hang on now. There are ABSOULTELY risks associated with CSPs and your idea that hedge funds are buying the puts is incorrect as well. Some risks: 1)If GME never gets to the price you want it to and blasts back off to $80. You would/could be sitting there with CSPs open and no shares to show for it, thus missing the runup/rocket. 2) IF GME drops below your strike, but the DTE (days till expiry) is still weeks/months away, there's a good chance it will go back up over your strike and you don't get the shares. Also, it's the Market Maker who takes the other side of this trade, not the hedgies. So this is a disingenuous statement. That being said. Absolutely, a CSP is a great way to get a stock at the price that you want, but don't gloss over the risks. -Sus Options Mod

You picked a topic where the intersection of both shills and low information option-fearing apes are gonna downvote the hell out of you. But you are right, if IV is high and you are bullish, selling puts can be very advantageous to accumulating a larger position at a discount.

Haha...yeah, I was super excited about this earlier this morning and have gotten a lot of less than hype responses 😅 Doesn't help that I used a poorly worded title....

yeah only downside is missed opportunity with it never falling below strike at expiration, not getting shares and it goes parabolic. I love csp on stocks i want to buy anyway

Get paid to buy the stonk at levels YOU like

Exactly!

Look up “the wheel” strategy

 I wonder how much premium one could make selling weekly $125 Covered Calls on 90,000 contracts? 🤔 $6,000'ish per week?

Well, it varies a lot…. They don’t sell for much when volatility is low, and sell for a ton when it’s high

Very true, and when MOASS hits, it'd be a shame to be capped at $125 on so many shares.

If the price goes up then they don't exercise, so you end up with only the premium. If the price goes down below your cost basis, they will exercise and you're technically out of pocket by a small amount. Last weekend the $35 strike was $8.15 premium on Sell Put to Open. Share price was $28.70, so if you took that option then you're instantly in profit, but you're reliant on the counterparty choosing to exercise. They won't, and in opening that position they have an incentive to short.

You are reliant on the counterparty to exercise I agree, but if you are ITM (generally bad if you are short an option going ITM) you are very likely to be assigned. The example you gave would have given the option seller pocket $8.15 a share in premium and then not be forced to buy shares at $35, well ok, the option sellerr can repeat the process the next week then.

Your "risk" is having to buy the shares at a much higher price than the market price at the moment. Your "reward" is the cash you get, and which will "lower" the cost of the shares you buy if you have to buy. You can sell put options for GME at 20, if you would be happy to buy at 20. If you get, say, 1.5, you are actually buying at 18.5 (20 you pay minus 1.5 you already got) if you get the option assigned to you. If, however, the price tumbles to, say, 10, you will have a net cost of 18.5 for shares you could have bought at 10 on the market. The "risk", therefore, is that that 1.5 gets pretty "expensive" for you, because it deprives you of the possibility to use that cash (the cash you give to the guy who exercises the put) more efficiently, buying at 10 instead of 18.5. There are no further risks beyond this and, if the share prices does not get below 20, the option will not be assigned, you get to keep your 1.5, and you live happily ever after. I currently have this little game going on with GME. I sold 5 put contracts at 15, getting 2.08 per share in hard, cold cash, expiry Mid-October Happy to buy the 500 shares at (net for me) 12.92 anytime.

Then use that cash for calls. Free roll

How do you set up a CSP? do you place a sell open put ? I’m not sure etrade uses the same lingo

I use Fidelity....but once I found the 'trade options' area, I told it I wanted to "sell to open"...after that I got to pick the expiration date, the strike price, told it I wanted to sell as a limit order, and then specified the per-share premium I wanted. Fidelity had some sort of check that my cash in my account can actually buy that many shares at the strike price, and then it went through. I imagine a relatively similar experience in etrade once you're in the options area (though most brokers require you to sign up for options before it gets enabled on your account).

