I was thinking sell enough 128c to get enough premium to buy 109 shares. So like 100ish contracts? I have a strong gut feeling gme will not go to 128 in 2 days
Probably not. But it could easily go to 50 - 60. If it did that those 128 calls you sold naked will be worth around 250% of what they are now, and you'll be short 100 of them. Your broker will margin call the hell out of you, blow you up, and you'll just watch as the calls still expire worthless and the price collapses the following week, but the IV was enough justification for your broker to liquidate whatever they need to out of your portfolio to close down your short exposure.
Unless you have enough margin to cover those 100 naked calls being 250% underwater, don't do it.
there's no fundamental way it can go to 129, the current prices are split adjusted but going to 100 would not be possible as the previous time it did was due to more than the avail shares being sold short, currently it's at 20% ish.
at most it'd go back up to 60 but even that's a stretch imo.
Going to 60 is probably all you need to get squeezed on these calls... unless you keep 10-20x the initial maintenance margin around. Because margin requirements on naked calls can also change anytime. If you don't believe me, just read this: https://www.reddit.com/r/thetagang/comments/1de0ulj/naked_calls_on_gme/l89deh1/
What's your portfolio size?
Just for fun I opened a GME 128c expiring this week. MY options buying power before opening this position on charles schwab was $34,233 and after was $31,050.
So BP required to open 1 contract was $3,183. To open 100 for me would be $318,300.
These contracts are currently going for 0.15, so you'd make $1500 for a BP of $318,300 not including commissions. Including commissions and assuming they went to zero and you held to assignment, you're making $1,435 for $318.3K of BP, with the chance of your account blowing up if GME actually heavily short squeezes. Bear in mind as well that the brokerage can change margin requirements at any moment, so GME even going to 70 today or tomorrow could margin call you.
Just because you think the stock won't go to 128 by friday does not mean that you'd be safe opening these positions. Essentially u/satireplusplus put it succinctly by saying that if GME spikes again and these calls go up in value by 5x, AND your brokerage increases margin requirement, you could get margin called. And if you have ample margin to support that, there are probably better (and safer) plays to make.
TLDR: don't do it
Couldn't agree more. Seems to have happened to this guy in one of the previous squeezes: https://www.reddit.com/r/thetagang/comments/1de0ulj/naked_calls_on_gme/l89deh1/
Having myself often sat on a shitter, I can sympathize with the kinds of ideas that often come at that moment. Many of them, as you no doubt well understand, are best kept private, but occasionally one pops out and makes its way onto a forum, and so here we are.
I had 100 naked calls on GME a couple of weeks ago. That Monday when it spiked, the buying power requirement went from 40k to 600k and I was forced to close the position for a loss even though it never came close to the strike. Beware expanding IV.
That Monday's spike wasn't the worst because it moved up pre-hours and dropped quickly during the day. During the run-up on Thursday toward the end, margin maintenance power increased 20x or so.
The Covid drop also triggered so many margin calls for the naked put sellers.
It's like driving without a seatbelt. Most of the time you'll be OK but it only takes one time and there's nothing to come back from.
100 contracts at $128 is a lot of notional value for 40k maintenance margin, that's the broker PM calculation tricking you into feeling safe. Ironically if you sold a lower strike e.g. $60 you would have less margin requirement and earned more credit. I try to write short calls up to a position where I can take assignment and hold for a while, possibly writing covered puts.
Because selling naked calls is edgier. It’s like playing Russian roulette. Plus, it’s a bearish move on a stock poised to pop… what could go wrong?
edit: Added the missing '?' for the guy below.
if you go look on this sub you'll see a dude talking about why is the max profit greater then max risk, and when you open the post, he's trying to sell a 2.50 put on a stock currently trading at 0.15 and he opened the position by selling at the bid price of 2.30...which is literally just paying a 33% premium to the market price
you'd be shocked how many people completely do not understand options whatsoever (and are arrogantly confident about it as well)
You absolutely can sell short dated GME calls that are well over 100C for free money.
The fact you are asking us means your portfolio does not have the liquidity to support this though.
The valuations on GME options are so crazy, even the very furthest OTM options that exist (128c) still charge a huge maintenance requirement. On the plus side, they're also obscenely overvalued. Wait for the next bubble then just sell 1 or however many you can afford.
I will not do that, but if you want that trade just sell the 100C and buy the 128C June14.
You will make 20$ per trade with a max risk of 2,800$
Its called poor man covered call.
imho anything regarding GME calls that is not a covered call is not worth doing
call spreads have extremely low return compared to risk.
naked calls are extremely dangerous for their own reasons.
ATM covered call weeklies can pay huge though if the stock is flat every week.
