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Options trading strategies for stacking mining shares and/or yield.

solarion

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This started off as a conversation about dividend yielding stocks, but there were other concepts I had in mind beyond the scope of that conversation. As a result I thought it best to start a new thread to discuss paper trading of options contracts for max profit and/or to generate yield. An important topic at this time, as it seems we're heading into an increasingly inflationary environment. Many are likely to become unable to outrun it and should likely prepare for ways to beat the inflation monster.

An ounce of silver(31.1 grams) currently costs VES 46,283,854.44(Venezuelan Bolivars). ...and that's after a couple currency resets already to lop off zeroes...extend and pretend.

First and foremost, this is not intended as an alternative to PM stacking or other preps. Rather I see this kind of activity is a way(potentially) to do more of the things necessary to defend yourself financially. Inflation really will eat your lunch if you're not ready for high inflation, stagflation, or even hyperinflation. The typical stocks and bonds are not going to cut it...and eventually neither will anything in derivatives...you'll eventually want to convert your fiats into tangibles. No doubt many here have been doing that for some while, but more is generally better right?

It is, imo, an inflection point in equity markets where we are seeing the beginning of a move away from risky overpriced "tech stuff" to more traditional value plays. The bond market is not a fun place after the death of the 40+ year bond bull, so where to go? Well, I believe the way to keep up with what's coming to a debt dollar near you is good old PM miners, streamers, explorers, royalty companies, and PM/commodity related ETFs. That's why this thread is going to focus on strategies to stack these things as deep as possible and possibly combine it with some income generating option strategies on the side.

First a list of some PM related companies I have on a short list to target as soon as I believe the mass migration into PMs is underway in earnest. Please feel free to chime in with other companies, ETFs, etc that you feel belong on the list.

WPM(Wheaton) ; OR(Osisko) ; FNV(Franco-Nevada) ; RGLD(Royal Gold) ; SAND(Sandstorm) ; MMX(Maverix) ; EXK(Endeavor) ; AG(First Majestic) ; SILJ(Silver juniors) ; SIL(Silver miners) ; URNM(Uranium ETF) ; GDX(Gold miners) ; GDXJ(Gold juniors). Those are the some I like off the top of my head. I envision mostly option positions hedged and otherwise, but there may be some stock positions as well. I do not believe MMX, for instance, is option-able.

Nothing in this thread is intended as investment advice. It's merely meant to be a discussion about possible strategies and opportunities. Please do not blame me for any investments you make as a result of anything posted in this thread...your trades are your business. Please, if you don't understand a strategy or aren't comfortable with an investment...then don't do it yourself, consult a professional broker.
 

savvydon

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Options are a world unto themselves. I believe in order to get really good with them you have to trade, trade, trade. I will tell you up front that I am a novice with them. I have an account that is in an IRA. I play there. I would of course like to grow the account, but it is also not money that is waiting to pay off next month's electric bill. So I do take risks. Most of the money in the account is in the miner space. I also have some layered calls in SLV (yes, I know slv is hated - I just use it as an instrument).

In the past I have followed Zed's advice to sell covered calls. This is a nice way to make a buck. Zed has also advised to hedge by buying out of the money puts in instruments you are otherwise long on. I have used both strategies in the past with modest success. I haven't spent too much time working out multi leg option plays because I just don't feel like I have the time and ability to tend to them like I might if I didn't have family and day job obligations. I have organized some laddered slv calls, some as close as three months out, some LEAPS, almost two years out. I believe in silver. I think it's time is coming. I'm willing to bet on it. If I'm wrong I will survive. If I'm right, and we manage to avoid economic armageddon, I might even thrive.
 

solarion

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Yeah, it definitely helps to practice trading with option contracts. There are freebee demo accounts one can sign up for at a number of online brokers. They've bots to simulate counterparties for after hours trades and the whole nine...it's actually pretty slick. I've been trying to train a disciple with a demo account over at interactive brokers. So if anyone wants to try it out without risking a dime of "real" fake funny munny...I highly recommend it.

Sounds like Zed gave you good advice. Selling out of the money calls when you hold the underlying is a great way to generate some extra scratch. Another rather simple but effective way to stack on some extra bank here and there is by selling bull credit spreads. This means selling an out of the money put and then buying a lower strike put with the same expiration. This results in a credit in your account with little risk, provided you don't spread your sell and buy out too much and preferably use consecutive strikes.

If it's an asset you want to stack anyway, you can even consider selling naked out of the money puts. This way if the underlying increases in value over the life of the contract then you pocket the full premium. If however the sold put becomes in the money prior to expiration then you'll be responsible for the purchase price of 100 shares of the underlying. It's kind of a great way to stack shares you want anyway, provided you're patient, at lower prices while being paid to wait.

The thing with options is they're constantly deteriorating...and there is no intrinsic value there...it's strictly extrinsic, unless they're "in the money". Understanding this simple fact is the beginning to get one's head wrapped around how they work as well as getting them to work for you rather than against you. You really really want that insidious time element(theta) to be working for you rather than against you.

Sounds like you already know, but SLV is most likely a pure scam. It's also not keeping up with its peers so far this year and I wouldn't be surprised if it lags further behind going forward. While silver is -4.93% YTD, SLV is -5.21% YTD. On the other hand the far more trustworthy physical silver ETF, PSLV, has fallen only 3.32% during that time. My advice would be, avoid that thing like the plague. Here's a video on the many problems with the way the SLV is operated.

 
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solarion

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An effective way to benefit from the potential drop in the nasdaq while limiting downside risk. Here a good tactic to employ would be the 1x2 volatility ratio spread. Basically you sell a put at an ITM/NTM(near the money) strike, while simultaneously buying a pair of puts at a lower strike. I usually spread these out 5 strikes or so. This results in a net debit in an amount equal to the cost of the sold(short) put less the two purchased(long puts).

