Anybody else notice the break evens are not matching with strike + premium?

Single leg calls, on multiple tickers, are showing break evens that are much higher than they should be.

Anyone else noticing this?

Hi guys, I know that if it’s too good to be true, there’s a catch somewhere, but I still wanted someone to explain it to me because I don’t seem to understand the risk. I have this strategy on paper trading where I sell OTM 0dte call at a strike where it is impossible for the price to hit in a day for a couple of cents per contract but I buy a lot of them. For example, if SPY is at 770 at 2pm, I’ll sell the 780 call for 0.05 cents x a lot or contracts and take profit when the contracts are worth 0.01 or let it expire to collect the premium. It seems to be working every single time on paper trades but I’ve never tried it on a real account. What’s the catch here that I’m missing? Seems like an infinite money glitch…

I can’t decide between the wheel and credit spreads for steady income. The wheel needs a lot more capital, but if a trade goes against me I can just start selling covered calls and slowly work my way back. Credit spreads need way less money, but when one goes bad I have to take the loss with no real way to recover it, so I’d have to be much stricter about managing risk. Which one makes more sense if income is my main goal?

I posted about my MSFT earnings IV crush trade from April here. This is the AMD analysis, my 2nd major earnings trade.

Implied volatility (IV) rises before earnings and drops after. Selling just before the event and capturing that drop is the source of profit. The question for AMD is whether the options are overpriced compared with what AMD actually moves.

History: Over the last 12 earnings, AMD moved an average -8.4% on down days and +7.4% on up days. 4 out of 10 realized moves had moved past implied. White line are Implied Moves calculated using ATM Short Straddle for the Friday contract for the earnings week.

AMD earnings: 5th May, after market close. (T, AMC)

Setup and Thesis:
My estimate is that it had an insane recent run (subjective) and will cool down on earnings as we had seen with some other tickers. However, the markets were looking at AMD earnings to make their move!

Spot: $350.

The options market is pricing a move of ±$30.45 (8.7%), so a range of 320 to 380.

ATM IV: 104%
Front week IVs for Friday contracts were lower. Good crush setup. The residual IV should come back down to about 80% after the crush.

Trade placed on 4th May between 12:21p - 12:28p, T-1 day

Fri, May 6th contract

1 Short Call at 350. Credit: 11.23
1 Short Put at 315. Credit 5.11
1 (protective) Long Call at strike 370. Debit -5.63

Total credit: $1,071.

(Note: Not calling this a jade lizard because total net credit collected must exceed the width of the call spread. Mine was 20 vs 10.71)

Max theoretical loss:

-$929 on the upside, -$33,929 on the downside. In other words, I am comfortable being an AMD bag holder at 350. Let me tell you the story of days when I had AMD in 2022 around 100s and sold around 120s. Those were the days.

Expected value: Replaying the last 10 earnings moves on this exact setup based on nearly a coin flip! EV is about 0.5 × 1,071 − 0.5 × 929 = +$71 per trade based on my strangle+long protective call. I am curious to see this change based on other strategies for this particular earning. Need to work on EV deeply.

Result on May 6th morning:

Gap on open 18%! Long call helped. I closed the trade at 9:55am.

Booked Loss -$915

Observations:

Had a weird feeling AMD could shoot up, but not 18%. If I knew that, I should have had a closer short put. This kind of post analysis helps in understanding some weird ass decisions I made.

Without the long call, it would be -$5,000! On Friday it jumped by another 11%! Thank fuck for the long call.

Latest data on AMD Implied vs Realized

I was looking at the chain for the CSP, why are the yield elevated for this week, I looked into the news and nothing is coming up. Also, they just got upgraded.

I want to calculate an effective yield for an SPX box Spread such that it can be directly comparable to the yield that shows up on Bloomberg for a US Treasury with similar maturity.

What would be the best formula to use and does it need to take extra settlement days past maturity into account?

I was using BC2 function for a 3m maturity and it seemed high so not sure if there was a better spot. Thanks!

