Well alrighty then. Guess I’ll be calling Fidelity.

Would it be possible to do a defined risk spread such as an iron condor in BrokerageLink? I’m having trouble getting another brokerage to let me do iron condors. In that account I can do an Iron Butterfly but not a Condor... I don’t understand why the difference in permissible trades and am curious if BrokerageLink is the same.

you might be right, but after reading a thread on Chit Chat Investing Finance it seems there are quite a few pilots trading a “method” of covered calls and cash secured puts in their 401k. They said you need permission from Fidelity...that seems to be the hang up!

oops NM I just saw earlier posts answering the option questions.

As I read this and see new traders wading in I can’t help but think....

please please do not trade options in your retirements accounts if you are new to it. It’s like flying a 737 bc you want to fly when you’ve never done it. Options if used incorrectly can decimate you financially.

Start very small and outside your retirement accounts. By the way paper trading is the equivalent of using Microsoft Flight Simulator and saying you can actually fly an airplane. It’s a lot different when it’s for real. It’s best for learning the platform.

Like flying its all about risk management, knowing your temperament for risk, and be careful entering orders bc if you enter an order wrong it can really hurt you.

this is a true statement! Although you’re limited as to what you can do in your retirements, I recommend what most have been considering, covered calls.

example; Buy 100 shares of something lower priced, say DAL for instance ($4056 outlay) and sell the Feb $45 call for $1.40 ($140 credit).

Your net debit should be $39.16

Two things happen; the stock shoots up to $60 and your shares are called away (sold) at the strike price of $45 (you collect $4500) or it stays under $45 and the contract expires, you keep your $140 And your shares. You can also roll the contract out to March and beyond the closer you get to February expiration and collect more credit, assuming the stock hasn’t gone bananas.

risks; stock shoots up and your shares are called away at $45 (if stock goes to $100, you forego $55) or stock goes to $0 and you lose all your $ you bought the shares with less the $140.

Spreads complicated things a little more when it comes to management of the position, so starting with one contract is best.

Do not go out and sell a put in Amazon to collect $10k, even if you have the cash, or unless you want to buy 100 shares of Amazon. And avoid naked calls entirely at this point until you’re more comfortable.

Just started to use them, love that platform for futures.

I have been trading for two decades and I completely agree. Any type of active trading is only for risk capital. Your retirement funds should be used for carefully selected stocks and covered calls. If you don't have the time or expertise to carefully select stocks (this takes research and the ability to understand balance sheets and earnings statements) then you should be in no load index funds.

Naked options can kill your account. Do not do them unless you can take a loss when needed. Most active traders lose money because they can't take small losses and end up wiping out accounts hoping for the price to come back. Futures and options have way more leverage than you can get with stocks. That 225.00 I made yesterday in ten minutes could easily have been a big loss had I bought instead of selling and then refused to take the loss. Trading is not something to just pick up and think you will succeed in your spare time. It took me five years to stop losing money trading futures and I am in a very small minority who actually receive a 1099 each year. Most lose, some lose a lot. I know of traders who have lost hundreds of thousands and never got it. A humble personality and understanding of probability is key. The best trading strategies will only win maybe 60% of their trades. You have to understand that you will lose forty to fifty percent of your trades and be ready and willing to take those small losses. You also have to have the intestinal fortitude to hang on to winners and not take a profit too early. Your winners MUST be larger than your losers.

Lastly, If you want to trade, watch some videos but be careful. Much of what is on the internet with respect to trading is pure junk. Many people sell training and most of them are failed traders. If you are considering asking for help and buying a course, ask the trainer for audited trade records for the last few years. If they refuse and start giving excuses walk away they are a scammer. The scammer to real ratio is about 500/1.

Trading can be fun. It can also ruin marriages and empty accounts. Be careful.

I like them so far. I was with Tradestation for many years but they won't negotiate their commissions any lower. Tradovate has the yearly fee and no commissions so I gave them a try. I am about to pay the fee and go with them in the new year.

Marcal, Misspoken, Seneca—interesting discussion on the risks of options. But couldn’t someone argue the exact opposite—that it’s better to start learning in a retirement account?

In an IRA, the brokerage literally won’t allow you to make high risk trades such as naked calls/puts. This guards you from getting into trouble. In a non-retirement account, I could make a mistake while putting in an order, or just think that selling this put on Amazon is really going to pay off because my buddy said so, and then the market moves against me and I get a margin call... this is simply not possible within an IRA.

Either way, I agree that a new trader needs to start slow and limit risk. It just seems like using some IRA capital to learn options is a way to force that limited risk on a newbie.