The result is very predictably limited downside risk if the the underlying moves counter to the expected direction and virtually unlimited gains in the predicted direction...until option expiration. This strategy is called a 1x2 ratio volatility spread. Pictured here is such a strategy set up to take advantage of weakness in the triple Qs, though such a strategy works just as well on the long side.

1616774147808.png


The above trade would result in a debit in the amount of 777(inc fees) and a margin maintenance requirement of a friendly 500. As you can see the return/risk profile is extremely favorable...while the downside risk is also limited.
 

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I am nowhere the advanced abilities of you crusty old farts. I'm a buy-and-hold penny investor in Canadian and US markets. For what it's worth, here are some companies I keep in my watchlist.
Silver and REE miners are the future, unless they're not ;) :
gainers.png

And some that may be worth buying on the dip:
losers.png
 

solarion

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I slapped a 1x2 volatility put spread on Intel. Do not like their fundamentals...and I like their technicals...on the downside. This is an expensive stock with falling earnings projections in a rising rate environment...not a great setup for longs. Maybe right, maybe wrong, but I like the position here and a put spread with an additional put pays me now and pays me more if/when intel gets creamed. The downside risk is that Intel will only creamed marginally and will end up near my purchased long put spread...which could result in a maximum loss of 405. Not real scary. They report earnings on 4/22 and I doubt it's all that pretty...as a result I think this stock is more likely to move toward its 52wk low(43) than its 52wk high(67).

1616782858830.png

1616782082045.png


1616782254369.png

1616782277010.png


You can see from the chart above that potential return is virtually unlimited...due to the additional put option...while losses are capped at 405 if the underlying settles into the gap between my long puts on expiration(May 21). On the other hand if I'm 100% wrong about all this and Intel explodes to all new highs then I stand to collect the 106 credit I received upon initiation of this trade. This makes the trade theta positive, which is what I generally look for with these things.

Edit: Slapped on a second 1x2 volatility put spread constructed identically to the first with Intel near the highs for the day.

1616788529649.png


So this is now a total of 206 stacked in credits after trading costs(6.52 total). I generally stack these things a minimum of two at a time anyway, which provides more ability to manage profits/losses by taking profits or paring losses incrementally.
 
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solarion

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Given that I have an average price of 4.105 each on the two 65 strike INTC puts I sold short, I will look to cover one at the value of the credit received on the execution of the two ratio spreads(206). This would make the entire position a net even trade, but would also reduce liability by 50%...essentially giving me 2 puts for free and maintain liability attached to the other short 65 strike put and the 2 long puts offsetting it. This illustrates the flexibility of options strategies as the wild swings can present opportunities.

It also illustrates the flexibility of the ratio bull call spread employed here. By taking on a credit at the time of execution...literally being paid to take a position, I have a great deal of flexibility. Now that INTC has moved up devaluing all of the puts used to construct my position, I can cover the liability portion of that position, while maintaining a net short position that benefits significantly if/when INTC drops significantly within the next 55 days.

I will also be looking to pick up a bargain put on IBM on any weakness(IBM share strength). May 21 expiry makes sense as they report their earnings on 4/19. Similar to the Intel situation, I do not much care for the technicals with IBM and they're facing difficult YoY earnings/revenue comparisons, while being richly valued in a rising rate environment. While I do not necessarily think IBM is as vulnerable as INTC, the puts are very cheap due to recent share strength and very low volatility. Assuming I find a pricetag I like I will likely grab one put and then wait for an opportunity to short another put at a nearby strike on any IBM weakness. This would give me the ability to complete a ratio spread position there also likely at zero or near zero cost.

1616895785820.png


On another note, I'd like to share a long term plan I have for long derivative positions I have in the stocks I mentioned in the OP. What I envision is some long term high delta(.80+) calls. This would then give me the stability and flexibility to sell lower strike covered calls against those contracts and thereby generate some income from them. This would likely be done on a monthly or bi-monthly basis.
 

gnome

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Options are a world unto themselves. I believe in order to get really good with them you have to trade, trade, trade. I will tell you up front that I am a novice with them. I have an account that is in an IRA. I play there. I would of course like to grow the account, but it is also not money that is waiting to pay off next month's electric bill. So I do take risks. Most of the money in the account is in the miner space. I also have some layered calls in SLV (yes, I know slv is hated - I just use it as an instrument).
SLV has very high liquidity, which makes it far better for options.
I've done well selling cash-secured puts when SLV has a red day and buying back a day or two later. Very high annualized rate of return. Haven't got assigned yet.

Thought I'd try buying SLV LEAPS and selling covered calls on it, but found the premiums less compelling than selling puts. Maybe just because I timed the SLV LEAPS wrong.

SILJ, GDXJ, etc are all very liquid, but I'd like to know what the most liquid among individual mining stocks.
 

savvydon

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SLV has very high liquidity, which makes it far better for options.
I've done well selling cash-secured puts when SLV has a red day and buying back a day or two later. Very high annualized rate of return. Haven't got assigned yet.

Thought I'd try buying SLV LEAPS and selling covered calls on it, but found the premiums less compelling than selling puts. Maybe just because I timed the SLV LEAPS wrong.

SILJ, GDXJ, etc are all very liquid, but I'd like to know what the most liquid among individual mining stocks.
Can't tell you the most liquid, but I can tell you First Majestic has some pretty large open interests and are probably more liquid than most.
 

solarion

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Sure, SLV is great for buying puts against, I just wouldn't expect it to represent an investment in physical silver as it's seeing massive outflows and failing to keep up with physical. This was baked into the poor way in which SLV was set up from the get though, as management fees eventually would have, and were causing SLV to diverge from physical prices over time. Now of course it's suffering also from a dose of recognition that it's not a legitimate investment vehicle. Option contracts on the SLV should not be moving the price of silver at any rate...being a derivative of a derivative, but it's no substitute for a futures contract or even a properly managed silver ETF share.

