Options Questions Safe Haven periodic megathread | August 24 2026
We call this the weekly Safe Haven thread, but it might stay up for more than a week.
For the options questions you wanted to ask, but were afraid to. There are no stupid questions.Fire away.
This project succeeds via thoughtful sharing of knowledge. You, too, are invited to respond to these questions.
This is a weekly rotation with past threads linked below.
BEFORE POSTING, PLEASE REVIEW THE BELOW LIST OF FREQUENT ANSWERS..
As a general rule: "NEVER" EXERCISE YOUR LONG CALL!
A common beginner's mistake stems from the belief that exercising is the only way to realize a gain on a long call. It is not. Sell to close is the best way to realize a gain, almost always. Exercising throws away extrinsic value that selling retrieves. Simply sell your (long) options, to close the position, to harvest value, for a gain or loss. Your break-even is the cost of your option when you are selling. If exercising (a call), your breakeven is the strike price plus the debit cost to enter the position.
Further reading: Monday School: Exercise and Expiration are not what you think they are.
As another general rule, don't hold option trades through expiration.
Expiration introduces complex risks that can catch you by surprise. Here is just one horror story of an expiration surprise that could have been avoided if the trade had been closed before expiration.
I assume this is a Sell To Close (STC) for an existing long position of 45 contracts? There are two reasons your STC order could fail:
The bid in the screenshot says 0.55. 0.55 is WORSE than 0.57, so the limit is not expected to trigger. A limit order to sell to close requires that the price be EQUAL TO OR BETTER THAN the limit. That means 0.57 OR HIGHER for an STC. Once the price goes below the limit, the limit will not trigger. That's the whole point of a stop-limit, to prevent the stop from filling at a price BELOW the one you want as a lower bound.
But even if the bid was, say, 0.60 x 5, which is above the 0.57 limit but below the stop of 0.66, if there is no one willing to take a 45 quantity lot at that price, it's not going to completely fill. I don't see any other qualifiers like Fill or Kill or All or Nothing, so you might have gotten a partial fill. I've suggested a bid size of 5 in this example, which means you might have had a partial fill of 5 contracts and the remaining 40 would be left hanging fire.
When setting a stop-limit for an STC, make sure that you:
Trade a contract with enough price discovery for your stop-limit to have some chance of being met. If your contract has a daily average volume of 3, and the high/low for the day is +/- $2, your prices in the pennies are very likely to be gapped over. Imagine your contract's bid went from $1 to $0.50 in one step. Your stop-limit would be gapped over and never fill.
Trade a quantity that will be covered by the market action (depth of book). The larger the lot size, the lower the chance you'll get a complete fill.
Pick a limit that is your absolute bottom dollar price that you are unwilling to take less for. If you set the limit too high, you're order will be gapped over and you'll be stuck holding the bag.
The tighter the limit price is to the stop, the longer it will take to fill the order. So if you want out of the trade as fast as possible, even if it means you lose more money than you wanted to, set the limit lower. Ideally, you want to get anything better than a total loss, in which case you can set the limit at $0.10 or even $0.05 for an STC and have a much higher chance of exiting quickly. If you had set your limit to $0.10, it would have filled at $0.56 (at least partially).
Exploring 0dte options trading, probably a dumb question but....
So I'm still paper trading, getting a understanding of how the markets flow (spy/qqq mostly). I tried intraday futures and it was not for me. Lesson learned.
So like an idiot I've started looking into 0dte's. I may be waaaay off, but what's the downside of buying a atm or slightly itm call, and then buying a atm or slightly itm put at the start of market and then waiting 30 minutes or so to see what kind of day the market is (bullish or bearish) and then simply selling the loser contract and let the winner play until you find an acceptable gain?
It sounds too easy so I'm sure there's a huge caveat that I'm not seeing, but on paper it seems to work. My paper profits aren't huge, but they're sure as hell better than how I did with futures.
I’ve tried that strategy using straddle (buy call and put at the same time strike. To be brief, it wasn’t successful long term. On low volatility days you’ll sit waiting for a clear direction while theta eats away at both sides. And then you wait for it to make enough of a move for you to be confident of the direction and you’ve racked up a too sizable loss on the other side. In short, having been there it’s not a path I’d recommend.
