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Message
re: Options premiums plays
Posted on 2/26/26 at 11:42 am to TigahsOnTop
Posted on 2/26/26 at 11:42 am to TigahsOnTop
quote:
During a real sell-off, you would get completely wiped out. Luckily we haven't seen one since you started using this strategy, but don't mistake that for "limiting downside risk".
I simply wouldnt trade and close any open position I have, again limits any long term downside to this...something you dont have just buying and holding and then suddenly need the money after big downturn.
I closed a position last year that was down over $300 on the day, so yes, certainly have seen a sell off in a day before on this.
During this week
The S&P lost 10% in 2 days there, I chose not to trade during that week knowing the extreme IV/volatility of what was going on. My big loss came the following week, but it was $300, not 10% of our savings (or $6k-$7k), vaporized.
Again this is NOT long term investment account money, it's savings, meant to stay liquid, and continually go up with maybe small down swings in very short periods. If things get crazy, i just sit on the sideline and collect the interest, once its not as crazy, sell way out the money put options to gamblers effectively.
Again, also well aware the S&P has rallied a ton since April of last year when that happened and "I would have been better off just leaving it in the S&P 500". I am purposely limiting my upside to also limit my downside to collect way more than a typical "savings" account would but keep it liquid without any big long term losses when we could need that money at any point.
Also I've sold options for the better part of 5+ years now, well through big downturns like 2022, this strategy is just newer with XSP as its a newer index (on RH at least) where premiums are taxed 60% long term which I am taking advantage of for tax purposes.
This post was edited on 2/26/26 at 12:07 pm
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Posted on 2/26/26 at 1:30 pm to TigahsOnTop
quote:
This is all just gambling. "I asked chatgpt if I should pick red or black on roulette".
For all of you options bros, compare your performance selling covered calls to the performance of the underlying equities if you bought and hold. You'll quickly realize this "income" you are generating is just capping your upside.
No. No it's not. At all.
Posted on 2/26/26 at 1:43 pm to TigahsOnTop
quote:
If you own the index, you get unlimited upside and can ride out drawdowns over time. If you sell 0DTE puts, your upside is capped at the tiny premium
No. It's just wrong. I own many stocks that I sell options on every week and have for well over a decade.
One is AMZN purchased at $104. I sell calls weekly and have from the start. I still own it. So, no it's not capping anything. On the few times I have been assigned, I simply sold puts with the idea of purchasing at the assigned price.
Posted on 2/26/26 at 2:27 pm to BCreed1
Thunderbird's strategy makes sense to me. Still hate the framing of a savings account, but he at least understands he is capping upside (which he has since explained is intentional). Totally understand the logic. Interesting strategy, but as he mentioned, it only works if you stop trading during downturns (assuming you are good enough at guessing downturns). And he has done it for 6 years, which doesn't include any true sell-offs (with the exception of covid, which is still not extreme).
This, on the other hand, is just a fundamental misunderstanding of what you are doing. Yes it is capping upside.
When you sell a call, you’re literally selling someone else the right to your stock above the strike. If AMZN rips $20 past your strike, you don’t get that move (the call buyer does). The premium doesn’t change that.
“Just selling puts to get it back” doesn’t undo the missed upside. You already gave it up.
Covered calls = long stock minus upside convexity, plus small income. That’s fine, but it is a cap by definition. Extensive research to back this
quote:
No. It's just wrong. I own many stocks that I sell options on every week and have for well over a decade.
One is AMZN purchased at $104. I sell calls weekly and have from the start. I still own it. So, no it's not capping anything. On the few times I have been assigned, I simply sold puts with the idea of purchasing at the assigned price.
This, on the other hand, is just a fundamental misunderstanding of what you are doing. Yes it is capping upside.
When you sell a call, you’re literally selling someone else the right to your stock above the strike. If AMZN rips $20 past your strike, you don’t get that move (the call buyer does). The premium doesn’t change that.
“Just selling puts to get it back” doesn’t undo the missed upside. You already gave it up.
