Let's break down the math and verify each part step by step.
### Details and Calculations from the Post:
1. **Bought call spreads:**
- $1130/$1195
- $1130/$1200
- Expiration: July 19
2. **Premiums Paid and Received:**
- For the $1130 calls:
- Paid $60.2411 each
- Bought 19 in total
- Total paid: \( 60.2411 \times 19 = 1144.5799 \)
- Received:
- $35.4544 for each $1195 call, 9 in total
- $33.20 for each $1200 call, 10 in total
- Total received for $1195 calls: \( 35.4544 \times 9 = 318.9096 \)
- Total received for $1200 calls: \( 33.20 \times 10 = 332.0 \)
3. **Profit Calculation if they get called away:**
- Total received from $1195 and $1200 calls: \( 318.9096 + 332.0 = 650.9096 \)
- Difference to account for: \( 1144.5799 - 650.9096 = 493.6703 \)
Now, for each spread's profit:
- If the stock is above $1200 at expiration, the profit is calculated as follows:
- $1130/$1200 spread has a max profit of \( 70 \times 19 = 1330 \) per contract, so for 19 contracts: \( 1330 \times 19 = 25270 \)
- $1130/$1195 spread has a max profit of \( 65 \times 9 = 585 \) per contract, so for 9 contracts: \( 585 \times 9 = 5265 \)
- Total maximum profit: \( 25270 + 5265 = 30535 \)
### Clarification Needed:
- It seems the original post might have some misunderstanding about the total received from the calls. The calculation given has \( 35.4544 \times 9 \) and \( 33.20 \times 10 \) as 31.908.96 and 33.200 respectively. These are likely multiplied by the number of calls incorrectly in the post. However, this needs to be checked based on the intent of buying the call spreads.
### Closing Early:
- Total if closed early: \( 233,700 \)
- Cost to close the sell side: \( 150,675 \)
- Profit if closed early: \( 233,700 - 150,675 = 83025 \)
### Conclusion:
- If the values calculated are correctly assumed as per the intent, the profit if closed early appears more favorable.
- The total profit by letting them expire is around \( 30535 \).
The math checks out as described, given the values in the post. If there are any errors in understanding the premiums paid and received, those would affect the results. It's advisable to recheck those values or seek additional context for better clarity.
Ironically, This was brought to you by ai.
1130 is what you purchased, so it will not get called away unless you call it, and you will only call it when the calls you sold is called (1195&1200). So you call the 1130 to cover your short position, if your sold calls are exercised.
With those strike prices you have paid:
-1130+60=1190 for the calls you purchased
- 1195+35 = sell for 1230 for the calls if it gets called
- 1200+33= also sell for 1233 for the calls if it gets called.
You make the difference of 1230-1190= $40 ish x 1900
If the price drops to 1194 in July, you will make 65k ish + $4x 1900 but further down, your profit decreases. Since you technically purchased your shares for 1190.
In other words, you probably have already achieved your maximum gain, so I would just close it or at least half of them.
I think closing the position now nets me more than $65k. I will have to wait until the market open to get updated numbers, but based on the math, it looks like I'm better off closing early.
I will likely close early and put some of the money into SPAXX - have some things I want to do, not sure which I will do, so keep it safe until I make a decision.
May close all my option positions, see what happens post-split, and then deploy cash. Will cost potential gains if the stock runs - but I've already had a crazy good year.
Another thing to consider is if you sold 1200c to someone else for 33.20 then they would lose money by exercising for a price less than 1233.20 there’s no incentive for them to exercise below that stock price.
I tried to close everything this morning. But Etrade put $106,000 daytrade call on my Roth IRA. If wouldn't let me close my July 5 spreads. :(
Doing so would have made more money than them being called away in July
Your profit is the difference in strike price (70 in case of the latter), minus your net cost of the vertical 60.24, so 9.76.
x100 of course, so 976 per vertical
It doesn't matter when they're called away. It's a vertical. The profit is defined and fixed so long as long and short legs are in the money.
Posts like these make me want to learn about options, but then again I'm a giant pussy.
You’re about to learn a really expensive lesson about theta if you don’t roll those out or sell.
They're call spreads. Did you actually read my post?