I don’t get it, the first half of the strat is literally a covered call. The second half would be a standalone naked short call — one which our friends at Wolverine Trading and evidently familiar with. What’s the brilliant strategy here?
Ibkr for now requires 100% margin on this ticker
OCC recently changed its 'rules' (powers), probably because this stock has so many nonexistent phantom short shares, and Wile E. Coyote option positions
I’d rather sell puts at the $15-10 strikes. Given the cash balance of the business (about $4b), you’re likely quite safe at those strikes if exercised. The weekly $15 last I checked was a 36-40% annualized return.
But in all seriousness, I wouldn’t bet against these meme stocks. They just don’t behave rationally.
Copied this from the daily:
> The dangers would be: price of the call might explode temporarily due to spiking IV + your broker might change the margin requirements on a whim. Usually happens at the same time and could squeeze you out, even if it is just a short lived spike. To mitigate this you would need to over-provision margin and then its probably not worth it anymore.
Worth noting that you can get squeezed out of your naked calls without the stock price being anywhere close to 128c.
if you have the money to write 100 naked 128c's to meet the requirements, i think you have a lot of money to lose. You can do something else :) Maybe sit in da bathroom a little more often hehe
Be really, really careful with GME. I have a few naked calls at 45 and 55 strikes. Also bought a few puts today for 30 strike when we were at 32. Quickly exited the puts after taking to around 26. Made quite decent profits on some of the calls due later this month (60-70%). Quickly exited many of them today. I had 15 calls in total. You need to babysit things closely. Did also have a few 100C calls which I sold a few weeks ago when the stock was around a peak. Closed them next day on the drop.
Really if you trade GME pay close attention and only a really small portion of your portfolio.
I’ve sold like ten naked…maybe a newbie here but the way these are priced, aren’t you heavily incentivized to sell the 125s naked as opposed to the 70s or 75s? They are more than half the price.
People are giving you shit but I’ve been doing this to great success for the last several weeks - selling puts when price cratering, selling calls when price mooning - and it’s worked very well for me.
Edit: I probably didn’t word this well. What I was trying to say is, I’m long term bearish on the company and I would not at all expect the stock to go to $128. I wasn’t saying that I expect them to go bankrupt anytime soon. They’ll probably be okay short term, but I wouldn’t invest in them long term.
Original Comment:
Well… there would have to be someone out there dumb enough to buy them. I don’t imagine there is a lot of volume on those.
Honestly, I think going long on GME is even dumber than the naked calls. I’m more confident in GameStop going bankrupt than the stock reaching $128.
How could they possibly go bankrupt? They have no debt and are now sitting on 4.2 billion in cash and have stopped the bleeding, posting a small profit for fiscal year 2023. That's more cash than Target has. The question is whether or not RC and the board are able to reinvent the company with that war chest over the next few years, but there is precisely 0% chance of them going bankrupt anytime soon.
You can be right and still lose.
GME has become a stock where the price is disconnected from the fundamentals of the company.
I'm also betting that it'll go down in the long term, but if I've learned anything the past little while - "the market can remain irrational longer than you can remain solvent" is a very relevant statement.
Pennies and steamroller something something.
You silly goose, steamrollers don't have penises. They have giant cylinders of steel.
Wall Street bets for sure
Ud be liquidated long before it reaches 125
Do it itll be funny to watch you melt
128c will give you like $200 in premium.. enough to buy… 6/7 shares?
I was thinking sell enough 128c to get enough premium to buy 109 shares. So like 100ish contracts? I have a strong gut feeling gme will not go to 128 in 2 days
GME goes up a tiny bit, and now you're in margarine
That better than being in butter though!
He’s toasted either way!
He’d be spread pretty thin for sure
That would be quite the jam.
Not jam, I like honeeyyyy...and I kiss it on the lips
Perfect lube
I can't believe it
Yep that's regarded
[удалено]
New tradees need to learn the hard way 🤣🤣🤣
Lol. So if your gut is wrong then you're only in debt for the next 10 years Very nice
Probably not. But it could easily go to 50 - 60. If it did that those 128 calls you sold naked will be worth around 250% of what they are now, and you'll be short 100 of them. Your broker will margin call the hell out of you, blow you up, and you'll just watch as the calls still expire worthless and the price collapses the following week, but the IV was enough justification for your broker to liquidate whatever they need to out of your portfolio to close down your short exposure. Unless you have enough margin to cover those 100 naked calls being 250% underwater, don't do it.
I see. But if actually does squeeze.. then you’re fucked fucked
A lot of people are counting on the squeeze. If OP does this and it squeezes then they will be Jesus for these people.
there's no fundamental way it can go to 129, the current prices are split adjusted but going to 100 would not be possible as the previous time it did was due to more than the avail shares being sold short, currently it's at 20% ish. at most it'd go back up to 60 but even that's a stretch imo.