Covered calls like selling naked puts are very sensitive to day to day moves as well as recent volatility. Currently implied volatility on SLV's May contract, for instance, is 28.6%, which is rather low. One must keep in mind that volatility, as much as price direction of the underlying affects the price tag of option contracts, so keep an eye on those greeks. While Gamma and Rho don't tend to have a huge impact, the other three are of vital import to option traders. Were I long SLV leaps(uh no) with a high delta position, and attempting to capitalize on them, I'd wait for a time in which volatility had spiked and a significant up move in the underlying made those contracts particularly expensive...then sell into that strength. These things can easily swing 75% or more in a single day, so one must be patient and pick their spots. The purchaser of your covered call contract is doing likewise if they're any good and waiting for their spot...which is of course counter to your own. Irrespective of the premium captured for the covered call you could end up liquidating your position at that price, so you should make sure you get a decent payout. The option to do nothing is always available.

If by mining stocks you mean specifically primary silver miners that are option-able, that's likely PAAS(Pan American), though I prefer Wheaton though it's principally a streamer these days. I try to keep track of the majority of the major players in the silver market...brutal though its been with the rampant and continuous price manipulation. The chart on SILJ still doesn't look healthy enough, for instance to move in actively...so I continue to wait for a better opportunity. This doesn't, of course, mean I'm not dumping naked puts regularly on the companies I like. Selling naked puts is crazy profitable and the downside is so not scary if one picks their spots with care.

1616936993443.png
 

solarion

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Can't tell you the most liquid, but I can tell you First Majestic has some pretty large open interests and are probably more liquid than most.
AG is a well run company, but it's just over half the size of PAAS on a market cap basis(3.5b vs 6.4b). That said, I don't have much trouble picking spots with either...at least on the "regular" option contract cycles.
 

solarion

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Fun tip. Options expiration can be a great way to stack a bit of extra funny munny by riding the wild volatility ebbs and flows. I used to often take a floater on a call(or put) on an index I perceived as particularly strong(or weak) going into expiration. With the current near constant options schedule on the indexes this is near constant. The triple Qs for instance has options expiring on both Wednesday and Thursday.

What I find is that those options become increasingly volatile on these occasions and I want to take a flyer on a contract or 2, so I want to stack them the evening before. So roll with the direction of the market, as usual, and stack(in the opposite direction) for the following day. Since these are guaranteed to be completely worthless within 24hrs, clearly we do not wish to invest a bunch into them, but they can prove quite valuable if there's a large gap up or down on options expiry morning.

So as an example, the QQQ's are IMO quite weak here, and I may or may not find an opportunity to roll the dice on this perceived weakness on Wednesday and/or Thursday. To capitalize on this potential I will go shopping for cheap OTM puts the evening before. So for March 31 options expiration, I'll shop on Tuesday shortly before market close.

Right at the moment the 295 put looks tasty, and it's only .23bid/.28ask Since I don't really want to risk my own funny munny on such a short term venture(cuz...duh), I would likely fund this little escapade by building a spread in the opposite direction to fund the outing. So in this example I'd build a vertical spread on the call side of the order book expiring at the same time and look to raise the funds necessary to grab the put I like for captured premium. Right this second that looks like a 324/328 bear call could work...to fund the lions share of the put.

Now while this is not without risk, the risks are clearly defined beforehand and if done properly has very little chance of blowing up in your face. These spreads should be appropriately far OTM and high probability of expiring worthless. The afore mentioned bear call spread has a 15% chance of ending profitable even now...three days ahead of expiry. More importantly for us this means it has an 85% chance of expiring worthless...which is groovy for me, but the reality is that the odds are likely much worse even than that as there's significant overhead resistance on the QQQs above 320ish and again at 325ish. By Tuesday afternoon these odds could be even more significantly in my favor allowing me to fund a longshot with proceeds picked up for nothing.

1616939597917.png


**************Not trading advice...entertainment only. If you don't know what you're doing, consult someone who does.****************

I'm also considering a net short position on CCL(carnival) ahead of their earnings report on Friday. The thing got beaten to crap with the lockdowns and plandemic last year, but then once the damage was baked in, it charged right back ahead and is now up 100% from the lows in October. I personally disagree with the assessment of those that believe the damage has been done and the situation is going to be peachy swell going forward. It's not. Moar lockdowns, forced vaccinations, and economic destruction caused by the response to the plandemic will, IMO hand CCL another crap year of earnings. I will be watching it very closely heading into Friday and building an appropriate position based on technicals over the week as I believe YoY earnings will be un-pretty and forward guidance will be coming down from already low levels. This position will likely be some kind of relatively safe volatility ratio spread...likely with a credit so that it's neutral-premium capture on the upside and offers unlimited upside if the underlying falls all the way to zero. I find this is often the best way to play these expected volatility expansions, though I know some prefer strangles here.

1616941357291.png

1616940838603.png


...and here's a relatively simple strategy I whipped up to attempt to take advantage of the situation...though it's far from certain this is going to be my final position. Specifically, I do not love the level of upside risk if somehow, some way, CCL manages to have a great quarter and declares 2021 the greatest earnings year in the history of earnings. ...I know right?

1616941563457.png


Edit: I may just go ahead and float some low ball bids for some OTM APR 09 puts on CCL over the next few days. They're already cheap only 12 days from expiry and generally bullish bias of the underlying. Bid on the 23 strike is appropriately enough .23 just now. Then if I snap up a couple, I can build a credit positive position around them by selling puts near them or even at a forward expiry as they'd be tanking as well if I turn out to be correct. This kind of calendar spread thought process can add a lot to your overall options gains. A bear call spread, for instance forward of APR 09 expiry, say APR 23 expiry for instance, built prior to Friday could fund the entire endeavor and would be nearly guaranteed to expire worthless if the underlying tanks in here.
 