You cannot refill an IRA account if it gets wiped out. If you lose the capital in an IRA, you have not only lost money you have lost years of tax benefits. If you get wiped out in a taxable account, you can refill it. Start with paper trading to learn the process, then you can try IRA eligible strategies in a taxable account. As others have pointed out, using real money changes the game. The discussion of real vs paper trading reminds me of the movie Ender's Game.

My problem with risk taking and trading options and futures isn't necessarily with the products. It is the leverage. With stocks and covered calls you have at most 4/1 leverage. With futures it is 50/1 and options are similar. You can trade any of these products in a self directed IRA and that is ok. Just keep in mind I know a man who killed his IRA, savings, and lost his marriage because he kept buying lower on a stock that he thought was safe. Ever heard of Enron? He literally averaged down to the dirt because he couldn't take a small loss. Discipline is the key to wealth. It is the key to wealth no matter what field or endeavor. If I had the choice between intelligence and discipline I would go discipline every time.

Take all the risk you are comfortable with, just make sure you have proven the ability to take a loss and move on. As long as you still have the risk tolerance to average down and wait for a scratch out or small winner to exit your account will be at risk. I am scared by some of the talk in this thread about rolling out options to wait for a profitable exit. That is what killed Karen the "super trader". I put up a video of Ken Cordier. Watch it, he ruined his clients because of his hubris and unwillingness to take a loss and move on.

Trading is not kids play. You can destroy yourself if you aren't built for it. I am just trying to make sure everyone understands that.

All this talk of risk, inexperienced traders and tax considerations has me thinking about a quick retreat to my happy place in real estate. I've never had a house drop to 0 or watched it double when I'm short. The leverage on options is great, but so is the leverage on RE. The tax code is favorable to index options, but even better for real estate. The ability to receive cash flow that is offset by a non-cash expense (depreciation), then take cash out via refi without paying taxes on the distribution is a huge advantage. I'm trying out trading more for entertainment in a small account, while keeping my primary focus on adding more real estate.

The most successful investors will always be doing what they enjoy spending the time and energy to get good at. If real estate is your thing you will be better at that than stock picking. I had rentals from 1989 to 2006, made a lot of money but just got sick of the 2AM calls about overflowing toilets and repairing tenant damage at the end of every lease. I sold out when the market went crazy last time. Right now sort of reminds me of those days.

You should copyright this. Best advice ever for newbies into options and futures.

It’s interesting how people view risk. Asset heavy properties that rely on others to pay your mortgage seem risky. It seems high overhead and the risk of the mortgage payment always is risky. But, you’re comfortable with it and I know it’s not as risky as I perceive.

Your perception of options is that it’s very risky, but I’m very comfortable with them.

No one is right or wrong, it’s just an interesting observation in how people perceive risk.

Most importantly, risk is what allows us to make money in our respective areas of expertise. So, we are all more similar than we think, in terms of risk tolerance.

1) Follow-up to earlier part of this thread: I called Fidelity about BrokerageLink. You can trade options (up to level 2, basically no spreads). But due to the nature of the account, it requires a paper application. Must be filled out, signed, scanned, and submitted via their secure messaging on the site.

2) Regarding risk, I think everyone is giving similar advice. Be careful. Start slow. Don’t risk too much of your portfolio on any single trade. That applies to both RE and options/futures. I just thought it was interesting that what sounds like safe, conservative options advice (don’t risk your retirement funds) actually exposes you to more risk (non-retirement accounts don’t have the built-in IRA safeguards) and wanted to make that clear for other newbies.

Absolutely. The most successful traders seem to be the ones who know how to take losses, not just pick winners.

All this talk of Delta, Theta, Vega, Beta, etc. has me thinking about real estate metrics. One I pay close attention to is the $/toilet ratio. We don't have a fancy Greek symbol for it, but higher is better. Self storage can get you north of 3,000,000:1. If investing in an asset class where a high $/toilet ratio isn't an option (residential), scaling the size of the portfolio where you hire employees makes a huge difference. The current high prices have tempted us into listing two of our smallest assets. We are re-deploying the capital into passive MF and pulling out a small amount for an options trading experiment. We've also taken advantage of the low rates to cash out refi and reduce risk with non-recourse debt.

Options aren't all that risky when managed properly by an educated trader. I've traded the simple strategies off and on for nearly 30 years. I just got tired of managing positions. The WB reserve schedule over the last year has given me time to take on some other personal interests, so I've returned to options trading. The biggest risk is losing time more than money.

Real estate comes with a wide range of risks. Buying an existing asset with a history of income is not very risky. Like options, you have to know the market and what represents a good price. You are absolutely correct about the relationship between risk and expertise. I'm working on my expertise in stocks, options and futures as a risk reduction measure. Knowledge and expertise definitely reduce risk and allow investors/traders to identify safety where others fear risk.