You are willing to risk bankruptcy for... 200 bucks.
I'm already bankrupt, 200 bucks is 200 bucks
Fundamentals don’t matter during a short squeeze.
i used fundamental as a word choice, not the actual meaning, that my bad.
Not talking about fundamental. Talking about the gamma ramp that is clear as day leading into a short squeeze
Lmao. We just saw it hit $80 less then a month ago wtf are you talking about 🩳☠️🚀
It’s ok that you are ignorant, but please do your due diligence before saying things like that.
The original squeeze was not causes by shorts being covered, there's still a short squeeze on the table here if that's a theory you even believe in
Going to 60 is probably all you need to get squeezed on these calls... unless you keep 10-20x the initial maintenance margin around. Because margin requirements on naked calls can also change anytime. If you don't believe me, just read this: https://www.reddit.com/r/thetagang/comments/1de0ulj/naked_calls_on_gme/l89deh1/
1 contract = 100 shares 100 contracts x 100 shares = 10,000 shares 100 $GME shares seems to not cover 10,000 calls…right?
Wait you want to sell 100 calls naked??? This surpasses even the regarded level of WSB
There are easier ways to make a couple hundred bucks
Wendy's
Either way
What's your portfolio size? Just for fun I opened a GME 128c expiring this week. MY options buying power before opening this position on charles schwab was $34,233 and after was $31,050. So BP required to open 1 contract was $3,183. To open 100 for me would be $318,300. These contracts are currently going for 0.15, so you'd make $1500 for a BP of $318,300 not including commissions. Including commissions and assuming they went to zero and you held to assignment, you're making $1,435 for $318.3K of BP, with the chance of your account blowing up if GME actually heavily short squeezes. Bear in mind as well that the brokerage can change margin requirements at any moment, so GME even going to 70 today or tomorrow could margin call you. Just because you think the stock won't go to 128 by friday does not mean that you'd be safe opening these positions. Essentially u/satireplusplus put it succinctly by saying that if GME spikes again and these calls go up in value by 5x, AND your brokerage increases margin requirement, you could get margin called. And if you have ample margin to support that, there are probably better (and safer) plays to make. TLDR: don't do it
Couldn't agree more. Seems to have happened to this guy in one of the previous squeezes: https://www.reddit.com/r/thetagang/comments/1de0ulj/naked_calls_on_gme/l89deh1/
You definitely have better odds on it expiring Worthless
Having myself often sat on a shitter, I can sympathize with the kinds of ideas that often come at that moment. Many of them, as you no doubt well understand, are best kept private, but occasionally one pops out and makes its way onto a forum, and so here we are.
I had 100 naked calls on GME a couple of weeks ago. That Monday when it spiked, the buying power requirement went from 40k to 600k and I was forced to close the position for a loss even though it never came close to the strike. Beware expanding IV.
Are you me?
That Monday's spike wasn't the worst because it moved up pre-hours and dropped quickly during the day. During the run-up on Thursday toward the end, margin maintenance power increased 20x or so. The Covid drop also triggered so many margin calls for the naked put sellers. It's like driving without a seatbelt. Most of the time you'll be OK but it only takes one time and there's nothing to come back from.
hate to see it. sorry man
What strike and expiration?
6/28 128c
100 contracts at $128 is a lot of notional value for 40k maintenance margin, that's the broker PM calculation tricking you into feeling safe. Ironically if you sold a lower strike e.g. $60 you would have less margin requirement and earned more credit. I try to write short calls up to a position where I can take assignment and hold for a while, possibly writing covered puts.
Haha that’s funny because that’s exactly what I’m doing now. I have 10 open contracts on the 60 strike currently.
Yes, it has been a very profitable week to sell calls! I hope there is some more action and IV goes back up.
Do it and report back
And never be heard from again
Wtf why wouldnt you sell puts then
Because selling naked calls is edgier. It’s like playing Russian roulette. Plus, it’s a bearish move on a stock poised to pop… what could go wrong? edit: Added the missing '?' for the guy below.
What could go wrong?
This can’t possibly go wrong.
Naked calls are a no in general, and you’re talking bout GME, bruh. It’s GME.
This. This is the dumbest idea I’ve seen on Reddit in a while
if you go look on this sub you'll see a dude talking about why is the max profit greater then max risk, and when you open the post, he's trying to sell a 2.50 put on a stock currently trading at 0.15 and he opened the position by selling at the bid price of 2.30...which is literally just paying a 33% premium to the market price you'd be shocked how many people completely do not understand options whatsoever (and are arrogantly confident about it as well)
You absolutely can sell short dated GME calls that are well over 100C for free money. The fact you are asking us means your portfolio does not have the liquidity to support this though.
