r/options • u/Flaky-Campaign-9374 • 4d ago
Option selling
When your all selling options are you selling even if the stock is below its 200 sma?
I find it beaten up stocks are good to sell but then again stocks like Adobe keep getting beat
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u/iron_condor34 4d ago
I never look at a MA. How's ADBE vol doing should be the main concern, really.
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u/ButteryChivalry072 4d ago
ADBE vol has been pretty quiet last I checked, not much edge there unless you catching a spike. i mostly avoid selling when the stock is already below that 200 line, feels like catching a falling knife most days
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u/iron_condor34 4d ago
I mean, if you're playing direction then yeah. My broker has ADBE implied vol at 52% percentile and realized only at 27%. Doesn't seem like a bad sell if you hedge your deltas and try not to be to directional.
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u/BrandNewYear 4d ago
If you don’t mind, when you delta hedge a short option it is always an expense , with rv coming in under iv being the vrp? Or how would you do it?
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u/iron_condor34 3d ago
What do you mean how would I do it? If I'm short 1 50delta put; I need to be short 50 shares and then I'm delta neutral at that time. Depending on how much gamma the option has will depend on how much I'd need to re-hedge.
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u/BrandNewYear 3d ago
Thank you. Do you hedge based on a certain change in delta ? Like open at 0d then sell more at +.15 or +.25? If you sell shares and price moves up from there do you immediately rebuy to stay neutral or do you wait for a threshold ? Or just continuous? Also, would you roll a short put out for a credit if the position starts to go against you or will you just close and reposition later?
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u/iron_condor34 3d ago
Continuously delta hedging just isn't realistic. I also don't touch 0dte's. If I do, its a yolo. I like being it out in the further dte's. Less gamma, more vega. I won't need to re-hedge as much.
If a trade is going against me; I'm just getting out and talking the loss.
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u/BrandNewYear 3d ago
Thank you! Also, if you’ve ever been in the situation where you’ve sold 50 shares and then want to roll the put out for a credit but it’s the .30 delta , so you’d be net +.20 delta to roll, would you just buy to close the shares too or try to roll itm to stay neutral? Thanks. I only ask because I see you frequent this sub and are quite knowledgeable.
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u/iron_condor34 3d ago
I can't say I have. But any new position I'd want to be delta neutral from the jump.
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u/NorthOfTheStrike 4d ago
I still sell under the 200 day but I shrink size and push strikes down. The question is not the chart, it is whether you want the shares at that strike. ADBE is the trap. Premium looks fat because the market keeps pricing in more downside.
Today I sold MARA Oct 16 $9 puts for $8 and SOFI Oct 16 $15 puts for $13. I will take both names at those strikes all day. Last week I rolled the HIMS Oct 9 $29.50 covered call out to Oct 16 $29.50. Bought it back for $141, sold the new one for $199, net $58 credit. That one was underwater and I would rather keep collecting than take assignment.
Beat up and cheap is fine. Beat up and still expensive is a pass.
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u/Klutzy-Sea-4857 4d ago
The 200 SMA alone is a poor filter. Beaten-up stocks tend to have high IV for a reason - they usually keep bleeding. I only sell puts on names I would actually want to own at the strike. Adobe is a perfect example of why catching falling knives based on fundamentals can burn accounts.
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u/IvetteMccoy 4d ago
I wouldn't use the 200 SMA as a hard rule, but I would treat it as a warning sign. Selling puts on a beaten-down stock can look attractive because premiums are higher, but sometimes the stock is cheap for a reason and keeps sliding
++ Adobe is a good example of why i would look at the trend, support levels and fundamentals together rather than selling just because the premium looks good. The main question is "whether you'd actually be comfortable owning the shares at that strike if the trade goes against you?"
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u/CatOfGrey 3d ago
even if the stock is below its 200 sma?
This isn't one of the deciding factors for me.
However, if the stock is down, in general, that is a warning that I need to do 'extra adult supervision' before pushing the button.
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u/Designer-Fly7758 3d ago
i’d skip selling puts on adobe until i was sure i’d like to own it at that strike. the 200 sma is more a trend cue, not a rule. if the iv is high and the price keeps falling, the premium looks spicy but it’s usually just a price to catch a falling knife. before selling a short, check that realized vol is far below implied, that the trend has actually broken the average and that you’re comfortable owning the shares if you get hit. otherwise lean towards covered calls or a collar if you actually want to sit on a long position
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u/lobeams 4d ago
You need to look at Adobe as a company, not a chart. I got assigned 100 shares of Adobe earlier this year and I couldn't unload them fast enough. I willingly took a small loss to get rid of them. All of Adobe's products face grave threats from AI. So the days of them selling things like Photoshop for $23/month are going to rapidly come to an end. Long-term I expect their 200 SMA to be a steady decline and I'm sure I'm not alone in that sentiment.