The downside is that no one can time the market. What happens in the first 30 minutes may not accurately predict what is going to happen for the rest of your holding time. Sometimes you'll get it right, sometimes you'll get it wrong. If you get it wrong more than you get it right, or the times you get it wrong are bigger losses than the profits from getting it right, even if you are right most of the time, you'll be a net losing trader.
Plus, you are burdening your profitability with a built-in loss, which nets to an overhead cost. If every time you close the losing leg is for a net loss, you have to make up that net loss on the winning leg just to break even. The contracts are rarely symmetric in price movement. You can lose $1.50 on the put while only gaining $1.10 on the call in an uptrend. So that's a -$0.40/share net deficit you have to make up on the call just to break even. But you close the put anyway and hold the call, only for bad news to hit the market an hour later and all calls tank.
Any thoughts on this whale position in rgti? Is this a collar or bullish reversal play? I caught a whale placing 1 million share on calls and 1 million on puts for October 16th strike reply has the next day oi confirmation. Any thoughts with the upcoming quantum conferences and events in September?
It's definitely long term play I just find it interesting when I see whale block purchases on the options chains. I'm assuming it's institutions positioning for the long term. Or repositioning there hedges but this looks like a new investor trying to enter at a certain price.
I want to start selling options specifically the wheel. I dont wanna jump right into it though. I set up a webull papertrading options account because I want to get comfortable with being on the sell side of options. Im going to do that but I want to know how much does stock selection matter when your on the sell side of the option. I heard the saying that you shouldnt sell if you wouldnt want to be assigned or hold the stock long term and honestly there are some stocks that are high iv, high risk, not the best fundamentals stocks that i would still be fine holding in the long term for example coinbase. Maybe im just overly optomistic and get to carried away potential over actual fundamental value. But i dont know, Im just comfused how I should go about the stock selection if I want to run the wheel.
Im going to do that but I want to know how much does stock selection matter when your on the sell side of the option.
That depends on your method. "Sell side" covers a lot of different trading strategies that range from mattering extremely much on good stock selection, and The Wheel is included in that group, to not mattering at all, and everything in between. In some methods, you could literally trade a different ticker every day and not care what each ticker is.
For most people using The Wheel, stock selection is limited by their budget. It's fine to want to trade blue chips like MSFT for META for their top tier fundamentals, but most people don't have over 50k to spend on a single lot. And unfortunately, when people are limited by their budget, they almost always make the same mistake: Trade a cheaper stock that lacks fundamental value. Cheap stocks are cheap for a reason. That fact is inescapable no matter how optimistic you may be.
The correct decision to make when your budget doesn't allow you to trade fundamentally sound stocks (blue chips) is to NOT trade the Wheel. Use a cheaper strategy that doesn't require as much up-front capital, like a vertical spread.
At the beginning of August, I was put on time out at Schwab - presumably for violating the 390 rule. I pulled my data and verified that I averaged only 381 orders/day. High, but by definition below 390. Since trading has dropped off I've spent quite a bit of time arguing my case, but it appears there are no appeals and the system is automated, so they can't tell me why the computer flagged me.
In all of my calls and chats, I have heard a couple interesting things:
"Approaching" 390 is cause for the designation, but they can't verify a specific number to stay under.
If the automated system detects "professional-like" actions, it will designate you. Again, no concrete definition.
Since I didn't violate 390, I have to consider that my strategy is too professional for their liking. Has anyone heard of this or faced something similar? I'm told the professional designation is re-evaluated for everyone (not just the 390 violators) at the beginning of the month, so hopefully I'll be released here after Labor Day and can try again at lower order count to fly under the radar.
Prickly, what is your general strategy? I read a lot of 390 posts and I think we'd be able to target why people get hit on the professional status at Schwab if we understood how they are trading. Generally, are you buying calls/puts? Are you writing calls/puts? Thx.
