filmov
tv
Calculating upside protection to prevent shares getting called away. Orange Pill Investor ep 212.
Показать описание
How I calculate how much upside protection to hold to fund rolling my covered calls to avoid getting called away.
There's no exact number since MSTR's future price is unknowable, but I go through the exercise of estimating reasonable rally prices to get a feel for whether I have enough equity to pay for rolls.
I had enough when MSTR was at $130, but delta collapses on long calls when the price drops so my insurance isn't enough anymore. I've been buying more, but not enough to cover my shares as my share count has also increased as I add positions trying to take advantage of every dip.
Next week at the latest I'll adjust my ratio of uncovered delta to covered delta to make sure I don't just break even on a rally. Technically, I'd make gains up to the spot price of MSTR, but then if that's all I'm trying to do here I could just hodl and save a bunch of time and risk.
Follow for more content like this.👀
Ask questions and post comments and suggestions below.
Orange Pill Investor ep 212.
Be good yall.
Follow on X @NithusezniSezni
00:00 Current uncovered delta per covered call.
03:30 Calculating gains from long calls vs cost to roll at $144. Dangit! I used the profit # for the long calls after subtracting what I paid for them, not their total value so in this scenario I actually do have enough delta to cover my shares completely. I still think there's not enough uncovered delta so the result is still the same.
11:28 Same bad math in the $163 scenario. I have $88k from the long calls, and I need $105,600 so I'd only have to let 150 shares get called away. Not nearly as bad as I thought, but still not idea.
15:30 Figuring better strikes than ATM for the amount of delta I have now.
17:25 Related to my confusion about why Tasty wasn't giving me full credit for the premium paid, I verified that if I go to 45 DTE they're giving me full buying power so there must be something in their algorithm that does not like the at the money covered call for 5 DTE.🤷
There's no exact number since MSTR's future price is unknowable, but I go through the exercise of estimating reasonable rally prices to get a feel for whether I have enough equity to pay for rolls.
I had enough when MSTR was at $130, but delta collapses on long calls when the price drops so my insurance isn't enough anymore. I've been buying more, but not enough to cover my shares as my share count has also increased as I add positions trying to take advantage of every dip.
Next week at the latest I'll adjust my ratio of uncovered delta to covered delta to make sure I don't just break even on a rally. Technically, I'd make gains up to the spot price of MSTR, but then if that's all I'm trying to do here I could just hodl and save a bunch of time and risk.
Follow for more content like this.👀
Ask questions and post comments and suggestions below.
Orange Pill Investor ep 212.
Be good yall.
Follow on X @NithusezniSezni
00:00 Current uncovered delta per covered call.
03:30 Calculating gains from long calls vs cost to roll at $144. Dangit! I used the profit # for the long calls after subtracting what I paid for them, not their total value so in this scenario I actually do have enough delta to cover my shares completely. I still think there's not enough uncovered delta so the result is still the same.
11:28 Same bad math in the $163 scenario. I have $88k from the long calls, and I need $105,600 so I'd only have to let 150 shares get called away. Not nearly as bad as I thought, but still not idea.
15:30 Figuring better strikes than ATM for the amount of delta I have now.
17:25 Related to my confusion about why Tasty wasn't giving me full credit for the premium paid, I verified that if I go to 45 DTE they're giving me full buying power so there must be something in their algorithm that does not like the at the money covered call for 5 DTE.🤷
0:20:42
0:24:44
0:04:05
0:13:03
0:26:59
0:10:59
0:18:51
0:39:23
0:03:47
0:29:31
0:00:46
1:10:29
0:08:24
0:25:21
0:09:45
0:08:29
0:10:10
0:00:34
0:10:05
0:05:19
0:01:39
0:05:02
0:59:43
0:09:55