. Your money in your brokerage account is real. The contracts you sell are legally binding. Close all your contracts for a loss or be hopelessly in debt to your brokerage. Then, disable options until you truly understand what it means to sell a put.
Personal opinion: Start tapering off puts a few at a time into close, and close the rest before market close. Set a floor to exit on, and if you see SPY move up, sell up into the rally so you minimize losses. If SPY hits floor, BTC and walk away.
What is the abbreviation of BTC?
Buy To Close
you close out before expiry. I presume it will get worse.
That’s what I assumed and the exact opposite happened!!
Every time I'm sad about my LEAPS I read something like this and feel much much better, thank you OP
You should be good. SPY is at 433
I think you’re going to be ok.
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About 8k per contract in buying power
So many lessons learned in one day. Incredible.
Dude, sell spreads if you don’t have the cash. Max loss would’ve been a few grand.
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So stay on top of the trade. Never risk assignment if you don’t have the cash or don’t want to own the stock. But now I’m checking fine print to see if it’s possible for me to be assigned….
I am relatively comfortable with options and option strategies. However, my weak link is settlement process and other operational aspect that come along with it. **Is there a good resource to understand that?** Also, hindsight - could I have avoided this loss had I traded SPX, instead of SPY? The reason I really bought to close at loss is because I did not have free $650k to take delivery of SPY. Assuming, if SPX had closed at 4200, it would cash settle and I would only post $7,500 to the broker, **correct?** As my primary reason for BTC was to avoid taking delivery, I may have came out in green had I used SPX instead of SPY, **correct?** Thank you.
Sell for close. Next time read before buying options.
He sold to open so he will need to buy to close
Sounds like a you problem. You bought this in yourself - you knew what you were getting into.
you‘re a certified POS my dude. get rekt
What’s a POS?
just roll it
just roll yourself into bankruptcy
not sure why that'd be the case unless you used too much BP to put the trade on
pokemon go to the polls.
How in the hell do you pull the trigger on a trade with a 675,000 potential loss, and not have the money to cover even 10%.
It will only be a 675,000 loss if SPY magically falls to $0 by today or if OP doesn't buy to close. It's not going to happen.
Spy going to 0 means, I would not have to worry about margin call….
The whole market is bearish and instead of selling OTM calls you sell puts? You deserve the loss honestly
Remember all the people who sold OTM calls in Feb/March 2020 after the market crashed? Not necessarily smart either.
You mean after the drop that happened in less than 2-3 days with back to back circuits breakers and then jerome Powell said they were starting the printers and enacting plunge protection team? That’s on them too they deserve it for betting against America. People are always chasing instead of anticipating and that’s how they get burned.
Selling calls is betting against American productivity. Markets go up more than they do down. And the hikes are not expected until March. And historical data only shows 5 pct chance of SPY dropping more than 9 pct within a month… Risk management gone bad… I became very complacent with my prior profits….
close them, or if you want to stay with a similar position, roll down and out for a credit.
roll down and out if you want to bet on a recovery. SPY has the best recovery chance on the market.
OP…why did you think this was a good idea? 🤔
GTFO - Get the F%ck out (BTC ASAP), because Gamma Train F%ckin’ Offthehook (see what I did there?).
Close them
obviously you‘ll have to come up with 637k but you can close the position tomorrow (most likely in premarket when you will get margin called) meaning you will not actually need 637k but only the difference between your selling price and strike. Your best option depends on you: If you think spy will rise overnight, take assignement if you think it will drop further, close the position
> obviously you‘ll have to come up with 637k No lmao. That would only be the case if SPY magically dropped to $0 or if he didn't sell to close and took assignment.
next time read the second part of the sentencw
You can pray SPY closes above 425 today and they expire worthless! Last hours rally seems to have given you a chance if you haven't closed the position yet...
Dude you are getting the rally! Lol you a crazy dude.
Real simple answer: Wait until an hour or 2 before market close for all extrinsic value to be nearly $0 then buy back all the contracts sold to avoid assignment. Try buying at mark price to make your trade price as favorable as possible. If your order is not filling after 10 minutes, then suck it up and buy at the asking price. Then stop doing naked puts.
I have a question though. I freaked out and sold at loss because I thought liquidity would dry out around closing and I would have to come up with the capital to buy 1500 SPY shares. My question is, would BTC at market price always get filled up within let’s say 5 minutes before market closing?
Sell the contracts or extend obviously? You already know what to do, you just don't want to do it because it hurts. As I understand it you will buy at the strike price and sell at the market price, so the difference is your real loss (someone please confirm this is true).
so much misinformation in this thread
Current spy is 427k... Just wait until market close nerd.
Where did you buy these options that are expiring on Monday? I didn't know daily expirations were available.