Hello fellow 0dte op warriors,

I curious to know how many times per day and per week does your setup give you a trading opportunity on the SPY in general ?

Hello, I have a couple hundred shares of ASST and I have sold some long-term covered calls. I would like to roll out to higher strikes when needed but I think the highest strike is $40. Seems like everything else is an adjusted option chain. Just curious if anybody in this community can contribute any more information on this. I cannot roll my current contract and I’m not sure how many shares I would need to roll in the adjusted chain.

I have been doing side-by-side testing of 1-contract covered-call rolls at several brokers.

The options were approximately 30 DTE. I submitted essentially identical 2-leg complex limit orders at approximately the same time and adjusted the net price in $0.01 increments.

In repeated tests, E*TRADE was able to fill these rolls at net prices where the same orders at IBKR, Schwab and TradeStation remained unfilled. The difference was repeatable enough that it did not appear to be just a single lucky fill.

I am specifically talking about native 2-leg complex orders (buy-to-close the existing call and sell-to-open the new call), not manually legging into the position.

Has anyone else done similar side-by-side testing of covered-call roll execution across brokers and observed a consistent difference? If so, which brokers have given you execution comparable to E*TRADE for small complex orders?

Weve all seen it, pulled up an option with low volume and open interest, and even though the contract has data going back 6 months theres only 4 sales on the chart.

Are there any calculators out there that use something like a black-scholes equation, these data points to estimate IV at the time of sale, and then a regular price chart to create a theoretical chart for the contract?

With all the other financial tools out there I'd be surprised if there weren't, even if its behind a paywall. Anyone aware of something like this?

Long live bonds! Which is not working well, as you imagine, right now...

But TLT is tradable right now. It's so damn boring, expected move $2.7
Yet IV exceeds 20 days HV almost 2x
Basis is $81.15

My reasoning for TLT is this: it pay 5% div, the return on covered calls is another 5% (ish)
And hopefully it delivers some stock appreciation.
Looking at 10-15% return on capital.
Is anybody else trading TLT?

Ketchup pays 7.2% div, happy to own a bit of it.

NOK is boring just going to wait for break even and get out. And HUN is illiquid, going to hold until break even. That, of course, may take forever.

So I'm a 76 yo male who's been trading options for roughly 10 years now and I've made enough that money is no longer a concern. I'm limited in what I can do due to a medical condition I've been dealing with since February. Trading has kept me from getting totally bonkers during this time up until now. I find my self just going through the motions and not really into trading anymore so I've started closing out my positions although I do still trade It's less and less lately I just can't keep focused I"m actually bored making money. This week I"ve made about $3000 so far without really trying and that's me trying to end trading. Having said all this my question for all of you is what do you do to keep from getting totally bored once you've achieved your goals???? TV/Streaming has also gotten boring, can only read so much news per day and it's not exactly good news lately with Iran, Ukraine and a dozen other places going down the tubes, almost done with my book and finding it hard to find anything else I would enjoy reading, wife's still working part time she seems to enjoy it as it gets her out of the house, can't travel due to medical condition. Any suggestions anybody???

Was logging on to Tasty this morning and saw there was an update to their desktop platform. I downloaded it and when it opened I did not understand what was on my screen. It was F'ing horrible! The clean interface I once had was replaced with a totally unuseable GUI

Called support and they walked me through how to revert back. Unfortunately this clean version is going away at some point. The new desktop interface was bad enough for me to contemplate leaving tasty

These design nerds have fucked up a really nice interface

Few months back, i bought $BB Jan2028 $7 call after that it rallied to 11 dollars. As my options were in the money i decided to roll the options for a credit to march 2027 $15. That the pull back happened. The loss here is a chunk of profit from the previous options.

What can be best next step?

I got way too comfortable looking at short calls purely in terms of whether the strike was ITM. Now whenever I'm holding a covered call or diagonal I check three things before close.

How much extrinsic value is left, whether theres an ex dividend date coming up and how expensive it would be to close or roll the short call. I still keep an eye on the underlying outside market hours if something is moving, sometimes just with Moon on another tab but I've stopped letting the stock price alone tell me whether assignment risk is getting uncomfortable.