Covered calls = long stock minus upside convexity, plus small income. That’s fine, but it is a cap by definition. Extensive research to back this
Posted on 2/26/26 at 3:09 pm to TigahsOnTop
Obviously it caps the upside but if you can generate income along the way selling out of the money calls at a price you'd be happy to sell the stock for anyway to generate "rent" from your holdings.
Posted on 2/26/26 at 10:12 pm to TigahsOnTop
quote:
This, on the other hand, is just a fundamental misunderstanding of what you are doing. Yes it is capping upside.
When you sell a call, you’re literally selling someone else the right to your stock above the strike. If AMZN rips $20 past your strike, you don’t get that move (the call buyer does). The premium doesn’t change that.
“Just selling puts to get it back” doesn’t undo the missed upside. You already gave it up.
No sir. You are wrong. You are presenting hypotheticals. I can do the same with every aspect of thew market.
AMZN, continuing to use it as an example (but applies to all stocks). AMZN is $40 under it's YTD high(over $51 off it's 52 week high). Tell me how I missed out on the upside had I been assigned at $245? I didn't. Markets and stock move up and down.
Stock "xyz" is purchased at $100. I sell a call at .15 delta or a strike of $110. It reaches $111 and I am assigned. I collect the $110 per share, plus the premium. I immediately sell a put at the $109. It falls off the following week(month..etc) and I exercise the put. I keep the premium and now own it at $109 after selling it for $110. Where did I lose upside?
The only time your hypo would be a thing is if a stock never breathes. If it never moves up or down. Nothing about the market only moves in an up direction.
quote:
Extensive research to back this
My extensive research is almost 2 decades of trading and investing.
Posted on 2/26/26 at 10:29 pm to TigahsOnTop
quote:
When you sell a call, you’re literally selling someone else the right to your stock above the strike. If AMZN rips $20 past your strike, you don’t get that move (the call buyer does). The premium doesn’t change that.
Not true, your shares are very rarely called away pre-expiry. Youhave the ability to roll your option up and/or out if you don’t want your shares called away.
In your example, when Amazon rips, you can still capture the upside beyond your strike by rolling up. And if you go out far enough, you will likely collect more premium by doing this.
Posted on 2/27/26 at 7:28 am to CecilShortsHisPants
No. This is just payoff math.
Using your own example:
Buy at $100.
Sell the $110 call (.15 delta).
Stock goes to $111 and you’re assigned.
You made $10 + premium. Great.
But if the stock keeps running to $130, $150 … you’re out at $110. That upside is gone. Selling a $109 put after doesn’t “undo” that. That’s a brand new trade with new risk. If it never comes back to $109, you just permanently underperformed buy-and-hold.
Same with the AMZN example. If you sold calls at $245 and it rips $20 past your strike, that $20 belongs to the call buyer. Rolling means you’re buying back intrinsic value at a loss and pushing risk out in time. That’s not free upside — that’s damage control.
And this absolutely would have crushed you during real secular runs. Try systematically selling calls during the massive multi-year runs in Amazon or Nvidia. You’d have been consistently called away and repeatedly chasing higher. That’s textbook underperformance in strong bull trends.
“I’ve traded for 20 years” doesn’t change the payoff diagram. If you could truly capture unlimited upside and premium at scale with no tradeoff, you wouldn’t be arguing on a message board (you’d be a PM at a top hedge fund).
Using your own example:
Buy at $100.
Sell the $110 call (.15 delta).
Stock goes to $111 and you’re assigned.
You made $10 + premium. Great.
But if the stock keeps running to $130, $150 … you’re out at $110. That upside is gone. Selling a $109 put after doesn’t “undo” that. That’s a brand new trade with new risk. If it never comes back to $109, you just permanently underperformed buy-and-hold.
Same with the AMZN example. If you sold calls at $245 and it rips $20 past your strike, that $20 belongs to the call buyer. Rolling means you’re buying back intrinsic value at a loss and pushing risk out in time. That’s not free upside — that’s damage control.
And this absolutely would have crushed you during real secular runs. Try systematically selling calls during the massive multi-year runs in Amazon or Nvidia. You’d have been consistently called away and repeatedly chasing higher. That’s textbook underperformance in strong bull trends.