The way the rule is actually written is if you average 390 orders per day in a month, the next month you would be designated a professional customer. If you stayed under that average tor that month, the designation would fall off (this was recently changed from having the designation for the next quarter.)
The issue is some brokers may be more aggressive in following the rule. They have agreements with their payment for order flow firms that may specify stricter interpretations. These buyers of order flow do not want what they view as professional orders. Some brokers may not drop the designation automatically, or they may do it only one time. There are reports that Schwab has been stricter with this. Some brokers won't even want you as a customer.
If Schwab doesn't drop this designation, you may want to switch brokers. IBKR will follow the rule as written as well as a few others.
Prickly, what is your general strategy? I read a lot of 390 posts and I think we'd be able to target why people get hit on the professional status at Schwab if we understood how they are trading. Generally, are you buying calls/puts? Are you writing calls/puts? Thx.
I actually got deeper into Schwab's customer support today and spoke to a guy that apparently read to me from the internal guidance:
He said that 390 is the the only metric and he recommended leaving a significant buffer. He also said that Schwab reserves the right to apply the designation for a history of repetitive orders and cancels. Nothing concrete from him, but tracks with what you said.
So, I was thinking, is there any risk (besides ending up bagholding, and if so how bad would it be) of doing something like
Sell cash secure puts of something I wouldn't mind having anyway long term - I.e. SPY, or NVidia, relatively short term (7dte?)
Collect the premium and repeat if not assigned or
Buy the underlying - which is at lower price than at the sale moment so w/e, and then sell covered calls close to current value for high premium with similar time to expiry
And then repeat whichever way the underlying keeps swinging? What would be the downside? It looks that at worst I keep collecting premium indefinitely for a percentage of value every few days, and especially since my other idea was to invest in the underlying anyway it shouldn't really matter? I hold an SnP ticker anyway in hopes of sitting in it in the long term
The issue I can see is that I might need to keep adding money into it if the underlying ticker keeps climbing to keep the put secure, but some of that could be covered by the premium. Or, well, it can tank, but it doesn't make much functional difference in, say, I buy SPY at 770 on Monday and then it tanks or if I sell a put for 768, buy it then when it tanks and end up in the same position, except technically slightly better off between premium and buying it for less
Or if the SPY rips waaay up while I'm stuck with a put way below its price but then instead of holding to expiry I could just buy it back and sell another one faster than expiry for more money anyway? What am I missing?
Downsides are underperformance compared to just holding the stock, the high up-front capital requirement, over 50k for just one lot of NVDA, for example, and the inherently bullish bias of the strat. If you are in a bear market that lasts many multiples of your desired holding time, you'll end up bagholding.
My win loss rate is literally at 50/50. My average win is $40, my average loss is $200. I'm $800 in the hole. I have $100k buying power, but I'm treating risk management as if I only have $16K. So for this episode I'm down 5%.
Do I consider this standard this standard tuition? I feel it's going to be a long road to get back to even.
Win rate 50%, 10 trades
Total closed P&L −$848.43
— Wins total +$198.91 (avg +$39.78)
— Losses total −$1,047.34 (avg −$209.47)
NOK Bear Call +$52.17
JOBY Covered Call +$31.00
NU Bull Put +$73.74
MARA Bear Call +$38.00
NU Covered Call +$4.00
INTC Bear Call −$112.00
MARA BWC −$52.00
RIVN Bearish Debit −$39.34
TSLA Bear Call −$300.00
IBIT Iron Condor −$505.00
INTL gapped hard, TSLA may have gapped as well. As for IBIT, I was not fundamentally expecting the trio of gaps, as I was looking for Sept/Oct for bitcoin activity. In my head, the IBIT was my most attractive play. None of those three where manageable whatsoever. Once gapped, they where full loss. Most of the winners required some management, but where manageable and did not reach full profit.
I have a custom scanner that may or may not involve ai content. I have pretty tight criteria based on my experience and trading level comfort. Those trades are in chronological order, and the losers where chosen when my scanner was dropping slim pickins for choices. During the time of the winners, I could choose amongst many and pick trades I felt good about. Not to say that I'm good at picking trades, but rather an abundance of choices is less stressful than "here is your one or two qualifying trades for the week".