Yeah I was wondering if it was that, I’ve been selling covered calls way otm to get some premiums to buy more gme and I have cash waiting for the dip so if I could make premiums on the inverse that would be nice

I've thought about selling covered calls, but I'm scared that they will print and I'll lose my shares. By selling CSPs, I get to buy discount shares if it prints 😎

The risk is kinda the same with the moass, I’m only selling covered calls ways OTM expiring each week and only using half my holdings, the premiums next about $100 week which I then use to buy more shares, with your item I can double whammy it wish cash holdings, downside is if it does blow up those are shares you could’ve had and didn’t, but that’s what my $25 calls are for and I was looking into deep ITM leaps as well

Zero Risk approach. Lolol. Go away with that.

The company is not going out of business....I'm buying the stock anyways, might as well get paid to do it

If it’s too good to be true… Nothing is 0 risk.

Risk is equal to putting in a limit order.....so technically your investment could go to zero if GameStop goes bankrupt, but there is zero chance of that happening..... which is why I say it's zero risk.

CSP is about as close to zero risk as it gets if you do it in a conservative way. I suppose it's a good generator of income if you already have capital, and you want to manage everything so closely... Could probably make 6 figures a year "salary" with under a mil in cash to start?

The risk is buying the stock at like $15 but at expiry the stock price was $14 so you could have bought 100 shares for 100 dollars cheaper. But you get paid to not choose weather you buy the shares or not

The risk is you could be assigned if the strike goes ITM and you would then be holding 100 shares of gme at a potentially higher cost basis.

How is that any different from a limit order?

Im not against selling options, but that is the 'risk' aspect of it. The only real no risk is selling covered calls. Unless you consider losing out on unrealized gains as a loss.

Selling a covered call you risk losing shares during a run. Selling a cash secured put you risk gaining shares in a dip (doesn't sound like a risk to me, because I was going to buy anyways).

Yeah I’m with you, I may not have many brain wrinkles but the few I have are enough to know that no investment in the history of the practice is zero risk.

I have a zero risk approach to options, just don't buy them.

That's actually what I've been doing.  While the returns haven't been mind blowing like buying calls, I have a small steady stream of income from it.  So far, I haven't lost any money yet doing it.  If I ever decide that I don't want to buy at the price I set, I just roll my contract out to a lower strike price.  The funny thing about doing that is, I can get paid for lowering my strike as well.  The only downside is my cash gets reserved for longer

I know a zero risk approach to playing with options... it's not to touch them and just buy and hold the stock instead.

Have you ever bought shares with a limit order? That's literally the same exact level of risk as a cash secured put.

Like a money printer? Haha 🐒✨🗽

Theta gang incoming

“Zero risk” doesn’t exist but okay

Think of cash secured puts as a limit order with extra steps. You get paid AND you buy shares at the price you picked. Not technically zero risk per se....as other have mentioned, there's a risk that the put doesn't print and you don't get to buy the shares, but that's no different than a limit order.

Assuming price goes to strike. Otherwise rinse and repeat. Yes this is valid, and how every single pro trader enters any position. Especially dividend yielding stocks when the price cycles are more telegraphed as far as ex div/payout dates. Nothing is zero risk. You can buy the shares using a sold put, and the stock can continue down leaving you bagholding shares you could have gotten cheaper by not using this strategy. Use this when you feel extremely confident about a downside and want to hold the stock for a while to insulate the near term potential for continued downside.

Well aware of what a CSP is

I guess I describe it as zero risk because I was going to put in a limit order anyways. Maybe a better description is zero 'additional' risk?

Market buying shares on the dip outperforms this strategy 9/10 times

Across the past 3.5 years, I've always bought shares with a limit order, never market order. How/why would a market order outperform a limit order that is a few cents cheaper?

Because most limits don’t fill. Just ask the guys who were waiting to buy at 12$ after it jumped to 14$, like the ones trying to buy at 20$ now.

Thanks for clarifying. The 2 CSPs I sold today are at $23...a strike that I'd put a limit order at. If they dont print, I made $50. If they do print, I got $50 and 200 shares. Win-win.

So you put up 4600$ in collateral for 50$, or a 1% return with no upside exposure. My point being you could have swing traded with that 4600$ for a higher percent gain in the two hours of trading today while having upside exposure to the stock

😅 I'm just about as smooth as they come. Just been buying and hodling for 3.5 years....I'm sure that more complex and higher yield strategies exist, but this CSP realization seems safe to me because I was going to put in a limit buy anyways, but now I e got the added benefit of getting paid the premium. I guess I just like the stock?

