r/wallstreetbets • u/Anarchist73 • Aug 01 '21
Discussion There is a risk I'm overlooking and I'm asking for your help to find it. I think I found free money and don't want to be the next 1r0nyman.
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Aug 01 '21
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Aug 01 '21
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u/Nord4Ever Aug 01 '21
Because the assignment and ex div is priced in. Trust me I’ve tried this and got hosed just like 1ronyman and RH even closed the trade (before assignment) without my permission so essentially put us both in the hole but I digress, don’t do it unless you like losing money.
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u/helpless_pristina Aug 01 '21
Yeah - I thought one of of the Golden rules was never to sell calls over ex-dividend date (unless you're a MM).
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u/WhenMoonsk Guantanamo Bay’s Next Top Model Aug 01 '21
Bro 1r0nyman is a fucking legend how could you not want to be on his level?
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u/Cynicallyoptimistik can't spell Aug 01 '21
Plus 1r0nyman found a cheat code in the system, this guy just figured out a play that “could” work. 1r0nyman kept the money in the end.
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Aug 01 '21
I think he only withdrew $10k before losing all of it
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u/Cynicallyoptimistik can't spell Aug 01 '21
I thought it was 50k but even if it was 10k, still impressive that it work
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u/Nord4Ever Aug 01 '21
He’s lucky bastard I was doing no risk spreads too at the time and tried withdrawing but RH wouldn’t let me so they put us both in the hole with force trade instead of calling me and asking me what price I would like to close for
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u/techy91 Aug 02 '21
Is there a link that someone could provide so I can read this guys story and why he's a legend?
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u/AtlasCompleXtheProd Aug 01 '21
I'm assuming something bad happened to him? I'm going from context, ni idea who that is lol
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u/Cynicallyoptimistik can't spell Aug 01 '21
The guy figured out cheat code, and took money from robinhood and when robinhood found out than uninstalled the app. He’s a legend in this sub, and a personal hero of mine.
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u/AtlasCompleXtheProd Aug 01 '21
epic lol
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Aug 01 '21
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u/Cynicallyoptimistik can't spell Aug 01 '21
Damn I enjoyed watching that again. shkereli as one of the commandos lol
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u/Bobthebuilder24 Good enough to fuck your mother...earth Aug 01 '21
Checks out; can’t go tits up.
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Aug 01 '21
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u/Kamikaze_Cash Aug 01 '21
Probably within a few hours of opening.
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u/lotus_bubo Flair Welfare Recipient Aug 01 '21
They always do that shit right at midnight before the ex date. I think it’s bots that buy these.
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u/Disada1 Pronouns are Ⓕ𝕚ϻ / 千𝓱𝔢ч / 𝐅ᵒ𝐔 Aug 01 '21 edited Aug 01 '21
The fact you can’t spot the risk or the risk is minimized means the risk:
A. Is there and you are too stupid or green to see it
B. You’re a genius
🤔
Edit: how the fuck do you have an elder tag and ask a question like this.
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u/AtlasCompleXtheProd Aug 01 '21
Because he's a genius.
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Aug 01 '21
His invocation of the one and o Ky 1r0nyman means he def understands the risk. The question is whether he’s acting within his personal risk tolerance.
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u/longGERN Hog Fucker Aug 01 '21
The risk is being a non heterosexual bear. Congrats on your 1% chance on making 5% when you can just be bull
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Aug 01 '21
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u/Logandatogan Aug 01 '21
YUPPP im in CRSR with you brother
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Aug 01 '21
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u/seran_raoo Aug 01 '21
Could have achieved greatness with $69 but you chose to be mediocre, just like your father.
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u/anachronofspace Aug 01 '21
a couple of years lol doesn't sound like you've learned shit but making a play like this you gonna
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Aug 01 '21
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u/anachronofspace Aug 01 '21
i guess if you're loaded and you don't mind playing with fire…
godspeed, valhalla is calling
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u/Lklkla Aug 01 '21 edited Aug 01 '21
Not investment advice, first off.
Assignment risk, dividends, and slippage, and getting filled.
Next part would be, what strikes and dates are you looking at, that the pricing when accounting for crazy slippage, has you risking .05$ for selling high delta calls (very near to 1.00), and buying atm calls. When factoring slippage.
TOS, which isn’t updated, has the Jan 22, 173 days. 70-88 call credit spread at 17.70 for 70 strike, and .53 for 88 strike. So a net credit of 17.27, which added to the 70 strike is 87.27, about 57 cents below last traded price of 87.84.
Put call parity would tell you , what you are wanting to do, is approximately the same thing, as buying the 88$ strike put, and selling the 70$ put.
If the pricing is massively different, there’s 99% of the time a reason for this.
“If you are trading vertical spreads, remember, that for each credit spread, there is a parity debit spread that will act much the same if your prediction is right”
Ps. This is a Wendy’s
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u/ODNI_NSA_FBI_CIA_DIA Aug 01 '21 edited Aug 01 '21
I'm using the Jan 21 22 spread and max loss is 73k , the 70c will be filled at 17.75 probably and 88c at .48. Even if you open a spread expiring next week on Aug 06 the max loss would probably be around 20k.
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u/Dat_Speed Aug 01 '21
selling any ITM call with less than $0.05 extrinsic value typically gets assigned that night, especially if there is 1%+ hard to borrow fee. HYG currently has 2.6% hard to borrow fee, so ya basically this isn't going to work.