I subscribe to a trading newsletter/group. It’s been great for me to start to learn trading stocks and options. They send out a weekly email newsletter each Sunday, have a daily chat group to ask questions and learn, online lessons, and send trade alerts when they make a trade (with stops and target). I've easily covered my subscription costs with gains from the trade alerts and what I’ve learned. They’re offering a 20% discount to new subscribers with code HNDST2020.

Wanderer Financial

I guess my point is more about how we perceive risk vs actual risk. I am very comfortable taking risks trading options. Somehow losing $1-$2k per trade seems less risky to me than investing in real estate. No one is right or wrong. There is no way to establish and appropriate amount of risk that works for everyone.

its just an interesting observation. I’ve always seen real estate as illiquid, high overhead, hope for a renter to pay your mortgage and pray for price appreciation that exceeds say, an index fund. A lot here have successfully done this.

Just an interesting observation and good way to continue to develop ones investing Arsenal. Ultimately, we all have the same *general* goal. I think.

thanks for the link razor.

The “type” of account isn’t the issue. It’s the source of funds. If you have $500K in your 401K in index funds, don’t sell that to trade options is my point. Build your nest egg, and maybe use a small amount around that to use options if you’d like. That’s what I was getting at.

I am not downing Razor or that service. I know nothing about either. If that service will not provide verified trading results for at least two years, walk away. You can thank me later.

So, tying it all together, what say the pundits on an Feb RMO strangle 15/40? You can play too Tegridy.

I'll propose a better trade would be selling put premium only. The IV is >100% and the max downside loss is capped at 100%- premium collected. It's a statistical winner. Max upside loss could exceed 100%, if the stock triples.

* Please don't take me seriously, I'm playing with a paper account. My trading opinions are equivalent to flying advice from a teenager playing MS Flight Simulator.https://i.ebayimg.com/images/i/22188...-1/s-l1000.jpg

I don’t have a lot of time to post right now but I use Trade Station. I avoided it for years because I thought it would be expensive but it isn’t. I trade options, futures and currency futures. I got into automated systems years ago using NinjaTrader (C# language) but whenever I had an idea for an automated system, I had to hire a programmer to program it without even knowing if it would be profitable so I didn’t. Now, with Tradestation, they use “easylanguage” which is based on FORTRAN and easy to learn. The reason I switched to Trade station was because I had an idea for an automated system for trading options, and Trade Station is the only platform that supports automated options trading. I’ll have to look but I don’t think I pay anything for data. If you make a certain amount of round turn trades, the fees are waved. I’ll post more when I can after the family vacation or you can PM me any questions you have and I’ll answer the best I can. Trade Station isn’t nearly as expensive as I thought it would be, and with a virtual private server, you can set yourself up to have a program trade the futures market 24 hours a day, 5 days a week, while you’re working, sleeping, or hanging with friends or family. There’s nothing better than connecting to your VPS and finding out you made $3-5 K overnight. The opposite can happen though and those mornings suck.

Always good for a discussion. I would look at doing this on a stand alone basis as a strangle(you are correct about the theoretical unlimited loss on the upside) Pretty low volume. A mitigating factor is, I bought RMO towards the close on Thursday after a PITA selling of RMO in Fidelity after the name change on Wed from RMG to RMO at 31. Had to call a broker at Fidelity because they didn’t handle the conversion as seamlessly as I would have wished. Nonetheless, it would be effectively a covered call with the naked put as you suggested. I opened a TT account and instead of paper trading( a good recc ) I have made some differing trades (IC, butterfly, strangle, vertical) to learn(no pain, no gain). Spent 1 day waiting on a fill, had to adjust the bid the next day to get filled. I suspect on a low volume stock like RMO that might also be a factor.

I have used the “duplicate me” of several TT traders but was wondering about my own pick. Seems the metrics are as good or better than a strangle from the pro’s at TT. I was tilting towards the strangle due to my long RMO stock but would have considered it on its own merits as well as what you are thinking. Since I am a Boomer and am well acquainted with all the “missionary positions” of options, I was interested in some of the “bark like a dog” or “pretzel positions”.

Signed,

An old dog trying to learn new tricks

For a second attempt, consider this double diagonal
-Sell FEB RMO strangle 15/40
-Buy MAY RMO strangle 12.5/45
-Net Debit of $2.70

*Reminder, this is like flying advice from a 12yo pilot playing MS Flight Sim. DYODD, YMMV, Objects in mirror are closer than they appear, You're about to become the bug on the windscreen. (YABBOW)

Effectively a very wide Iron Condor(my term) Would lower the cap requirement over 2 separate trades and maybe a better ROC?