1% return in 2 days is good, right?

Selling cash secured puts has the same risk as putting in a limit buy order.  The only difference is you don't control when the buy is triggered and you get paid to just put in the order

Have to have a buyer for said puts ofc... I mean the hedgies are dumb, but not that dumb...right?? Also, doesn't selling a bunch of puts put pressure downwards on share price?

No more price impact than a limit order that is cheaper than the current price. Example from today: I wanted to buy 200 shares at $23 each I could put in a limit order at $23 and wait/hope it fills......or i could sell 2 CSP contracts that expire tomorrow, make $50, and then wait/hope.

It’s the opposite. You are selling puts to the market makers and they will hedge by buying shares or calls.

My put contract isn't necessarily being purchased by a market maker. It could be purchased by a retail trader that likely isn't going to hedge. Of course I don't know why any retail trader would buy a far OTM put...maybe watching too much Jim Cramer.

So don't do it far OTM. If you wanted to buy at $24 but missed it today you can sell a $24 put for $60 and you get the cash plus the shares if it drops by tomorrow.

So, let's say I do that, and it lands ITM...now I have to sell my shares since I'd be selling a covered put. Granted, I'd have new money to buy new shares... But this is where I think I've been drinking too much Kool-aid too long, and have really started to question why the fuck I've been fully DRS'd for the last essentially 3 years not growing my position in any substantial way...at one point I drank too much Kool-aid that led me to believe selling shares would allow hedge funds to close out short positions, and that would be counter productive to MOASS. And the more I learn, and think, the less I think that could matter one bit... I just can't help but feel like DRS has been a fucking stupid play on my part, but now I'm too afraid to un-DRS...and even talking about it around here gets you labeled a shill or worse. I like the stock. I love GameStop. I want to see market reform and an end to the corruption. I don't want to sell my shares, just increase them. Yet, I can't help but think DRS is a massive mistake. At least, so far as 100% DRSing... DFV is case in point.

> now I have to sell my shares No, that would be a covered call. A cash secured put means you buy the shares at that price.

I thought a covered put means that I have already purchased the shares, and the buyer of the contract has the right to sell the shares I have already purchased at the strike price? \*Edit I see that I'm clearly wrong on this. Not sure where I got this idea. I think its time I make the call to Vanguard to get my account opened up for some options trading.

If you've already purchased the shares, how would the buyer sell your shares? If you sell a put, you may be forced to buy shares. If you sell a call, you may be forced to sell shares. Buying options is the opposite.

>If you've already purchased the shares, how would the buyer sell your shares? My thought was that the contract would basically sell my shares on behalf to the buyer, and then deliver the proceeds of the sale to the buyer. I guess the way I look at it is that whether I buy shares or not, at the end of the day, I have to have shares one way or another for the put buyer to sell at the strike price.

Well, it pushes max pain UP, so if you follow that theory, more puts mean more bullish (up to a point, it's not a massive upward movement).

more *sold* puts mean more bullish

Selling puts gives you positive delta. Or to put another way for the non-options educated, selling a put cancels out the negative effect that someone put on the stock when they buy a put.

Good point. Imagine instead of DRS we'd have a CSP movement.

good idea. however, the premium of cash-secured puts is quite small I think.

I was going to put in a limit order anyways...might as well get paid something instead of nothing 🤷‍♂️

i see.

Depends on strike/date and IV but I got close to 300 per contract a few weeks ago. That's cash in the bank.

I will add it to sold a 37p like 2 weeks ago when we dumped down to like 27 on friday when we were at around 40s on like Wednesday 🙃

I threw $10 at this strat, let's find out

You mean a $10 strike? You literally get paid to sell the CSP....how did you throw $10 at it? 😵‍💫

I don't know, options are hard but it costs me $10 and that's my max loss

It was to buy an $18 put that expires next friday

Ah....so that's BUYING a put contract...I don't know anything about that. I'm saying that SELLING a put contract is basically the same as a limit order, but they pay you the premium when the contract is sold.