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solarion

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The Bond Market’s Sell-Off Is Taking Out the Stock Market’s Leaders​


This has seemed obvious for some while, but some need to read things in black and white to recognize what's in front of them. The market was serially saved from collapsing on at least two occasions just last week. As a result, I much rather be short select positions than long.

When the big dogs get killed, I'd like to be there to profit. Puts on QQQ, IWF, and VUG are all good ways to play an anticipated breakdown of the overpriced "FANG" stocks.

...of course this all likely changes when the fed finally says they're going to go ahead and implement yield curve control...which they've already been doing for years. Then it'll be risk on time! ...for most. I'll be stacking commodity companies with good management teams, hopefully at lower prices...let everyone else have the overpriced crap.

Which side of this chart would you rather take...? ...if any?

1616945462304.png


I draw all trendlines on daily candles btw...in case anyone was wondering why my trendlines sometimes look like they were drawn by a 4yo with crayons. lol I then look to 4hr and 1 week charts for confirmation(/6(four hour) + *7(weekly)). This methodology of checking up on my own reasoning has proven itself time and again. ...just because you think something should happen doesn't mean much to the market and allowing illegitimate directional bias to creep in to color your decisions, can be an expensive blunder. Here's the weekly on the triple Qs.

1616946242188.png


Near an inflection point is how I take it. Note the lack of energy in the bounce off the fast moving average this time around vs the bounces in Sept and Oct. Note also that the selling pressure as indicated by volume, while slightly higher than those two prior bounces was not exactly what you'd like to see in a blow off top...to say the least. Then there's the bearish hammer with huge wick and barely positive hammer with another huge wick on the next couple bars. It all points to slowing momentum to me...and I do not like the overly bullish cloud going forward. Markets nearly always reverse trends while the majority of people have opposite sentiment. The known unknown here is the overt market manipulators. What will the fed, the ESF, the PPT, etc do here? My own take is that they'll slow the decent to provide a soft(er) landing...as they most likely were in there doing all last week.
 
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Voodoo

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Fun tip. Options expiration can be a great way to stack a bit of extra funny munny by riding the wild volatility ebbs and flows. I used to often take a floater on a call(or put) on an index I perceived as particularly strong(or weak) going into expiration. With the current near constant options schedule on the indexes this is near constant. The triple Qs for instance has options expiring on both Wednesday and Thursday.

What I find is that those options become increasingly volatile on these occasions and I want to take a flyer on a contract or 2, so I want to stack them the evening before. So roll with the direction of the market, as usual, and stack(in the opposite direction) for the following day. Since these are guaranteed to be completely worthless within 24hrs, clearly we do not wish to invest a bunch into them, but they can prove quite valuable if there's a large gap up or down on options expiry morning.

So as an example, the QQQ's are IMO quite weak here, and I may or may not find an opportunity to roll the dice on this perceived weakness on Wednesday and/or Thursday. To capitalize on this potential I will go shopping for cheap OTM puts the evening before. So for March 31 options expiration, I'll shop on Tuesday shortly before market close.

Right at the moment the 295 put looks tasty, and it's only .23bid/.28ask Since I don't really want to risk my own funny munny on such a short term venture(cuz...duh), I would likely fund this little escapade by building a spread in the opposite direction to fund the outing. So in this example I'd build a vertical spread on the call side of the order book expiring at the same time and look to raise the funds necessary to grab the put I like for captured premium. Right this second that looks like a 324/328 bear call could work...to fund the lions share of the put.

Now while this is not without risk, the risks are clearly defined beforehand and if done properly has very little chance of blowing up in your face. These spreads should be appropriately far OTM and high probability of expiring worthless. The afore mentioned bear call spread has a 15% chance of ending profitable even now...three days ahead of expiry. More importantly for us this means it has an 85% chance of expiring worthless...which is groovy for me, but the reality is that the odds are likely much worse even than that as there's significant overhead resistance on the QQQs above 320ish and again at 325ish. By Tuesday afternoon these odds could be even more significantly in my favor allowing me to fund a longshot with proceeds picked up for nothing.

View attachment 205895

**************Not trading advice...entertainment only. If you don't know what you're doing, consult someone who does.****************

I'm also considering a net short position on CCL(carnival) ahead of their earnings report on Friday. The thing got beaten to crap with the lockdowns and plandemic last year, but then once the damage was baked in, it charged right back ahead and is now up 100% from the lows in October. I personally disagree with the assessment of those that believe the damage has been done and the situation is going to be peachy swell going forward. It's not. Moar lockdowns, forced vaccinations, and economic destruction caused by the response to the plandemic will, IMO hand CCL another crap year of earnings. I will be watching it very closely heading into Friday and building an appropriate position based on technicals over the week as I believe YoY earnings will be un-pretty and forward guidance will be coming down from already low levels. This position will likely be some kind of relatively safe volatility ratio spread...likely with a credit so that it's neutral-premium capture on the upside and offers unlimited upside if the underlying falls all the way to zero. I find this is often the best way to play these expected volatility expansions, though I know some prefer strangles here.

View attachment 205898
View attachment 205897

...and here's a relatively simple strategy I whipped up to attempt to take advantage of the situation...though it's far from certain this is going to be my final position. Specifically, I do not love the level of upside risk if somehow, some way, CCL manages to have a great quarter and declares 2021 the greatest earnings year in the history of earnings. ...I know right?