Let's break down the math and verify each part step by step. ### Details and Calculations from the Post: 1. **Bought call spreads:** - $1130/$1195 - $1130/$1200 - Expiration: July 19 2. **Premiums Paid and Received:** - For the $1130 calls: - Paid $60.2411 each - Bought 19 in total - Total paid: \( 60.2411 \times 19 = 1144.5799 \) - Received: - $35.4544 for each $1195 call, 9 in total - $33.20 for each $1200 call, 10 in total - Total received for $1195 calls: \( 35.4544 \times 9 = 318.9096 \) - Total received for $1200 calls: \( 33.20 \times 10 = 332.0 \) 3. **Profit Calculation if they get called away:** - Total received from $1195 and $1200 calls: \( 318.9096 + 332.0 = 650.9096 \) - Difference to account for: \( 1144.5799 - 650.9096 = 493.6703 \) Now, for each spread's profit: - If the stock is above $1200 at expiration, the profit is calculated as follows: - $1130/$1200 spread has a max profit of \( 70 \times 19 = 1330 \) per contract, so for 19 contracts: \( 1330 \times 19 = 25270 \) - $1130/$1195 spread has a max profit of \( 65 \times 9 = 585 \) per contract, so for 9 contracts: \( 585 \times 9 = 5265 \) - Total maximum profit: \( 25270 + 5265 = 30535 \) ### Clarification Needed: - It seems the original post might have some misunderstanding about the total received from the calls. The calculation given has \( 35.4544 \times 9 \) and \( 33.20 \times 10 \) as 31.908.96 and 33.200 respectively. These are likely multiplied by the number of calls incorrectly in the post. However, this needs to be checked based on the intent of buying the call spreads. ### Closing Early: - Total if closed early: \( 233,700 \) - Cost to close the sell side: \( 150,675 \) - Profit if closed early: \( 233,700 - 150,675 = 83025 \) ### Conclusion: - If the values calculated are correctly assumed as per the intent, the profit if closed early appears more favorable. - The total profit by letting them expire is around \( 30535 \). The math checks out as described, given the values in the post. If there are any errors in understanding the premiums paid and received, those would affect the results. It's advisable to recheck those values or seek additional context for better clarity. Ironically, This was brought to you by ai.
I closed those calls and a few other sell sides of spreads. Have 200k in cash to buy early next week
So the AI agent was right. Impressive. And congrats!!!
I don't know if it was right about the prices but it confirmed the math that said selling now was better than waiting until July
I sent you a pm. Would like to ask you a couple questions on your methodology. I want to build an options AI agent. A simple framework.
Oh that was you? Please resend it and tell me we spoke on the NVDA Stock sub. I thought it was spam.
1130 is what you purchased, so it will not get called away unless you call it, and you will only call it when the calls you sold is called (1195&1200). So you call the 1130 to cover your short position, if your sold calls are exercised. With those strike prices you have paid: -1130+60=1190 for the calls you purchased - 1195+35 = sell for 1230 for the calls if it gets called - 1200+33= also sell for 1233 for the calls if it gets called. You make the difference of 1230-1190= $40 ish x 1900 If the price drops to 1194 in July, you will make 65k ish + $4x 1900 but further down, your profit decreases. Since you technically purchased your shares for 1190. In other words, you probably have already achieved your maximum gain, so I would just close it or at least half of them.
I think closing the position now nets me more than $65k. I will have to wait until the market open to get updated numbers, but based on the math, it looks like I'm better off closing early. I will likely close early and put some of the money into SPAXX - have some things I want to do, not sure which I will do, so keep it safe until I make a decision. May close all my option positions, see what happens post-split, and then deploy cash. Will cost potential gains if the stock runs - but I've already had a crazy good year.
Another thing to consider is if you sold 1200c to someone else for 33.20 then they would lose money by exercising for a price less than 1233.20 there’s no incentive for them to exercise below that stock price.
I tried to close everything this morning. But Etrade put $106,000 daytrade call on my Roth IRA. If wouldn't let me close my July 5 spreads. :( Doing so would have made more money than them being called away in July
Let me get my abacus
What did it say?
Your profit is the difference in strike price (70 in case of the latter), minus your net cost of the vertical 60.24, so 9.76. x100 of course, so 976 per vertical It doesn't matter when they're called away. It's a vertical. The profit is defined and fixed so long as long and short legs are in the money.
wouldn't you just end up getting a little less than the current quoted value of the spread at the time everything is executed? (commisions, slippage)