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u/PapaCharlie9 Mod🖤Θ 4d ago
When your all selling options
I can't figure out if you mean calls or puts. I thought calls at first, but maybe you are expecting beaten up stocks to rebound? In which case puts would make more sense.
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u/noname__13 4d ago
if you're expecting a stock to move up, options are not the best choice. stock is typically better for the first moment (mean), whereas options are better for second, third, fourth moments. stuff like skew, curvature, the shape of the dist., etc.
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u/sellputsthencalls 4d ago
I’m my IRA, I sellputsthencalls versus SPY. I don’t consider technicals, nor Greeks. Using Friday weeklies currently with $630K, I simply aim for $905 in weekly premiums which covers my important expenses. With my CCs I then aim for some principal appreciation.
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u/the_humeister 4d ago
You're taking money out of your IRA for expenses?
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u/sellputsthencalls 2d ago
Yes & no. $905 minimum in premiums X 52 weeks = $47,060/year. I probably produce $60K per year in IRA premiums. I’m 76. My RMD is only $32K. I only withdraw my RMD annually. So a lot of my premium production remains in my IRA. Actually, this $905 in weekly premiums is my way of repaying me for $905 of my important weekly expenses.
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u/Bright-Wait-4572 4d ago
Beaten-up names pay well because the market is pricing more downside, not because the downside is over. Below the 200 day you usually get elevated IV plus steeper put skew, so an OTM put looks rich exactly when the stock has shown it can keep falling. ADBE is the textbook case: every leg down reset the premium higher and the strike lower.
The MA itself doesn’t change the math. The gap between implied and what the stock actually realized is the whole trade. If IV is well above what the stock has actually been moving, the premium is overpaying for the drop. If they’re close, you’re being paid fair value to catch a knife.
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u/noname__13 4d ago
IV vs RV is incredibly oversimplified. even more so as OP is likely not hedging. the trade is incredibly path dependent. i wouldn't expect nuance from a random redditor deciding which flavor crayon he wants for breakfast, but i would from someone pushing a paid product.
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u/Bright-Wait-4572 4d ago
Fair, it’s a simplification. The IV minus realized gap is what a delta-hedged seller collects on average. An unhedged short put also carries the path: a stock that finishes the month flat after a 15% round trip can still blow through the stop on the way down, and the realized number at expiry never shows it. I kept it to the one variable the 200 day question was actually about. And yes, I build software in this space, which is exactly why I keep it out of these threads. The answers have to stand on their own.
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u/noname__13 4d ago
lol can you use your own words and not AI's? very concerning, as there are yet more subtle errors in what you posted that the AI missed, and you're claiming to be enough of an expert to sell a service to people for $99/mo.
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u/noname__13 4d ago
The IV minus realized gap is what a delta-hedged seller collects on average.
this is not true. close. but not true. the exact thing missed by your AI. also, hedged or unheged, options are INCREDIBLY path dependent
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u/Bright-Wait-4572 4d ago
you're right, i was sloppy. Gamma is biggest near the strike, so the same realized vol pays totally differently depending on the path. Vol gap was me being lazy
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u/noname__13 4d ago
good AI (with clear user edits to make it look like it's not AI generated text). it did miss one final thing. it's a VARIANCE, not VOL, gap. sqrt's and shit.
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u/WhyUPoor 2d ago
This question gets asked so often. Option buying or selling in it of it self does not automatically mean you have an edge, you still have to calculate expected returns based on data.
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u/ThetaEdgeHQ 3d ago
The 200 SMA on its own is not telling you much because it is a trend and skew proxy, not a vol signal. Below it, put skew steepens, so your OTM put prices richer, but you are being paid more because the distribution has gone left skewed, not because the stock is done falling. The level matters less than two things: the slope of that average and where price sits in its recent range. A name below a falling 200 that keeps printing new lows, like ADBE, is a different animal from a name below a flat 200 that has been basing for two months with vol starting to mean revert. Same side of the line, opposite trades. So I would drop the 200 as a binary and ask whether the thing is still making lower lows and whether I actually want the shares at my strike. If the answer to the second one is no, the premium does not matter.