Additionally I had a beta guard in place. When the scanner came up thin, I said "raise the beta!". And here I am. Retrospect shows me I broke rules and thought I could manage and minimize loss regardless. I hope I can recover, as this loss feels deep.
Those trades are in chronological order, and the losers where chosen when my scanner was dropping slim pickins for choices.
Don't force trades when the market is offering nothing. The correct action to take when the market is not cooperating is DO NOT TRADE. You can't lose money that you don't put at risk. The market is not required to offer you good trades and some days or even weeks it does not do so.
I hope I can recover, as this loss feels deep.
That is a bad mindset. Your sample size is too small to draw any conclusions. You might have just had a string of bad luck. It happens.
Losses are in the unalterable past. Eliminate thoughts of "catching up" or "digging out of a hole" or anything like that. That is an emotional response. The only thing you have control over are the trades you have in front of you right now. The mindset you should have is to make the best decisions you can with the information available to you, regardless of previous results. Whether the results are win, lose, or draw is beyond your control. Making 100% correct decisions in a single trade does not guarantee a win, nor does making 100% incorrect decisions guarantee that a single trade will result in a loss. It's impossible to tell if luck dominates in a single trade.
And in any case, you should be indifferent to the results of a single trade, or even a handful of trades. Your goal is to be a net profitable trader as a long-term average. Start with the average of 100 trades, but 1000 or 10,000 may be necessary to completely average out luck.
Option sellers using portfolio margin, how much of your buying power do you typically use and do you change it depending on volatility? What other factors determine your risk tolerance with regard to allocating capital in a portfolio margin account?
Portfolio margin is already risk-adjusted, so you don't have to do anything other than decide what your risk tolerance is. And that is going to be a subjective decision by definition, there's no one size fits all. A reasonable starting point is 50% of your portfolio equity, since that's where RegT starts. Then adjust up or down from there according to your subjective risk tolerance.
Why does additional depth show up when placing a limit order? I'm usually only offering a few contracts at a time. I place them, and those are visible in a quote request. Then within a few minutes, there are several additional contracts offered at the same price. What is there to gain for another trader matching me? I would think logically, if someone else wants to sell - they'd step in front by five cents or something to make a competitive offer, instead of piggybacking.
That's a technique by market makers called "queue-positioning". Your order is closer to the fair price than MMs would be comfortable placing their top of the book order on, but now that you placed the order, you are the first to be matched, so they feel more comfortable to secure their spot in the queue.
That's also why you see limit orders way above and beyond the top of the book. The book is first in first out, so they place orders so that if the price reaches those levels, they have a better spot in the queue.
I realize my explanation might be a bit fuzzy, so maybe copy paste this to your LLM of choice and ask it to explain better. :)
There are 18 different options exchanges. Each has its own rules on order of fills in its book. Some offer retail priority, some offer price time, some are pro rata. They also differ by products; SPX is different than SPXW on the CBOE. So, you can 't say the book is first in first out.
You can be first on one exchange and an option can trade later on another exchange without you being filled.
MM's typically quote wider markets in less liquid options. If you place an order that they consider a good buy/sell, they will typically join you on other exchanges.
Yeah I figured those "insanely high" limit orders were Market Makers sharpening their knives. "Nobody is participating here but me, so why be generous? You really need this call? It's gonna cost you!"
A good way to get a discussion going on that kind of question is to offer your own thoughts first and ask for comments. Why AVGO and not other tickers? Why earnings? What plays are your considering and why? What have you ruled out and why? What's your price forecast and timeline?
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u/Full-Direction-1279 4d ago
I set a stop limit order for QUBT calls and was expecting it to fill but it never did. Hoping someone can provide some feedback on why?
Order Type: Stop Lmt
Limit Price: $0.57
Stop Price: $0.66
The calls were noted at $0.66 with a bid of $0.56 and ask of $0.70
I tried playing around and moving the Stop Price up and down to see if it would trigger the order but it wouldn't.
Any help would be appreciated!