“I’ve traded for 20 years” doesn’t change the payoff diagram. If you could truly capture unlimited upside and premium at scale with no tradeoff, you wouldn’t be arguing on a message board (you’d be a PM at a top hedge fund).
This post was edited on 2/27/26 at 7:31 am
Posted on 2/27/26 at 7:44 am to TigahsOnTop
IF you are willing to part with a stock at a set price, there is nothing wrong with selling a covered call.
You do give up further gains, but IF you have reasons to sell at that price, that is fine.
Selling a put can be used to enter a position. It could go lower.
I’ve done options at times. Most contracts expire worthless so being on the sell side tends to work better.
I agree that buying and holding works best. Mostly bc of time and decreased transaction costs.
You do give up further gains, but IF you have reasons to sell at that price, that is fine.
Selling a put can be used to enter a position. It could go lower.
I’ve done options at times. Most contracts expire worthless so being on the sell side tends to work better.
I agree that buying and holding works best. Mostly bc of time and decreased transaction costs.
Posted on 2/27/26 at 8:34 am to TigahsOnTop
quote:
Using your own example:
But you didn't use my own example. You used a part of it and demand that it be what you are presenting. When in reality I gave you the numbers of AMZN over the past 52 weeks and showed you that like EVERY OTHER STOCK... they all move up and down.
Why ignore that?
quote:
And this absolutely would have crushed you during real secular runs. Try systematically selling calls during the massive multi-year runs in Amazon or Nvidia. You’d have been consistently called away and repeatedly chasing higher.
You are full of shite! Dude I own both of those and SNDK which has been on a hard run!
quote:
“I’ve traded for 20 years” doesn’t change the payoff diagram. If you could truly capture unlimited upside and premium at scale with no tradeoff, you wouldn’t be arguing on a message board (you’d be a PM at a top hedge fund).
LMAO!...... Dumbarse!
Posted on 2/27/26 at 11:35 am to BCreed1
quote:
You are full of shite! Dude I own both of those and SNDK which has been on a hard run!
I can do the math however way you want to cut it. You are part of a larger issue, options bros that think they know something, but in reality don’t understand the financial instrument.
There are some great academic papers released on the concept, I’d advise you to read them. As someone who looks at private funds for UHNW clients for a living, I’ve seen hedge funds get smoked for trying to replicate similar strategies to the one you are outlying at scale. Why I largely don’t play in the public markets outside of indexing/ direct indexing for tax loss harvesting.
This post was edited on 2/27/26 at 11:38 am
Posted on 2/27/26 at 11:37 am to TigahsOnTop
quote:This is 1000% correct. You explained it simpler than I could!
IF you are willing to part with a stock at a set price, there is nothing wrong with selling a covered call. You do give up further gains, but IF you have reasons to sell at that price, that is fine. Selling a put can be used to enter a position. It could go lower. I’ve done options at times. Most contracts expire worthless so being on the sell side tends to work better. I agree that buying and holding works best. Mostly bc of time and decreased transaction costs.
Posted on 2/27/26 at 12:24 pm to TigahsOnTop
quote:
I can do the math however way you want to cut it. You are part of a larger issue, options bros that think they know something, but in reality don’t understand the financial instrument.
No you actually have proven you can not. The only thing you can do is make up a strict hypothetical to try to prove your misguided point.
The hypothetical is not based in reality.
Tell me, how many stocks have only gone up? You can not name one. And that is the only way your point is valid.
And WE both know it.
This post was edited on 2/27/26 at 12:25 pm
Posted on 2/27/26 at 12:41 pm to BCreed1
Dude, the math is not reliant on the stock only going up lmao. I don't know why you are so fixated on that. Every time the stock goes above the strike price (and stays there!), you lose upside. Plain and simple. Yes, stocks go up and down, I'm not retarded.
read up: LINK
read up: LINK
This post was edited on 2/27/26 at 12:45 pm
Posted on 2/27/26 at 1:39 pm to TigahsOnTop
Today I really wish the person that bought my delta options had exercised them yesterday when we were above the strike price 
Posted on 2/27/26 at 2:16 pm to TigahsOnTop
quote:
Every time the stock goes above the strike price (and stays there!),
See your own words? "And stays there"???