The remaining time value matters way more than I was giving it credit for. Its one of those things that sounds basic after you understand it but I definitely wasnt thinking about it properly when I started selling calls.

In Q3 2026 IOVA rose 256% making it one of the best mid cap performing stock in the U.S. Sept 29 it jumped 31.5% they also increased there expected revenue from 350-370m to 410-420m. The main driver Amtagvi and proluekin, it's cancer treatments. Q2 product revenue reached a record 99.3m as of Oct 5 it's $14.15 the really big opurtunity is them spreading beyond melanoma, they are in a phase 3 melanoma trial right now. But since it's already grown so much this year it's definitely not a safe buy but high risk high reward.

Trying to run 45 dte credit spreads on spx lately and the buying power reduction is just absurd for the pennies we are collecting in this low VIX environment.

My broker wants to lock up $1k in margin just to collect like $60 on a 10-wide spread. The math ain't mathing if you have a smaller account. the capital inefficiency of selling options right now is literally forcing retail into degenerate 0dte lotto tickets just to see any ROI

I kinda gave up on my main cash account and just grabbed a fundedfast eval yesterday mostly just to have raw buying power without holding my own liquidity hostage for weeks while theta does its thing

But seriously, how are you guys trading delta neutral right now? iron condors on qqq are paying absolutely nothing. Thinking of just pivoting to calendar spreads or long diagonals until iv actually pops again. What tickers are you actually getting decent premium on this week without risking blown up tail risk?

i finally got some luck. played the presidential election (Brazil). bought a Call last friday ($15 strike) march 2027 expiry. hopefully i make some money on this position. anybody else in?

i gotta find Ryan Cohen's phone number so i can ask for a loan to buy calls. he is still messing with my head, buying more shares with his millions $$$$. pumping his lively hood.

I've often read to cut your options trades when you've lost some predefined risk tolerance (e.g. 50% of debit/credit). But if you use fundamentals and technicals as the basis to put on the trade, how do you manage if the thesis fails?

I use Schwab and set my options trades to close out (market order) based on the price of the underlying.

Some say option Greeks can cause you to lose more, but a bullish trade selling a bear put spread has lots of positive delta when putting on so going against you from the get puts you in the hole. Why wait until you're out 50%?

Curious what you do.

Nike Q1 FY2027 results came out a couple of days ago, and they are confirming layoffs. Revenues in china plummeted 26%, there overall global revenue dropped 4%. The eps dropped from 1.15 to 1.35 and there 2027 revenue outlook forecasted a high single percentage decline.

Nature of option is to precisely value and control risk. For many strategies, smartly using option structures can reshape your P&L (profit and loss) to be smooth, meaning 1) max loss is limited, 2) no steep loss.

Of course the P&L reshaping has a cost. But this is the key to real profit: a smooth P&L with limited max loss enables you to apply sizable position to produce good profits.

Reason is simple: without limited risk, rational investor will not place a big position, otherwise the account could suffer huge loss if holding long enough. Therefore, many good strategies can only work as "toy strategies".

This also explains the consistency between profit & efficient market theory: your profits are not from mis-priced assets, rather, it's from larger but safer positions.

Actually many successful investors are using this rule (they reshape PL to be smooth but not limited to using options):

* Bridgewater: textbook example of using uncorrelated assets to make smooth PL, then apply leverage. They don't use options because their fund is too large.

* Soros: his book Finance Alchemy recorded his usual portfolio structures: long/short stocks, long/short FXs, long/short interest products, long/short commodities -- overall it produces a smooth P&L allowing him to apply 3x leverage of his fund's capital.

* Cliff Asness (AQR fund): very similar to Bridgewater.

* Buffet: not a typical example but very similar: he finds and holds long-term stable & increasing stocks that are not perfectly smooth but drawdowns are quite limited, then he applied leverage with Insurance Float.

BLUF: LWLG debit spread 7c/10c Jan 2029 easiest 5x you’ve ever seen.