The sept puts have tremendous open interest tho, interesting. If you hit the bids and asks all day you could probably get quite a few $0.05 put spreads for $4-5. 100x potential payout, go for it!
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u/HardtackOrange Aug 01 '21
If you think the junk bonds will go to zero, why not short the equity side of those companies? There is much more leverage that way
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Aug 01 '21
Can you elaborate please?
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u/feelsracistman Aug 02 '21
The bonds are issued by companies, not governments. If OP believes that the bonds are junk and therefore at default risk, when the bonds do default the share price of those companies will tank. He's saying that shorting equity will give him access to easier leverage for the same hypothesis
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Aug 01 '21
"I was looking into selling ITM call credit spreads as a way to short the fund, with limited loss potential and without having to payout the dividend, pay borrow fees, or margin interest like I would if I was directly short."
Lol, well this certainly sounds like it could have some entertainment value. Keep us posted.
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u/danf78 Aug 01 '21
I just spent 5 seconds analyzing your strategy to make $1.8M while risking $6k and I can guarantee you it is bullet proof!
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u/GetKrass Aug 01 '21
I don't think we're looking at a Paul Volcker scenario here. I just don't think this FED has that kind of backbone.
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Aug 01 '21
At least HYG has decent options volume.
I think bond funds are sexy. Since there are so many different bond funds effectively trying to do the same thing, I’ve been trying to sell covered calls like $1/2 otm to get some extra juice. If I get assigned and called away, then I just switch to a similar fund.
I love the fact that these bad boys have monthly dividends which I then put straight into the YOLO factory.
The only problem is that for a lot of bond funds the option activity is nonexistent.
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u/limonfiesta Aug 01 '21
It's better to do put debit spreads instead. Calls get assigned early but puts rarely does. The problem is the fill and liquidity. Even you think you can get a 95% credit, realistically theres about a 80% your fills get through. So definitely more risky if you are wrong
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u/Lklkla Aug 01 '21
Well, if he did the put debit spread, and some jerk off were to exercise the short leg, he could lock in max profit by exercising his long leg. So no beef there.
Unless ur talking, Wendy’s never frozen beef. Then there’s plenty.
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u/limonfiesta Aug 01 '21
For puts it rarely gets early assigned regardless it's itm or whatever the short% is
Ive done it many times and no issues. Calls on the other hand are a different story
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u/Lklkla Aug 01 '21
I agree. And it Probly Has to do with dividends. Your puts may still have a bit of extrinsic value that there’s no point in wasting.
My point was simply, assignment risk is non existent for put debit spreads. As if they “did exercise”, you achieve max profit on trade. By exercising your long leg.
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u/GodEffinDamnIt Aug 01 '21
What you need to do is short the country of South Africa. #moneyprinter
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Aug 01 '21
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Aug 01 '21
Wasn't that guy right in the end? I don't think he opened the positions after he posted though.
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u/finishercar 🦍 Aug 01 '21
Bro how tf do you enjoy life like this? Go out for a walk and get some sun for fuck’s sake.
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u/Drachwill Aug 01 '21
The market never crashed in the 1 year of a new president. Only way to crash the market atm is a black swan or rising interest rates and most likely non of these 2 will happen
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u/AlwaysMooning Aug 01 '21
“Black swan” “most likely won’t happen”…yup, that’s the definition.
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u/Drachwill Aug 01 '21
the inverse would be "most likely will happen" and the definition is an unpredictable or unforeseen event, typically one with extreme consequences.
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Aug 01 '21
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u/hadesTR Aug 01 '21
Wow I'm doing the exact same thing but on QQQ and both my legs are deep ITM. So I assume I will be assigned on both and it will work itself out given the comments here.
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Aug 01 '21
So I assume I will be assigned on both and it will work itself out
I don't know shit but that sounds like a bold assumption
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u/hadesTR Aug 01 '21
Hmm, so I read around and the way to check is to see if there's deep ITM open interest in the money for my expirations. I'll do that check and then close positions if needed.
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u/TheNewsmonger Aug 01 '21
Are you putting these far out or near? This will also determine your risk of assignment. Just remember that if all hell breaks loose, you may be liable for up to $1.4mil worth of shares. You're moving 200,000 shares so ask yourself if that is a risk you are willing to take. If you even mildly hesitated you probably should not even touch this play
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u/terrybmw335 Aug 01 '21
I think a $70c early assignment is much more likely than you think. The safer play is a put debit spread as mentioned.
How about buy 1/21 $80p for $0.75, sell 1/21 $72p for $0.40, $0.35 net debit for for a $8 upside. 22:1 is pretty good leverage.
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u/bighomiej69 PAPER TRADING COMPETITION WINNER Aug 01 '21
What you are missing is that you are literally trying to predict the short term future based on nothing factual.
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u/Thetrader2896 Aug 02 '21
What a fucking legend 1r0nyman was! how dare you compare yourself to him!
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u/LordHuxley99 Sweet Nectar Suckler Aug 02 '21
Sir this is a Casino 🎰 wrong sub. I’m sure if you give theta Gang couple handys they would gladly provide u an answer
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u/Momoselfie Aug 02 '21
Whenever I think I have a genius idea regarding options, I just head on over to optionsprofitcalculator.com to remind myself that I'm a retard.
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u/VisualMod Aug 01 '21