r/options_trading

I have some nvda shares. Ive been selling some covered calls for extra income. I just got assigned on some July2 212.5s! Why did someone exercise that when nvda is trading at less than 200?

I've been daytrading stocks for around 6 months to no success, and was curious to know how similar trading options is to trading stocks? I was wondering if regular options traders frequently use indicators like EMA and RSI to enter Calls and Puts, or if options are all about spreads?

Dvlt is at a low of .33. When everyone invests it’s an .86 stock. Lots of room to print $$$ plus an easy way to double your investment.

no exchange publishes Greeks. Not OPRA, not Cboe, nobody. The actual data feed under your broker is just price and quotes (bid, ask, last, volume, OI). That's it. No delta, no gamma, none of it.

So where does the number on your screen come from? Your broker or platform computed it themselves. Which means the delta on IBKR, the delta on ThinkOrSwim, and the delta on whatever scanner you use are three separate calculations of the same contract, not three views of one true number. They can disagree and none of them is "wrong."

Why they disagree, in plain terms:

Model choice. Most retail platforms still default to Black-Scholes, which technically assumes European-style exercise. But equity and index options are American-style, meaning early exercise is allowed, and that right has real value (especially on puts, or anything with a dividend coming up). Some providers run a binomial tree instead to price that in. Some just run Black-Scholes anyway because it's faster and "close enough." Both are out there in production right now.

Where they solve IV. Volatility is the one input to these models that isn't observable. It gets backed out (usually with Newton-Raphson) by solving "what vol makes the model price equal the market price." But which market price? Bid, ask, or mid? Each provider picks one. On a tight market it barely matters. On a wide spread, especially in less liquid names, that choice alone can shift implied vol enough to move every Greek that depends on it, which is all of them.

to sum up: Greeks were never a measured fact. They're a model's opinion, and the model is somebody's design choice, not a law of physics.

if you're comparing Greeks across two sources, or building anything that depends on precise Greeks (hedging, gamma exposure, risk sizing), it's worth checking what model and what IV convention each source actually uses.

 

I own 1 MU June 26 1500 call. Cost was $7.35 and current price is around $10.60.

MU is trading around 1230 before earnings.

I see strong call volume at 1200, 1300 and 1500 strikes, but IV is high.

My concern is IV crush after earnings.

Would you hold through earnings or take profits before the report?

In previous posts I talked about generating income by selling Call and Put options. Gamma is the second derivative of option price change to underlying price change, or a speed of Delta change. If you remember Delta had a humble range of 0..1.0 roughly approximating the probability of option being in the money. Delta approaches 0(out of the money) or 1(in the money) closer to the date of expiration. Gamma of around at the money options gets higher closer to the date of expiration of the options because that means that probability of option being in the money changes rapidly as expiration approaches. Similarly Gamma is higher for at-the-money options since just small changes in underlying price can make or break option value. So how do I use Gamma when selling Calls and Puts?

As the option seller I often need to decide whether to sell options with the strike price close to being at-the-money. The danger here is that options close to being at-the-money have very high Gamma and therefore they can rapidly hurt my portfolio by even minor swings in the underlying price. To mitigate this risk I can sell options with long expiration dates. So I always balance out expiration dates and current Gamma levels. Alternatively I can decide to sell options out-of-money or deep in-the-money so they have low Gamma. If you remember from my previous posts my primary approach is steady income from option selling of Covered Calls and Cash Secured Puts so eventually big swings leading to the expiration date won’t matter much specifically for my approach.. So Gamma is important but not as much for those who sell Calls and Puts without securing them or especially when using leverage.

The other important Greek for me is Theta which is a first derivative of option price to time change till expiration. This is the one that makes me happy. My portfolio Theta is overwhelmingly positive, meaning every passing day makes me money. Options I sold naturally lose value if their probability of getting executed on the day of expiration falls. Since I usually sell many options for various stocks, for various expiration days and with carefully chosen strike prices on average, the absolute majority of the options I sold will not get executed and that means their Delta falls to zero as time comes. That means their price falls to zero as time approaches the expiration date.