IDKWTF a double diagonal is but I get what you are throwing down

RMO diverged from the market on Thursday closing on its absolute low while the market closed at all time highs. Not a good sign for the bulls. Given the ugliness of the chart and the lack of support below I would probably hold off for now. It is down over thirty percent from its highs in two days. I bet it goes down a bit more before leveling off. The wholesale cashing out of the investors looks a lot like a pump and dump to me.

Gunfighter does your platform offer you IV Rank? That’s much more relative if you’re premium hunting. An underlying “rank” tells you if it’s volatility is elevated relative to its historical volatility. So RMO, for example has a rank of 32. Not bad for premium, but not great. I can’t remember if you said you use TW or TOS. TW has this built into the platform, TOS requires a macro which I have somewhere and can get it to you if you’re interested.

Buck Rogers RMO isn’t terribly illiquid so it seems tradeable. Consider a February spread; its close to 45 days to expiration (Tasty trade target). I just plugged in the following February trade; sell the $20 put and buy the $15 put. This gets you, roughly, a $2.50 credit. So max loss is $2.50 (width of spread is $5 (20-15)) and max loss is width of spread minus credit collected (5-2.5). So let’s assume the stock tanks to $5, you give back the $2.50 you collected plus another $2.50. The probability of 50% profit on this is 66% (also a tasty trade target).

I like this trade. I’d put an order to sell the spread for $2.50 and if it executed put in a GTC to close it at 50% profit. (STC For $1.25...GTC).

Thanks for that. Generally speaking, have you found that generating metrics like this trade with POP P50 and ROC are numerous? Or does it take either mimicking the pros or lots of "digging" to come up with appropriate trades. Additionally, do you vary your trade strategies for diversity, or have you found your "comfort zone" by restricting the strategies you employ to just a couple?

For my 45 DTE trades, I use almost exclusively naked puts and put spreads. (Also consider the $20 naked put, worst case scenario you are assigned 100 shares at a cost basis close to $15, if you have been wanting shares of this stock that’s a good option).

For earnings trades where I am trying to profit from the post earnings “volatility crush” I use iron condors, typically. Depending on how a stock moves after an earnings release I usually write another put spread or buy calls.

For my highest conviction companies, I dabble with buying deep in the money calls dated at least a year out. These move almost identically stock but require less capital (this is “stock replacement”).

For the statistical side of this, the RMO trade I posted is 66% P50, which are great odds. Realize though, you have to trade these often for the statistics to play out. This one might be a dud, but over time if you keep trading these ~70% trades, you should do well. Tastyworks makes it super easy.

I’ve owned SPY in the 401 for a few years and it has been good! After listening to Tastytrade seminars it seems like I’m leaving money on the table by not doing a covered call on long positions I own.

so if I did a cc on SPY, at 30 delta; 45 dte? If it gets excercised fine then seek the put at 30 delta too? Rinse repeat?? What do you guys think? Maybe just leave it alone and don’t screw withit!! Lol!

That is called the wheel strategy. You tube it and you can learn all you need to know.

Ok, all the SPAC stocks for the most part go out with warrants. They cost pennies and are exercised at, typically, 11.50. They are then sold into the market to keep the company for exercising them for the same pennies they were bought at. This stock will find support at 11.50 ish after all the warrants have been exercised and either held or sold for profit. If you are going to mess with RMO you may get lower prices. The range will be 11.50 to 18.00 as the stock typically has to be at or above 18 for the warrants to be convertible.

Long story short the big drop is the warrant holders paying the company 11.50 for the shares then dumping them on the market at the highest price possible. One of Buffet's biggest plays through the years. Pay a few pennies for a warrant and sell the stock for a few thousand percent gain in a few months.

Current warrant price:
RMO.WT Stock Price | Romeo Power Inc. Wt Stock Quote (U.S.: NYSE) | MarketWatch

Intresting..Too bad Tegridy got his feathers ruffled. I would have liked to hear his opinion on this

Oh well

The market is full of ways for people in the know to make big profits. This is why I said don't listen to Buffet's BS earlier in the thread. Warrants have made almost half of his billions over the years. When he says buy and hold index funds he is protecting his turf. Within the past 52 weeks those Romeo warrants traded for as low as forty cents. If you bought them at .40 and converted and sold them on opening day at 30.00, well you can do the math. If you like the stock buy it back when it settles down and reaches equilibrium. Or you could sell the ten puts and see if it comes to you.

EDIT: The real gain is just selling the warrants. .40 to 10.47 = 26X

Great, now I get hot stock ads and foreclosed home notices, plus the usual midget hooker ads.

That doesn’t sound like “Tegridy”, that sounds shady AF! :D Note to self: stay away from SPACs. Learned something new today, thanks.