Do you have any kind of forum or blog besides posting on these pages where we can chat among us? Any thoughts on SFM taking a huge dump today? the 100% up from yesterday is all gone. :0(
I might be able to create a forum here; let me see what capabilities Substack has for that.
Re the ~3% drop in SFM so far today: I don't have any thoughts on why it happened, but I'll share a thought from David Janello to me yesterday: the correct price to exit is anything above what you paid, and it's best to take profits sooner rather than later. Since this spread is still in the money, we should consider taking profits now. An exit at $0.80, for example, is still a ~78% gain. Not bad for a two-day trade.
The next earnings are the catalysts for all three. WING releases earnings tomorrow, and our spread is a bet on a positive surprise. So I’m obviously going to hold it until then and see what happens.
Sorry, my mistake: WING released earnings today, and had a big earnings beat. Stock closed up 9.35%. If those gains hold tomorrow, we should be able to exit our spreads with nice gains.
With spreads you typically close both "legs" at the same time, so you would 'buy to close' the short 36 call and 'sell to close' the long 35 call for (currently) a net credit. Try one contract pair to get a feel for it in case you mess something up. If you have a paper trading account it might be helpful to practice there too. FYI. I sold a portion of this spread earlier today for $0.80/contract. It will take a lot of time to get to $0.95 and there is still a lot of time to expiration.
Big, you need to look at these together. Based on your numbers above you opened the position at $0.466/contract pair. You should be able to exit (currently) ~$0.75-0.80/pair for a potential profit of ~$0.30-$0.35/pair. If you could sell all 8 at $0.80, you would have a profit of ~$0.334/contract or ~$267 or ~70% in one day!!
Your current values above are skewed because the bid/ask spread of each contract is about $0.30 wide. Your numbers are likely based on selling the bid price (lowest) and buying the ask price (highest), the worst result possible!! Typically you can use the average between these, or 'mid' price (on most platforms) to approximate the value. Remember it's an auction and the only "real" price is the bid and the ask.
Thank you for the idea, so trying to do it with 1 of the 8. Is there any way to do the buy & close in one step like when I purchased or 1 @ a time. When I try to sell the 35 I get this error from Fidelity
(354014) Your order will leave your account with an option position that exceeds your option level. Please review your order.
Why do spreads open and close so weird on robinhood? I had an order placed to close SFM spread at $0.95 and I saw the price go way above it but it still hasn't closed yet?
Not sure about Robinhood, but currently I'm seeing a midpoint of $0.88 at Fidelity. Looks like we may have to wait a bit if we want to hold out for >100% gains. Exiting at $0.88 would give a gain of 95% if you got in at the same net debit I did ($0.45).
When we entered this trade, we entered it with a net debit (meaning we paid for it, on net) so when we exit, we want to do so for a net credit (meaning we get money back). So, net credit on the way out of net debit spreads.
Do you have any kind of forum or blog besides posting on these pages where we can chat among us? Any thoughts on SFM taking a huge dump today? the 100% up from yesterday is all gone. :0(
I might be able to create a forum here; let me see what capabilities Substack has for that.
Re the ~3% drop in SFM so far today: I don't have any thoughts on why it happened, but I'll share a thought from David Janello to me yesterday: the correct price to exit is anything above what you paid, and it's best to take profits sooner rather than later. Since this spread is still in the money, we should consider taking profits now. An exit at $0.80, for example, is still a ~78% gain. Not bad for a two-day trade.
Good advice, better to make some than lose! What are your thoughts on the other 3 open spreads, FULT, NIO & WING?
The next earnings are the catalysts for all three. WING releases earnings tomorrow, and our spread is a bet on a positive surprise. So I’m obviously going to hold it until then and see what happens.
Sorry, my mistake: WING released earnings today, and had a big earnings beat. Stock closed up 9.35%. If those gains hold tomorrow, we should be able to exit our spreads with nice gains.
I started a chat here for subscribers: https://substack.com/profile/118966504-portfolio-armor/note/c-15563237?utm_source=notes-share-action
Yes I do & its a Roth
Hi David, can you help with selling the SFM, as I am up nice.
35 Call up 138.29% gain to $2,720.20 on $1,143.43 cost basis
36 Call down -211.47 loss to -$2400 on $770.56 cost basis
This is my first spread. When I sell the 35, would I then buy to close? I am buying the shares at the lower price, correct? Thanks for help here.
Hi Big,
With spreads you typically close both "legs" at the same time, so you would 'buy to close' the short 36 call and 'sell to close' the long 35 call for (currently) a net credit. Try one contract pair to get a feel for it in case you mess something up. If you have a paper trading account it might be helpful to practice there too. FYI. I sold a portion of this spread earlier today for $0.80/contract. It will take a lot of time to get to $0.95 and there is still a lot of time to expiration.
Yeah, it looks like I might have to wait until Orthodox Christmas morning to get the ~115% gain here.
Really appreciate your help Glenn, on this I get this
Sell to close 35 I have 8x Value is $2314.80 with a $1176 profit
Buy to close 36 I have 8x value is $1956.20 with a -$1192 loss
So that is about break even?
Big, you need to look at these together. Based on your numbers above you opened the position at $0.466/contract pair. You should be able to exit (currently) ~$0.75-0.80/pair for a potential profit of ~$0.30-$0.35/pair. If you could sell all 8 at $0.80, you would have a profit of ~$0.334/contract or ~$267 or ~70% in one day!!
Your current values above are skewed because the bid/ask spread of each contract is about $0.30 wide. Your numbers are likely based on selling the bid price (lowest) and buying the ask price (highest), the worst result possible!! Typically you can use the average between these, or 'mid' price (on most platforms) to approximate the value. Remember it's an auction and the only "real" price is the bid and the ask.
Hope this helps.
Thank you for the idea, so trying to do it with 1 of the 8. Is there any way to do the buy & close in one step like when I purchased or 1 @ a time. When I try to sell the 35 I get this error from Fidelity
(354014) Your order will leave your account with an option position that exceeds your option level. Please review your order.
or do I buy to close the 36 1st?
Why do spreads open and close so weird on robinhood? I had an order placed to close SFM spread at $0.95 and I saw the price go way above it but it still hasn't closed yet?
Not sure about Robinhood, but currently I'm seeing a midpoint of $0.88 at Fidelity. Looks like we may have to wait a bit if we want to hold out for >100% gains. Exiting at $0.88 would give a gain of 95% if you got in at the same net debit I did ($0.45).
HI David, so if I try to get out of the 7x left, midpoint is $0.80 and I would get $550.90 or a $231 profit. Is that correct?
And does it matter on Order Type Net Credit and Trade Type, Cash or Margin?
thank you.
That sounds correct about the profit.
When we entered this trade, we entered it with a net debit (meaning we paid for it, on net) so when we exit, we want to do so for a net credit (meaning we get money back). So, net credit on the way out of net debit spreads.