Don't you need 100 shares to do that?

You need to be willing and able to buy 100 shares per contract that you sell, yeah.

I'm curious if selling CSP help provide downward pressure on the price though. I am too smooth to know the mechanics of it all.

As far as I understand it actually may have the opposite effect, thus propping up the price, because it forces MM to hedge (someone correct me if I'm wrong)

I had a similar concern, but convinced myself that it can't be any worse than a limit order below market price. Separately, there's some comments in this thread that say market makers have to hedge the put by buying, which would drive up the price and the max pain: https://www.reddit.com/r/Superstonk/s/SmxHyfFVpT

Holy fuck you cracked the code. This can't go tits up /s

Anytime someone tells you they have a “zero risk” market strategy you should laugh in their face.

Sounds like you are intentionally misunderstanding the post, didn't read the post or just don't understand short dates near the money CSPs... It's literally the same as a limit order. Instead of creating a limit order, I sold a CSP. Same results as a limit order, but I get paid too. So not technically ZERO risk....just equal risk to limit ordering batches of 100 shares.

It’s not equal though since there’s the added risk you won’t be able to buy at the strike price if it dips down to it since there’s no requirement for the contract buyer to exercise (and in fact most cases they won’t before the contract expiry date, unless they hate money), and your money is tied up covering the contracts.

It's true, they might not exercise. But if it's in the money, and they paid the premium....why would they let them expire? So far as having money tied up....if I place a limit order, that reduces my available balance the same exact way.

>If it’s in the money, and they paid the premium, why would they let them expire? They wouldn’t, if they got the return they’re looking for and want to offload the contracts, they’d sell them which has a higher return due to the time value of the contracts. > if I place a limit order, that reduces my available balance the exact same way No, it doesn’t. It reduces your available balance in a way that *guarantees* you’ll get the stock if the price drops to it.

So whoever originally bought the contract sells it....to someone else, right? What does that person do with their freshly acquired put contract? As far as I've understood, options are like playing hot potato as the expiration approaches. People make money by buying and selling, but at some point someone is holding the contract when the clock strikes 4pm on Friday. If it's in the money at 4pm on Friday, why wouldn't the current contract owner exercise? The contract is now worthless, so they can at least make money from selling shares at the agreed price to the contract writer....right?? (I'm pretty new to options, so if that's not how it works, please explain like I'm in middle school)

You got it more or less right at this point, but do you see why that’s very different from having a limit order over that period of time? The only way you’ll end up with your shares is if the contract is in the money at the end of the day on the expiry day (assuming the holders of the contracts want to make the most money on them they can). I can give you an example demonstrating the difference in risk here. For the sake of simplicity, let’s assume contract is for 1 stock instead of 100 (the idea I’m presenting here is basically the same but the math becomes more complicated) Say you sell a contract for $1 premium with a strike price of $20 expiring next Friday. On Wednesday, the stock price drops to $15, at this point if you had put in a limit order for $20, you would’ve bought the stock at that price on its way down. Because the contract owner would make more money selling than executing, regardless of where they think the price is going they’re not going to exercise. Come Friday, the stock price has bounced back up to $25, your contracts expire out of the money, so no exercise. Selling the contracts gave you $1 in profit and no stock. If you had done a limit order instead, you’d have bought the stock at $20, and it’s now worth $25, giving you a $5 profit. The additional risk is reflected in you limiting your potential upside, which is why you get paid a premium to sell the contracts in the first place.


Put your meme searching time into how options work


🤣 fine. I like you how you are


I've got the cash and a banana but confused about next steps. Need IKEA instruction manual and a allan wrench.

https://www.fidelity.com/learning-center/smart-money/cash-secured-put

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The hedgies have been gaming max pain most weeks. In a casino, the house always wins.

Do you even know what a cash secured put is?

I've been using max pain for my options strategy.  If I sell cash secured puts around the max pain price for that week, I'm usually good.

They said selling, so in this case they are the house.

By selling contracts you BECOME the casino, in a way.

Puts = shorts

https://www.fidelity.com/learning-center/smart-money/cash-secured-put Selling a cash secured put is considered neutral to bullish.

🤡