View attachment 205899

Edit: I may just go ahead and float some low ball bids for some OTM APR 09 puts on CCL over the next few days. They're already cheap only 12 days from expiry and generally bullish bias of the underlying. Bid on the 23 strike is appropriately enough .23 just now. Then if I snap up a couple, I can build a credit positive position around them by selling puts near them or even at a forward expiry as they'd be tanking as well if I turn out to be correct. This kind of calendar spread thought process can add a lot to your overall options gains. A bear call spread, for instance forward of APR 09 expiry, say APR 23 expiry for instance, built prior to Friday could fund the entire endeavor and would be nearly guaranteed to expire worthless if the underlying tanks in here.

I fully agree on the bearish CCL trade. But that's not how I would have played it before, which I guess makes me the amateur options player. There is no reason for cruise lines to have any bulls what-so ever. Will you close out the trades all at the same time? Ie, doing the opposite on all the options? How do you keep track and not screw things up?
 

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From what I am reading, much monkey business in SLV, changing prospectuses, fractional bullion to support shares....how about PSLV which backs the shares in silver bullion? More than a few say Sprott’s PSLV actually is taking 1000 ounce bars off the market into their fund, which is what needs to be done- drain the Comex of physica.
 

solarion

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From what I am reading, much monkey business in SLV, changing prospectuses, fractional bullion to support shares....how about PSLV which backs the shares in silver bullion? More than a few say Sprott’s PSLV actually is taking 1000 ounce bars off the market into their fund, which is what needs to be done- drain the Comex of physica.
Yeah...it's garbage, if not an outright scam. The mere fact that the custodian is also an "authorized participant" ...a blatantly obvious conflict of interest is more than enough to make me run the other direction. Then there's the changes you mentioned, the way the prospectus is written in legalese gibberish. The reality is that only the big banks specifically named in the prospectus, JPM, HSBC, BOA, Goldman, etc are allowed to redeem shares for physical. A massive warning flag, but most can't be bothered to even read the prospectus before pouring in funds.
I fully agree on the bearish CCL trade. But that's not how I would have played it before, which I guess makes me the amateur options player. There is no reason for cruise lines to have any bulls what-so ever. Will you close out the trades all at the same time? Ie, doing the opposite on all the options? How do you keep track and not screw things up?
Yeah the irrational exuberance in these things is startling, but remember the lockdowns were supposed to be "two weeks™", and the recovery was supposed to be a "V" shaped recovery. Lots of propaganda and outright lying going on by TPTB causing people to miscalculate risk...imo.

Well the trade listed above is merely an idea. I may do none of it...but if CCL remains expensive, puts remain cheap, and more DD on my part doesn't change my mind this will be happening.

Please feel free to share your ideas here. I wouldn't say I'm an expert with these things, I'm competent. I used to be even "good", but I'm rusty, so there's lots of room for improvement here.

As to closing out the trades...the bear call positions exist only to fund the real target...the long puts. Those would be allowed to simply expire, there's no need to pay them any heed unless CCL somehow...magically sky rockets, and even then it's a pretty unlikely risk. The main put position too would be allowed to simply expire if CCL doesn't move in any meaningful way. This is why we like credit neutral/credit positive positions...they're generally fire and forget unless something goes very wrong. Options are a probability game, so you set up high probability trades, avoid the extreme longshots, keep the time decay on your side wherever possible, close positions moving against you early if necessary, and try not to do too much.

If CCL does crater then I'll likely liquidate the long puts/cover any shorts there for a healthy profit almost immediately because time decay will work against those positions being only a 17 days between CCLs earnings report and options expiry. The theta decay curve steepens in the last couple weeks prior to expiration, so you don't want to leave a bunch of value there as both time decay and volatility dropping will eat your gains.

Here's another possibility :

1616957379794.png


Higher potential gains, significantly lower downside risk, still credit positive...what's not to love? ;)

...matter of fact I could sell the bear call for APR 16 expiry for higher sale prices and buy puts that expire APR 9 to make them even cheaper. Always keep time working for you not against you with options. Time is the enemy on the long side a great ally on the short side.
 
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solarion

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I entered into a small position short CCL this morning on volatility. It's a combination of a bear call spread APR 16 expiry with strikes 30(-2) & 40(+2). This raised .78 in credit, which I put toward a single APR 16 put @ 23.5 strike. The whole deal netted a grand total of .03 in credit, but there's near zero risk...unless CCL goes to 31 prior to April 16. If, however CCL drops precipitously prior to April 16, then my position could increase in value sharply. Then I snagged another put also April 16 expiry, but this time with a strike @ 21.5. The latter well OTM I picked up mostly because it was undervalued imo at .30.

So with that I have a grand total of .27(27 bucks) into my CCL short position.

I also took on a bull put spread in EXK(Endeavor silver) with the outsized weakness today. This is a short term position, and mostly I'm just trying to scalp premium here, but if Endeavor rallies back over 5 in the next 18 days then the profits will begin to stack up.

1617034657449.png


Edit: I've converted the above to a ratio spread by stacking a second APR 16 put with a 5 strike price. This gives the trade the following profile.

1617046271601.png


...as a result I benefit from volatility in either direction, though a reduction in volatility is unwelcome. The maths looks like so...

Short 1 APR 16 put with a 7.5 strike = -2.69(credit).
Long 2 APR 16 put with a 5 strike = .86(debit).

2.69 - .86 = 1.83(credit) Now I hold on to as much of that credit as possible with continued volatility until they all expire worthless...hopefully.

Also added another bear call spread at 30/40 on CCL APR 16 expiry as well as a 2nd put at a strike of 21.5. So my position looks thusly:

Bear call spreads 30/40(3) -1.04(credit)
Puts 2x21.5 strike 1x23.5 strike 1.05(debit) for a total cost of .01(1 buck).

This report most definitely does nothing to convince me that I'm on the wrong side of this CCL thing.