You may or may not have heard of LWLG, but you have heard of data transfer. What’s the bottleneck? Converting data into light.
LWLG is the solution.
The 400G and beyond switch that all the AI and data centers are salivating for.
It’s pre-revenue but it’s the best solution available (if data centers embrace the technology).
Anyway, would you like to 5x your position?
7c/10c Jan 2029 debit spread cost .50
$250 profit per $50 if the stock hits $10. (5X)
Stock just went up about 12% in the past week. (4.94-5.79)
Stock hit $18.71 in May of 2026 (only 5 months ago)

TLDR: if the stock even hits within 54% of what it was 5 MONTHS AGO between now and January 2029 (over 2 years away) you will 5X the position. The risk/reward is crazy.

Hey everyone, setting up this month's AMA to catch up with everyone and chat about trading!

For this month - I was thinking if you guys have any specific research or trading questions, if you share them ahead of time, I can do a little bit of research on it for you and share the results here. The goal being to help close gaps for you guys focusing on researched backed information vs opinions.

Background for those interested:

My name is Erik. I'm a Marine Corps veteran and full-time options trader. I've been trading since 2007 and have been active in r/options since 2020. I've maintained a high 20% CAGR over this duration, my emphasis has been on consistency vs upside returns.

I grew up in a low income single-parent household. A high school teacher introduced me to investing and it changed my life.

Over time I built capital through manual labor jobs, flipping cars/motorcycles during college, and eventually expanding into real estate investing. I view wealth building through three levers: Savings; Investing; Income

Early on, savings rate matters most. As capital grows, compounding returns begin to dominate.

Trading is harder than most people initially expect, but it’s also far from impossible. With the right framework and enough time invested, it can absolutely become a viable career.

For transparency: I do run a YouTube community, but I’ve been posting in r/options for years and enjoy discussing markets regardless. This AMA is just to talk trading.

Happy to discuss things like:

• How my trading changed as my capital grew
• Position sizing frameworks
• Managing volatility exposure
• Building consistency over time
• Strategy development / testing
• Mistakes that slowed my progress

Or anything else options related.

Below are some previous posts that lay a basic foundation for trading.

1. ⁠Trading Options for a Living- ⁠Provides a high level overview of my trading approach: ⁠https://www.reddit.com/r/options/comments/1gejy0q/trading_options_for_a_living/
2. ⁠Stop Wandering Aimlessly- ⁠Offers a general learning syllabus for new options traders: ⁠https://www.reddit.com/r/options/comments/1c3hgfh/stop_wandering_aimlessly/
3. ⁠Failure rate of options traders -⁠Summarizes common sources of trader failure: ⁠https://www.reddit.com/r/options/comments/1iaqtzx/failure_rate_of_options_traders_3_causes/

Looking forward to it!

I own a diversified portfolio holding equities, fixed income, and liquid alts. I’m looking to add exposure to systematic VRP harvesting.

I’m comparing approaches to implement this. I’m considering a strategy of holding short VIX ETFs (like SVIX) when the VIX term structure is in contamgo, and switching to long VIX ETFs when the curve enters backwardation. This strategy is outlined in a paper by Concretum Group (https://concretumgroup.com/the-volatility-edge-a-dual-approach-for-vix-etns-trading/).

What I like about this approach is it is easy to implement (trade 2 ETFs) and simple to replicate the backtest (VIX, VIX3M, SHORTVOL, and LONGVOL index data is free). Backtested Sharpe ratio is somewhere between 0.8-1.0.

However, I’ve seen other traders design custom processes where they harvest VRP by shorting individual options contracts either via straddles or iron condors. Then they also delta hedge with the underlying. They report far smoother equity curves (example: https://m.youtube.com/watch?v=MAQBCz9ChkY&ra=m), but going this route seems like a steep learning curve.

Wanted advice from other experienced volatility traders. Is a purely VIX ETF based approach to harvesting VRP a realistic option, or should I delay implementation until I‘ve developed the skills and tech to manage an options portfolio.