My goodness man. Think. No stock "stays there". He asked you to name one that does only goes up. You couldn't.
Now tell me a stock that never goes down. Bet you cant.
Like Creed stated, your hypothetical relies strictly upon a stock moving past a strike price and never ever in history dips.
Name a stock that has done what you have suggested.
This post was edited on 2/27/26 at 2:18 pm
Posted on 2/27/26 at 2:59 pm to Jjdoc
quote:
See your own words? "And stays there"???
My goodness man. Think. No stock "stays there". He asked you to name one that does only goes up. You couldn't.
Like Creed stated, your hypothetical relies strictly upon a stock moving past a strike price and never ever in history dips.
Name a stock that has done what you have suggested.
Option bros out in full force. Strike price is 110, stock goes to 120. Falls back down to 115. Guess what, the stock went down, but stayed above the strike price. The math doesn't imply the stock can't ever go up and down you bimbo.
Pretty sad I have to spell this out for you. The "Black-Scholes formula" won a Nobel prize for laying out the exact way in which options are priced. I could give you about 50 academic papers all coming to the same conclusion that covered calls have a lower expected value than the underlying equities.
This is not exactly a controversial take for anyone who has made their living working in high-finance
Posted on 2/27/26 at 3:24 pm to TigahsOnTop
In February I generated around 600 in option premium on stock I am going to hold anyway. If it gets called away at a price I am happy with great. In the meantime the call premium can fund my silly little side plays like hgraf or degenerate gambling like 0dte SPY options. Either way the 600 was "free" money to my smooth brain and like I said if it had exercised yesterday I'd have locked the price at 70 a share and not participated in the 5 dollar drop that happened today.
Posted on 2/27/26 at 4:01 pm to TigahsOnTop
You keep using his example and what you are using is wrong.
AMZN clearly went to above 255 and drop way past where you are demanding it to be. The fact is it dropped back below 200. Now he is in it cheaper than the assignment price.
Its ok. I get that you need to be the internet hero correcting everybody. In reality (that word again) you are just providing entertainment and laughs.
There is nothing wrong with investing and holding. I purchased WMT when it split. Held it to the 125 and started selling calls. Guess what. I still own it and have never been assigned.
In the end, in order for your scenario to work, you have to insist it never drops below the assigned price. That is not real world. Not even with the best of stocks.
How they are priced has nothing to do with the topic. At all. It all goes back to you insisting that stocks never will drop below the assigned price. And you are wrong. While it may not be in a day, a week, or a month, it will drop. All the while selling puts.
You also ignore the fact that the freed up capital can be placed into something else while they wait on the assigned stock to fall below the assigned strike.
AMZN clearly went to above 255 and drop way past where you are demanding it to be. The fact is it dropped back below 200. Now he is in it cheaper than the assignment price.
Its ok. I get that you need to be the internet hero correcting everybody. In reality (that word again) you are just providing entertainment and laughs.
There is nothing wrong with investing and holding. I purchased WMT when it split. Held it to the 125 and started selling calls. Guess what. I still own it and have never been assigned.
In the end, in order for your scenario to work, you have to insist it never drops below the assigned price. That is not real world. Not even with the best of stocks.
quote:
The "Black-Scholes formula" won a Nobel prize for laying out the exact way in which options are priced
How they are priced has nothing to do with the topic. At all. It all goes back to you insisting that stocks never will drop below the assigned price. And you are wrong. While it may not be in a day, a week, or a month, it will drop. All the while selling puts.
You also ignore the fact that the freed up capital can be placed into something else while they wait on the assigned stock to fall below the assigned strike.
Posted on 2/27/26 at 4:18 pm to Jjdoc
quote:
It all goes back to you insisting that stocks never will drop below the assigned price.
Of course they do sometimes do. I could play 50 blackjack hands and win 30. The EXPECTED RETURN of a covered call strategy underperforms the underlying equity in the LONG RUN.
Please provide any substantive research that claims otherwise.
Everyone so caught up in this bullshite example.
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