1617052376154.png



Thanks again gubmint...

 
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solarion

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1617078991986.png


^^A nice bit of shareholder value dilution there methinks...^^ ...and here...

1617079360865.png


This company looks to be roughly 60% overvalued to me. Blame lockdowns and the plandemic...sure, but the reality is they over-expanded and peaked in 2018. If anything the plandemic looks to have given them life support...and they've been "surviving" on stock buy backs and revolving debt. This thing is levered up to ridiculousness. If you have shares...don't.

Looks like dead company walking to me. ...oh and they report earnings on Wednesday. Ask me what I'm gonna do about it?

1617074733706.png


1617073982795.png

1617074534457.png


...that stock chart. I mean... How TF is it worth more now than pre-plandemic?!?

1617074952381.png


I'm thinking perhaps a couple MAY 21 @ 60/70 bear calls to fund a 40 strike put. Volatility is significantly lower on the MAY 21 expiry contracts.

1617078448086.png
 
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solarion

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Considering a position on JAGX(Jaguar Health) ahead of their earnings report on Thursday. I may either choose to simply grab a couple APR 16 calls(.15), set up a longer term bull put spread, or some combination thereof. This is a very speculative play, as this used to be a valuable company that has been serially mismanaged for years on end. Even so, there's not a whole bunch of downside risk as its shares are unlikely to go below zero. ;)

1617108628098.png



1617108421910.png


Haven't decided if I want to potentially stare at this position for most of the year. It went up sharply on rumors surrounding a drug allegedly to help ease intestinal issues for those diagnosed with Mexican beer virus. ...sounded like a bunch of crap to me, but the trade above does make sense as it raises a bunch of credit, has low downside risk.

It's up slightly this morning while nearly everything else is getting hammered presumably do to some largely meaningless merger news, but certainly the shares are cheap and if there's much of anything real in their drug pipeline there's likely a non-zero risk this thing gets gobbled up by a much larger pharma/biotech. Again, this is all highly speculative and the only reason to consider it is due to the spreads on some of the longer term options spitting out credit...I like getting paid to hold positions, with clearly defined downside risk. I wouldn't care to stack shares in here.

1617109255463.png
 
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solarion

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Wait...so the stock is overvalued by at least 40% and the rating is a hold/buy? There's no such thing as "too expensive" anymore? The ONE analyst with the nads to call for a sell rating recanted. Well done guys. lol

1617138958309.png


Anyone see a problem with *THIS* financial statement at all? I'd say "to the moon", but the shares are already there...

1617139266802.png


Well that explains how/why this zombie company's shares just keep motoring higher on near zero volume. There are no sellers. Institutions own 100.3% of shares. Blackrock & Vanguard are 23.4% of ownership alone. The top 5 institutions alone own 50.52% of all outstanding shares. lol

All these assholes have to do is agree not to sell and their little scam just keeps climbing as new saps believing there are free markets buy into this "great" momentum play. What a joke.

1617146568194.png


Also helps to explain analyst's reluctance to slap a sell on this steaming pile of zombie company. Who wants these heavyweights pissed at you?

1617147130455.png
 
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solarion

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Play is melting based on being hopelessly overpriced crap...so I'll be keeping the premiums scalped on those puts I sold while the long puts I stacked have gained value considerably. I also had some bear calls that will be expiring worthless today...so more premiums scalped. All in all a satisfying affair. I still have puts that expire on the 9th, 16th, and 23rd in case it continues being melty...which is my expectation.

1617290609277.png


JAGX on the other hand exceeded revenue forecasts and is trading roughly 5.6% higher so my AUG bull/put spread there is moving in the right direction to allow me to keep 100% of that credit(4.4) and I took a flier on a couple APR 16 calls @ .08 each and they should be moving up modestly.

I'm also looking to stack a pull/put spread on VALE and thinking MAY 17/15 makes sense, but only at a decent pricetag. This would yield a credit of 66 and provide slight upside potential.

1617291283907.png
 
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Voodoo

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The markets clearly have a serious problem. Institutional ownership on MANY stocks is far above 100%. How is this possible? There are serious underlying clearing problems in the US markets. Like most of the US I think it has been severely corrupted and I have no idea what really remains.

Exhibit 1 - was Gamestop. Even thought the media blamed all of this on Reddit the INSTITUTIONAL ownership was like 120%. So what remained for all those Reddit Apes to buy?

1617291735038.png

What Yahoo shows today ^^.
 

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Institutional ownership on MANY stocks is far above 100%. How is this possible?
When one shorts shares, they first borrow them to sell in the hopes of buying them back at lower prices. Institutional investors in particular do this and it's not inherently corrupt, but it's definitely open to a lot of corruption from the market makers. The borrowing increases share counts...usually modestly, but in extreme cases the effect can be striking. I never employ this strategy myself, because I don't like having infinite loss potential. Instead I either stack bear puts or naked puts at strategic levels. If I really think a company's outlook is bleak...like PLAY, then I buy naked puts against them.

Update: My VALE spread trade, a 17/15 Bull Put went through at -.69(credit), so very happy with that. These guys report earnings on 4/27 and their YoY growth looks fantastic on paper. I will look to make my position more bullish on any weakness in the underlying.

SILJ looking to break out? I may play this in a very bullish fashion when it finally looks solid on the upside. I'm thinking a combination of deep in the money calls to sell calls against and/or selling naked puts.

1617294258888.png
 
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Voodoo

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Could you look at Autozone and possibly put together a bearish trade? I think they ran out of buybacks after their earnings and painted a nice print for the end of the quarter. I'm really bearish this company but it can stay up for a long time and option premiums would kill you. Currently I am short a couple shares and clearly not working that well.

I mean, I agree, we absolute need an ability to sell short. But it really shouldn't be creating millions of shares. I think they are creating FAR more shares than they are reporting.
 