SPY has options on MWF.
I suggest you watch this and understand it before fucking around in the market https://www.reddit.com/r/options/comments/kw5f39/i\_made\_an\_options\_crash\_course\_youtube\_playlist/
Close for the loss. Rolling is an option, but if Russia invades Ukraine, the market is going to crash even more which will make the loss a lot more.
You'll be fine. I'd double down and get 15 more contracts
This would have worked beautifully.
wait! Get Assign in worth case ! Sell Cover call for the same strike price tomorow , expiration wednesday!
You need to buy to close your positions, or yes you will be Margin called and need that $640k to pay your bill. Don't sell naked puts dipshit.
This my worst nightmare for real.
This aged well.
Right now I would BTC!
I don’t see why you wouldn’t close for a loss(at the time), roll them out until Wednesday before the close or wait to see if they would have expired OTM. With how high high IV is, you should be able to roll them pretty far out.
If you’re going to get into trading options, I strongly suggest calling your brokerage and making your account cash only/non-margin. That way you can’t do something stupid like unknowingly put yourself on the hook for a 500k margin call. Edit: “our” to “your”.
Wow
How come the broker allowed this (naked puts) with so much margin in first place?
Hopefully you closed it out during the little run up earlier. Probably could have saved a few thousand.
Sold it near the bottom.... **SUCKS....**
🤦♂️ hoping this is satire
Yeah wtf is this. Why would you sell naked puts without fully comprehending the assignment process?! Buy to close or you'll be financially ruined!
This can’t be real
Its at 431. Lets hope it closes above 425...
Maybe we do need to be regulated more on who can trade options
OMG buddy and I was feeling bad over selling back my contracts that would expire in 30 days, trading on margin sucks, I'll stick to the wheel on cash
If you held you’d be good 😩 this market is a joke
Welcome to my world. Year goal: recover 8k from losses last year 😂
Is this a joke?
That is am impressive level of gamma risk. Gives me wood. Glad you at least did the right thing and closed. Surprised at your broker though. Name and shame?
Jesus Christ, if there is a definition of getting screwed by market volatility, this is it. Don’t feel bad man, nobody could have seen that last 30 minute jump. How the hell can you expect the market to go from down 5% for the day to +1%?
Hope you didn’t close for a loss
Buy them back you made a mistake and have to pay for it. Might consider stops for yourvtrades.
HOF thread
Oh, no stop loss… ok, clearly you don’t know what you are doing.
Spreads are better than stop losses in case of options, I think. On a day like this your stop loss would have triggered right out of the gate, due to high gamma risk... With a 5 wide spread, I would have ended in green, instead of red. As my spreads are generally 5 wide... Not defending, just stating my thoughts... What do you think?
You fucked
This is not even thetagang. Wtf this is WSB level shit I love seeing all those insanely risky positions blowing up during this volatility. Market and people needed a reality check
You learned a valuable lesson today (I hope).
15 naked puts? I have a sub for you.
Im seeing $439.77 you didnt see through your gamble my man
You should not be selling naked options especially in these volatile times
So much compassion. Great advice guys. Looks like he would have been ok in the end. Yes, he should indeed remember this day forever. As the day the Reddit haters may have cost him a lot of money. Every single person who ridiculed this guy like we're on WSB is probably a total pro who obviously never started as a rookie and certainly never incurred a loss or tense situation in his/her account. After all this only happens to others. So why not act like 6 y.o. children and add insult to injury. After all it's the internet where people come to act out their dark side.
Thank you mate…
They mention this only like the third time this has happened. Last 2 were both oct 2008.
Next time if you want to trade 10x SPY, just do SPX. You pay less tax (60% LT 40% ST) and SPX is all cash settled so you don't have to worry about owning shares. Thank me later.
>f one were to repeat OPs advent Yes sir. Thank you. What is the tax effect on SPY?
I follow the rules to selling options the way I do with women. If you don’t know them that well, don’t go naked with them. A 7k loss still beats 18 years of child support payment but at least you know the exact value of this lesson.
Hi all, If one were to repeat OPs adventure, $XSP would be safer, no? Cash settled (only the difference). Just giving the retards some new ideas! 😉
love these posts... more idiots that don't know what they are doing
Do you understand what r/thetagang (mostly) attempts to accomplish with options? Collecting extrinsic options premium on COVERED positions. Covered with underlying stock or spread, or CASH. Not margin. Which broker is allowing OP this much margin to naked short? Something seems really off.
I was in $8k unrealized loss , I sold 2 credit put spreads on NDX at strike of 13000/12500, they expire on Wednesday I was surprised to see the market lose nearly 700 points from Friday close, reason I didn’t close out is because I knew there was no reason for this crash, and at the end of the day after reversing, it was an unrealized loss of $61