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+--- Thread: Thoughts on an options strategy (/showthread.php?tid=1632)
Thoughts on an options strategy - ronn38 - 01-01-2017
Never tried options before, and I want to.
I wanted to, and will eventually, start writing sell to open --but I discovered Capital One doesn't allow Sell to open Puts, so calls are where I start.
I'm thinking of a buy/write on two companies I would have no problem owning, Roche Holding AG ADR and Amgen Inc AMGN. Both are listed as wide-moat, Low-value uncertainty stocks trading way below valuation at 5 stars, and have started to trend up. I would buy and hold these, however I am already heavy in pharm and Roche has tax issues (Medtronic is what I'd like to hold in Health sector).
So these seem like no-brainers to sell to open a call contract.
Any thoughts, warnings, advice, good place for further reading on this idea?
Thanks,
Ronn
RE: Thoughts on an options strategy - NilesMike - 01-01-2017
(01-01-2017, 03:17 PM)ronn38 Wrote: Never tried options before, and I want to.
I wanted to, and will eventually, start writing sell to open --but I discovered Capital One doesn't allow Sell to open Puts, so calls are where I start.
I'm thinking of a buy/write on two companies I would have no problem owning, Roche Holding AG ADR and Amgen Inc AMGN. Both are listed as wide-moat, Low-value uncertainty stocks trading way below valuation at 5 stars, and have started to trend up. I would buy and hold these, however I am already heavy in pharm and Roche has tax issues (Medtronic is what I'd like to hold in Health sector).
So these seem like no-brainers to sell to open a call contract.
Any thoughts, warnings, advice, good place for further reading on this idea?
Thanks,
Ronn
Not being snarky but find a real brokerage that allows selling puts to open.
A cash secured put is the synthetically same as your buy/write setup. Except it generates more commission to your brokerage house.
RE: Thoughts on an options strategy - ronn38 - 01-01-2017
Indeed, I'm looking into other on-line brokers now. But again, having never traded with options before, I only knew I was cleared to write/sell contracts. I didn't understand the specifics of how I was limited.
Live and learn--but the $6.95 trading fee's are ok, and some of their programs are nice for beginning investors.
R
RE: Thoughts on an options strategy - Kerim - 01-02-2017
I occasionally buy calls when I have a hunch I want to play, and to add a touch of excitement while I watch the paint dry on my DG portfolio. I've concluded that -- IN MY CASE -- it is a sucker's game. It is hard enough to make good buy / sell decisions when there is NO time pressure. But the deep timing element associated with options makes it very stressful and especially difficult. After some medium-sized bets early on (for me), I started only playing with small sums, and haven't even done that in over a year. Here is a snapshot of every option I've ever traded. After all of that churn and time and energy, I'm very grateful to have broken even.
[attachment=192]
That said, I have never tried, and would still consider selling cash secured puts on stocks that I'd be happy to buy anyway.
RE: Thoughts on an options strategy - ronn38 - 01-02-2017
Kerim,
I'd agree--buying options successfully would involve some really insightful /intuitive readings of technical. Not really something as primarily a "buy and hold" guy I want to kill time learning more about that I do. On the other hand, selling puts and calls on stocks I intend to buy or trim anyway seems like a much less "intuitive" proposition.
For example, I bought EXR when it started its trip down at the end of summer. I bought a 1/2 position at $75, and then a full position at $70 (which is where I'm happy). So I have a position and a half. As it travels back up, I plan on selling the $75 position (first in, first out). Since I intend to sell this, and its ITM already, why not a sell a covered call?
I want to add to my position in V, but not at this price. I want the stock--and will buy more eventually-- but not at this price (if I can help it). So why not sell a put?
Of course, the risk is in what opportunities might present themselves while your stock/cash is tied up in the option. However, if its stock you intend to sell (but don't mind if you keep) or a stock you intend to buy (but not at this price), it seems the risk/reward profile is positive.
But again, my entire conversation is academic, as I’ve never done any of what I'm talking about ;-)
Ronn