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I can look into it when I have time. Autozone isn't something I nominally monitor. Off the top of my head, I'd say a bear put ratio spread could make sense. That way you're limited on the downside(underlying up) and limited on the upside only to the extent that the underlying reaches zero.

Meanwhile, I just put this order in, though it may or may not execute. From a technical standpoint VALE appears on the brink of a breakout and from a fundamental and potential standpoint they appear very well positioned to gain significantly from the misguided wasteful spending in DeeCee. It's down today allegedly because China sees limited expansion. ...that won't matter much if/when the spendthrift goobers print up trillions to build stuff. They shan't be doing so without tons of copper.

1617297654077.png


...this went through while I was typing up this book. I like these long risk reversals, provided you've time to have the trade work on your behalf, you have a credit, and there's reason to believe the underlying has positive potential. This strategy is also wide open to additional supporting positions in the future to make it more or less bearing/bullish. Additionally a bullish long position on down day for the underlying means you're selling a put when it's expensive and buying a call when it's cheap. ...like today.
 

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The other problem with AutoZone is that it has like NO Volume. Which just screams scam considering it ran from 1200 to $1400 a share.
 

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They're buying back shares and they've another 717.6m left to buy back. Their earnings were a surprise on the high side and they don't report again until next month. Haven't gone over the fundamentals, but the technical picture, while somewhat extended, isn't crazy so. I would not be short this thing.


It's somewhat overpriced, but that's relative as the dollar is massively devalued through monetary inflation. Their EPS is 18.07...not great, but not crazy. Their balance sheet is decent, but not great. They're dumping funds into buying back shares and shorts are going to get hurt while they're doing that. Institutional ownership is flat...but not declining. I would cover on any weakness frankly and choose a different target.

1617302125245.png


These analysts are mostly corporate cheerleaders to be taken seriously only to the extent that other investors do so. That said, their price targets are above current.

1617302321329.png
 
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Voodoo

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Yeah they've spent Billions to buy back shares over the past decade, heck all the way back to Eddie Lambert. They had well over 100 million shares at one point. The problem is they often are Borrowing money to buy those shares. And the earnings Always beat, which is another Huge red flag in my book. I just don't know when it blows up. But much of the management left last year.
 

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If you're convinced they're a good short then what you should do is maintain no position at all, until they get near earnings report time. Then take on a bearish ratio spread with a net credit. Having puts constantly melting due to time decay while you wait for them to blow up is no bueno. The large down spikes are much more likely around earnings time anyway. Otherwise, fighting the up trend, particularly in such a wildly inflationary environment is likely to be a losing battle. That'd be true even were AZO NOT deflating their own currency with buy backs of their shares. You absolutely want that time decay working for you...that way, even if they don't blow up you'll stand a great chance of pocketing some premium. This is what I did with PLAY...and those bear calls expired worthless today. Another batch will likely expire worthless on APR 16. This is a pair of 51/60 bear calls that will net me 2.68. No, 268 bones isn't going to make or break me, but they financed several long puts that I've now sold for a tidy gain...and then the cherry on top is that those sold calls will expire worthless because the underlying cratered.

I began stacking SLVRF(Silver One) today. It's a microcap primary silver miner based in Canada with high correlation to copper due to controlling interest in land in Nevada. Eric Sprott is a stakeholder. Just a small position I'll likely add to over time on weakness.

1617307443773.png
 
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Voodoo

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The markets clearly have a serious problem. Institutional ownership on MANY stocks is far above 100%. How is this possible? There are serious underlying clearing problems in the US markets. Like most of the US I think it has been severely corrupted and I have no idea what really remains.

Exhibit 1 - was Gamestop. Even thought the media blamed all of this on Reddit the INSTITUTIONAL ownership was like 120%. So what remained for all those Reddit Apes to buy?

View attachment 206310
What Yahoo shows today ^^.

Here's one possible answer. Somehow, a fund with $100 BILLION dollars in "stock" slash something in the market who really knows.


it would never be the actual owner of record of the underlying stock. Instead, the stock that Archegos was long would be "owned" by its prime broker, the same entity that allowed it to enter into TRS in the first place. As such Archegos also never had any disclosure requirements, allowing it to transact completely in the dark while being fully compliant with SEC disclosure requirements - since it didn't own the underlying stock, Archegos did not have to disclose it. Simple and brilliant.
 

solarion

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Yeah they're sneaky creepers and the market makers collude with them at every turn. Even so, you have to learn to stay out of the way of the major criminal undertakings. Methinks you're looking for the "long bomb" with regard to these trading positions and the probability monster is likely to eat you alive. Today I took a couple of the riskiest plays since I got back into paper trading just last week...after a decade+ off.

Even so I like the trades I made, the entry/exit points, and the strategies I employed. What I find most dangerous is trades with undefined downside risk. I simply do not like them...particularly when they have low probability of ending profitably...and also if I have to actually pay a net debit to get into them. The VALE positions I put on today are only roughly 61% and 49% profitable going forward...and that's okay even if it is low for me. They're far enough out to make adjustments, and this thing will explode higher as soon as the spending bill waste of money is finalized. Furthermore, I got paid...up front to take on both trades and that makes a huge difference in long term profitability.

Option contracts are ridiculously volatile and inherently worthless. There's more than enough risk involved without adding low probability of success or big debits at the onset. Scalp premiums, get the clock ticking on your side, and take the relatively sure things. Even "slow and steady" with options is crazy volatile and silly profitable if you stick to favorable trades. I've stacked around 6.7% in a week, almost entirely scalping premiums and sitting in cash...so there's definitely plenty to be said for that kind of strategy.

