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SIVR Silver Paper Trade. For Learning Purposes only (Patreon)

Published:
2021-02-02 16:15:21
Imported:
2022-03

Content

Hey everybody I want you all to get familiar with this because this gives you an idea of some option basics. It shows the effect on the combination of price of buying a call and selling it out of the money calls and the impact of time depleting the time value of the out of the money calls and also highlighting how breakeven points vary overtime by strike price. I just want you to all start thinking in these terms. 

This is from my PAPER (Theoretical Trade I did not make) from yesterdays video.  Google Sheet is here https://docs.google.com/spreadsheets/d/1qLdEx6NVxJnLxcePdNCCpXzJIuCcd8HyvJ07tC2P4sg/edit?usp=sharing 

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Comments

Anonymous

Can we see how you setup this excel sheet in terms of equations and inputs? Ty

InvestAnswers
>>52752929

It is currently tied to my black scholes model and it is still a little bit fragile. I have not locked down formula so one wrong key stroke and the whole model breaks. Working on tightening it up and once fully baked will share like all my other tools.

Anonymous

Apologies for the novice question in advance. But can you give us a practical example of how this spread trade would work with $10,000 investment? As of now the Ask for the $25 Sep Call is $4.30. So say I buy 20 contracts for $8600 plus fees. Delta is at 0.60, so if it goes to $27, in theory the call should gain approx $1200, is this correct? And this is when you would open the spread by selling the $30 calls. Today the $30 calls are at a Bid of 2.30 with a delta of 0.43 so say the delta changes to .50 by the time it hit $27. Would that put the option bid around $3.30? Yielding 330x20=$6600 premium + $1200= $7800. The $8600 25 call option cost still leaves you in the red at -$800. Am I missing something here? Time decay never accounted for. Thanks

InvestAnswers
>>52755766

That is a brilliant question! Nice work and yes. The $30 calls were at $4.25 yesterday when SIVR was at $28. Running the #'s now assuming you were to sell the calls now also and now wait for a bounce . Estimated returns SIVR at $25.86 on 2nd Feb 2021 Entry cost: $2,600.00 (net debit) Maximum risk: $2,600.00 at a price of $25.00 at expiry Maximum return: $7,400.00 at a price of $30.00 at expiry Breakevens at expiry: $26.30

Anonymous

Would you be willing to share the Option excel Spreadsheet above? Would be a handy tool to see future upside.

Anonymous

Looking at CRSP. It is a company I want to own. Screen, the overall market is in a Bull trend and the stock itself has retraced from recent highs of $220 and now sitting at $166, hovering above the daily 50MA. My thoughts are either sell a Put and take the premium and if it goes down buy the stock at a discount, or do a call spread as discussed with SIVR. The Ex months would be July 2021. 1 contract for simple math. Put would be a $160 sell for $35 for a $3500 prem. If the stock drops to $125 I'd buy 100 shares at breakeven (is this accurate?). For the Call spread will use the same ex month, buy $160call at $42 and sell the $200 Call for $28, creating a breakeven of $174 and controlling 100 units for $1400. Noticed IV is at 90% which is pretty high, is that a concern and am I assessing this paper trade correctly? Thanks

InvestAnswers

you nailed both! nice work. issue to bear in mind is breakout. If CRSP shoots to $200 time to roll up - ie buy the $200c back and sell a $240. That is what I would do. Not inv advice. Rem the real game for CRSP is 3-5 years out - not instant gains in 12 months.

Anonymous

I have always been a wait for the dip or at least a reversion to the mean kind of trader, that's just what my eyes look for however, not always providing great results. I am looking more closely at companies that are breaking to ATH and getting through resistance while in an overall upward market. Such as SNAP, PINS, PANW, PD, NOW. What are the best option plays and time til exp would be the best for these type of breakout plays? Thanks.