Wheeling high IV earnings, thoughts?

Research & Analysis Theta Gang/Wheel
1

Its been a while since I posted anything, been really busy with work and family lately.
So for the most part I’ve run some wheeling from time to time.

After looking at SNAP today I sold a APR 22’22 20p for 0.4 $ just to see how it played out.

I know earnings are not predictable these days, but I thought I wouldn’t mind owning SNAP at 20 $.

This is the IBKR quote details on the Put:
image

Anyone have some input on this ?
Is it a retarded thing to do ?
I wouldn’t do it on anything , but Snap seemed like an ok place to try it out.

2

I think you should be fine on that one, $40 premium, and if you are assigned just $1980 to make back -
Given the ER and AH movement doesn’t look like you will get assigned pretty decent IV play.

I think the biggest part of CSP’s is asking yourself if I get assigned do I like this for the long term and having a plan - is it to make a quick buck in and out or is it work down the cost of entry and to continue to sell calls for life.

1 Like
3

I dont mind holding this at 1980$ but I dont expect to get assigned. For the quick buck the correct name may not be the wheel :slight_smile:

If I do get assigned I think Nekkid that talked about selling naked puts on this will feel the hurt a bit more

4

Ya that would suck, any CSPs I sell and get assigned on - if I can even them out in 6 months I call that win - since after that it is basically free money for life.

5

If you sell a 30% OTM put on an earnings play and it blows up, you should probably take the L and move on. Do you really want to baghold some steaming pile of shit that missed bad enough to dump > 30% in a day?

Keep in mind if you lose you’re not losing your max loss, you’re losing (Strike price - premium - stock closing price on expiry)*100 per contract assuming you short sell shares on expiry to offset the assignment.

Oh, and don’t ever do this on a bio tech. Those can dump like 80% if they report news that the drug they spent the last 3 years (and all their money) on got rejected by the FDA. And that kind of thing happens on a regular basis.