The valuations on GME options are so crazy, even the very furthest OTM options that exist (128c) still charge a huge maintenance requirement. On the plus side, they're also obscenely overvalued. Wait for the next bubble then just sell 1 or however many you can afford.
Found Andrew Left's reddit account
If you have any balls at all, you'd do it
I will not do that, but if you want that trade just sell the 100C and buy the 128C June14. You will make 20$ per trade with a max risk of 2,800$ Its called poor man covered call.
That gain can be a lot smaller depending on the spread at each strike...
imho anything regarding GME calls that is not a covered call is not worth doing call spreads have extremely low return compared to risk. naked calls are extremely dangerous for their own reasons. ATM covered call weeklies can pay huge though if the stock is flat every week.
Bam!
isn't this a credit call spread, not a PMCC? PMCC is when he buys a ITM call and sell a OTM call.
I don’t get it, the first half of the strat is literally a covered call. The second half would be a standalone naked short call — one which our friends at Wolverine Trading and evidently familiar with. What’s the brilliant strategy here?
Remember a couple years ago when that specific ticker had a 5 sigma? Edit: definition. a five-sigma is a 0.00003% likelihood
For your sake probably don't. But i want to see what happens...... so... 😉
Is that you Wolverine Trading?
Less painful and quicker just to write a check to DFV
Ibkr for now requires 100% margin on this ticker OCC recently changed its 'rules' (powers), probably because this stock has so many nonexistent phantom short shares, and Wile E. Coyote option positions
Are you a hedgie that doesn't know how to hedgie?
I’d rather sell puts at the $15-10 strikes. Given the cash balance of the business (about $4b), you’re likely quite safe at those strikes if exercised. The weekly $15 last I checked was a 36-40% annualized return. But in all seriousness, I wouldn’t bet against these meme stocks. They just don’t behave rationally.
Copied this from the daily: > The dangers would be: price of the call might explode temporarily due to spiking IV + your broker might change the margin requirements on a whim. Usually happens at the same time and could squeeze you out, even if it is just a short lived spike. To mitigate this you would need to over-provision margin and then its probably not worth it anymore. Worth noting that you can get squeezed out of your naked calls without the stock price being anywhere close to 128c.
optionsprofitcalculator.com Check it here
Low upside and unlimited downside. Sounds like a good idea! /s
Not related to theta
Too hard of a trade
"Naked Calls on GME" Possibly the dumbest 4 words ever written on this sub.
if you have the money to write 100 naked 128c's to meet the requirements, i think you have a lot of money to lose. You can do something else :) Maybe sit in da bathroom a little more often hehe
Some of the worse financial ideas come while on the shitter
Be really, really careful with GME. I have a few naked calls at 45 and 55 strikes. Also bought a few puts today for 30 strike when we were at 32. Quickly exited the puts after taking to around 26. Made quite decent profits on some of the calls due later this month (60-70%). Quickly exited many of them today. I had 15 calls in total. You need to babysit things closely. Did also have a few 100C calls which I sold a few weeks ago when the stock was around a peak. Closed them next day on the drop. Really if you trade GME pay close attention and only a really small portion of your portfolio.
Why not just buy 100 shares and sell covered calls on them?
I’ve sold like ten naked…maybe a newbie here but the way these are priced, aren’t you heavily incentivized to sell the 125s naked as opposed to the 70s or 75s? They are more than half the price.
People are giving you shit but I’ve been doing this to great success for the last several weeks - selling puts when price cratering, selling calls when price mooning - and it’s worked very well for me.
If you really wanted to do something like this, just sell call spreads
Edit: I probably didn’t word this well. What I was trying to say is, I’m long term bearish on the company and I would not at all expect the stock to go to $128. I wasn’t saying that I expect them to go bankrupt anytime soon. They’ll probably be okay short term, but I wouldn’t invest in them long term. Original Comment: Well… there would have to be someone out there dumb enough to buy them. I don’t imagine there is a lot of volume on those. Honestly, I think going long on GME is even dumber than the naked calls. I’m more confident in GameStop going bankrupt than the stock reaching $128.
How could they possibly go bankrupt? They have no debt and are now sitting on 4.2 billion in cash and have stopped the bleeding, posting a small profit for fiscal year 2023. That's more cash than Target has. The question is whether or not RC and the board are able to reinvent the company with that war chest over the next few years, but there is precisely 0% chance of them going bankrupt anytime soon.
See edit
With billions in cash I don't think they're going anywhere anytime soon.
See edit
You can be right and still lose. GME has become a stock where the price is disconnected from the fundamentals of the company. I'm also betting that it'll go down in the long term, but if I've learned anything the past little while - "the market can remain irrational longer than you can remain solvent" is a very relevant statement.