While getting paid up front to take on a new position makes it difficult to calculate the overall return(lol), it's also a lot more fun than being in the hole immediately and having to dig out. These positions netted me 1.78 immediately and have lots of upside going forward. This is the way to go imo. Slow and steady with some of the most volatile derivatives ever inflicted on the individual trader. ;)

1617340912027.png
 

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Yeah they're sneaky creepers and the market makers collude with them at every turn. Even so, you have to learn to stay out of the way of the major criminal undertakings. Methinks you're looking for the "long bomb" with regard to these trading positions and the probability monster is likely to eat you alive. Today I took a couple of the riskiest plays since I got back into paper trading just last week...after a decade+ off.

Even so I like the trades I made, the entry/exit points, and the strategies I employed. What I find most dangerous is trades with undefined downside risk. I simply do not like them...particularly when they have low probability of ending profitably...and also if I have to actually pay a net debit to get into them. The VALE positions I put on today are only roughly 61% and 49% profitable going forward...and that's okay even if it is low for me. They're far enough out to make adjustments, and this thing will explode higher as soon as the spending bill waste of money is finalized. Furthermore, I got paid...up front to take on both trades and that makes a huge difference in long term profitability.

Option contracts are ridiculously volatile and inherently worthless. There's more than enough risk involved without adding low probability of success or big debits at the onset. Scalp premiums, get the clock ticking on your side, and take the relatively sure things. Even "slow and steady" with options is crazy volatile and silly profitable if you stick to favorable trades. I've stacked around 6.7% in a week, almost entirely scalping premiums and sitting in cash...so there's definitely plenty to be said for that kind of strategy.

While getting paid up front to take on a new position makes it difficult to calculate the overall return(lol), it's also a lot more fun than being in the hole immediately and having to dig out. These positions netted me 1.78 immediately and have lots of upside going forward. This is the way to go imo. Slow and steady with some of the most volatile derivatives ever inflicted on the individual trader. ;)

View attachment 206381

Yeah, you are right. I'll just look to exit and keep my ears to the ground. I may jump on it if something actually starts to crack.

My biggest problem as an investor is I don't hate losing money...I know sounds kinda dumb.
 

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Now here's a stock that I have also shorted and is a more immediate candidate. Terrible earnings and bad last report. Basically the only hope it has is free infrastructure money from Biden. Might be some option plays here as well, lots of new investors buying ST calls on this.

1617466115435.png
 

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Yeah, you are right. I'll just look to exit and keep my ears to the ground. I may jump on it if something actually starts to crack.

My biggest problem as an investor is I don't hate losing money...I know sounds kinda dumb.

No risk, no reward. Might get burned now and then, but I'm good as long as I don't let any one position blow my account up.
 

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Now here's a stock that I have also shorted and is a more immediate candidate. Terrible earnings and bad last report. Basically the only hope it has is free infrastructure money from Biden. Might be some option plays here as well, lots of new investors buying ST calls on this.

View attachment 206517
I was leaning towards shorting the hydrogen hype stocks (partly to hedge my EV long positions), but Biden's infla-structure may have saved them from doom. I did go small and buy an OTM put against RIDE, but unless some ugly news breaks, I'm out $40.
 

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It's ironic as I really like Hydrogen as a superior long term solution, as opposed to just EV cars. Heck, my background was in researching new materials for fuel cell membranes. It's just that the stocks got way ahead of themselves and there will be a lot of companies that do nothing.
 
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solarion

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I don't hate losing money...I know sounds kinda dumb.
More amusing than dumb. ...perhaps a bit masochistic? lol

They(FCEL) have been aggressively diluting their shares outstanding over the past several years as well. Current shares outstanding are 322,429k and growing. I would look into selling a bull put near term below support to help offset the cost of a longer term long put. Something like an APR23 12/9(strike) bull put and a MAY21 14 strike long put could make some sense. Please don't do this without looking into it extensively yourself though, I came up with this combination in about 3 mins and haven't spent any amount of time on it.

While I don't usually like naked put options, implied volatility on FCEL is in the tank currently...making options very cheap on a historical basis. In such an environment you want to be a net buyer not seller of contracts.

1617473565424.png


I'm currently looking at strategies to play the recent drop in a crypto based ETF called BLOK. It looks like a consolidation period here after an explosive run up.

1617473944544.png

1617473980782.png

1617474700902.png


To play this I'm thinking short term bull puts and longer term naked calls, but I haven't finalized anything. To some extent it depends on the opening direction as last I looked the buck and rates were heading upward.

1617475042463.png


Agree with regard to the future outlook of hydrogen fuel cell tech. It should have a bright future, but it's a question of timing. Expensive oil can/will make it more appealing. It's one reason why I'm stacking lots of physical platinum.
 

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What trading system are you using? I have access to Etrade Pro, probably - haven't used either of these, and Think or Swim. The TD Ameritrade account is an IRA so cash only account with some option trading allowed. So I will probably look into firing up ETrade Pro and getting a little more serious about trading.
 

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I've been using Interactive Brokers currently. They've very low margin rates and lots of option tools. A couple niggles with the software so far and god forbid you have to get a human on the phone, but overall quite positive. I put very little in there till I was sure I liked it okay, but I believe I'll stick with them and continue funding it.
 

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After crunching a dizzying array of numbers, I'm leaning toward a longer term investment in BLOK. I believe I will target a JAN '23 48 strike LEAP rather than an AUG '21 call...and sell short a MAY '21 57 strike put to help offset the cost. This way the shorter term contract will expire in 47 days...hopefully worthless and then leave the LEAP unencumbered. Crunching the numbers on time value / day led me to this conclusion as a 48 strike LEAP is only 0.03265 / day vs the AUG '21 48 strike call's 0.07842...so much cheaper if you intend to hold long term.

1617517867184.png


This thing doesn't calculate calendar spreads properly, but this is the gist of it.