Conservative option strategies, what did you buy or sell today?

[john]

Thanks Mike and Fenders for advise

[fenders53]

(04-05-2020, 10:26 AM)john Wrote: Thanks Mike and Fenders for advise

No problem and if you want to throw up a few ideas before you trade I'm sure a few of us will give you our two cents.  We won't always be right of course, but we can alert you to potential problems.  The market is almost sure to be volatile and I would stick with the weeklies for now.  It's easier to adjust them out farther if it becomes necessary.  If you are buying it might make sense to go farther out.  Opinions will vary.  In a market like this I don't prefer to lock myself into many options a month or two out.  They are tougher to adjust without spending money.  

Here's an example of one I called wrong but was able to correct.  

I sold a covered weekly MO call on part of my position at strike 35.  It became clear it was going to be 36-37 at expiration.  I was able to buy back the 35 (at a loss), immediately sell a couple more weeks time and move the strike to 37 selling a new call.  I am still slightly ahead on the net call proceeds.  Big win?  Nope, but I can't get it perfect every time.  Now I'll sell the shares for $200 more per lot if I don't roll it forward again.  80% of my calls just expire worthless so I'll make time to deal with a few that don't cooperate initially. Half my mistakes fix themselves with a little patience.  And some stocks run to the moon and I have to give up and miss some of the profit.  It's just comes with the covered call selling game.  I try not to spend much time crying about a smaller profit.  That's a waste of time.

[john]

I sold a covered call on IRM Jul 17 35 strike for .58 this morning. Should collect a dividend between now and then of .61~
100 shares cost avg of 33.30 over the last year I like IRM Ive been trying to sell a call against it for awhile then this morning it finally bounced up enough to do that.

[fenders53]

(04-09-2020, 08:55 PM)john Wrote: I sold a covered call on IRM Jul 17 35 strike for .58 this morning. Should collect a dividend between now and then of .61~
100 shares cost avg of 33.30 over the last year I like IRM Ive been trying to sell a call against it for awhile then this morning it finally bounced up enough to do that.

As long as you are good with ALL the potential outcomes CCs are good income producers over the course of a year.  I refrain from them on high flyers as I've left a lot of profit on the table.  I like them best for highish Div stocks trapped in a fairly predictable trading range.  Sometime I can sell a call ten times in a row with good results,  Get called out just sell a new covered put in the next dip.  Very little of that going on lately with this crazy bull run.  My best luck has been selling calls only a few days from expiration.  I've sold calls on the same shares of my troubled DAL about four times in under three weeks.  The stock stinks for the foreseeable but I'm getting my basis down with the sky high premiums.  I expect I'll need it.  It's not my first choice. I have zero interest in selling calls or puts months until expiration.

[NilesMike]

Newest strategy goes in the toolbox on Tuesday when JNJ reports earnings.

Strategy essentials: selling an Iron Condor on lower beta (<1.0) stocks after earnings day closes. Short strikes are 5% above and below closing price. The IV will continue to collapse after earnings come out. No adjustments, hold to expiration unless like 90% of max comes out very quickly for some reason.

Earnings come out on a Mon or Tues, expiration chosen will be that same Fri. W,TH, Fri earnings will use the next Friday expiration.

All stocks will be lower beta, higher prices with weekly options. Risk is only to one side.

Studied it enough, now some real world experience with these.

[fenders53]

(04-12-2020, 06:41 AM)NilesMike Wrote: Newest strategy goes in the toolbox on Tuesday when JNJ reports earnings.

Strategy essentials: selling an Iron Condor on lower beta (<1.0) stocks after earnings day closes. Short strikes are 5% above and below closing price. The IV will continue to collapse after earnings come out. No adjustments, hold to expiration unless like 90% of max comes out very quickly for some reason.

Earnings come out on a Mon or Tues, expiration chosen will be that same Fri. W,TH, Fri earnings will use the next Friday expiration.

All stocks will be lower beta, higher prices with weekly options. Risk is only to one side.

Studied it enough, now some real world experience with these.

Let us know how it goes.  

Earnings will be interesting this quarter and next.  Companies will pull guidance but they won't get by with complete silence.  They have enough information to paint a near-term picture.  I am very curious to see how the market processes horrible numbers, the possibility of more Div cuts, and effects of taking government grants/loans.  And of course a few positive earnings surprises as well.

[john]

What do you all think of AAL puts for 4/17/20 $10 strike is .31 $11 strike is .61
Prices premarket

[NilesMike]

(04-05-2020, 09:51 PM)fenders53 Wrote:

(04-05-2020, 09:07 PM)NilesMike Wrote:

(04-05-2020, 08:08 PM)fenders53 Wrote: And the futures are up on all the great news....  Stand by for another volatile week IMO.

LOL, I'm still holding my ES short from 2500. I hope to get paid this week, I know i've taken my share of heat on this trade.

I have some shorts because it makes me feel better, but I am definitely net long.  I won't be celebrating if the market gets crushed too much.

(04-12-2020, 07:28 AM)fenders53 Wrote:

(04-12-2020, 06:41 AM)NilesMike Wrote: Newest strategy goes in the toolbox on Tuesday when JNJ reports earnings.

Strategy essentials: selling an Iron Condor on lower beta (<1.0) stocks after earnings day closes. Short strikes are 5% above and below closing price. The IV will continue to collapse after earnings come out. No adjustments, hold to expiration unless like 90% of max comes out very quickly for some reason.

Earnings come out on a Mon or Tues, expiration chosen will be that same Fri. W,TH, Fri earnings will use the next Friday expiration.

All stocks will be lower beta, higher prices with weekly options. Risk is only to one side.

Studied it enough, now some real world experience with these.

Let us know how it goes.  

.

JNJ IC short the 139P and 152.50C Long 135P and 155C
Expiring next Friday. Sold for .71.
No adjustments will be made, all on, all off.

[NilesMike]

UNH IC -295C long 300C
-267.5P long 262.50P

1 MAY 20

[john]

On 4/9 I sold a CALL on IRM for 7/17 expiration 35 strike for .58 The price of IRM has dropped since then and I could buy my CALL back for .20 leaving ~ $37 profit.
How do you decide when to buy an option back vrs letting it ride?

[NilesMike]

(04-15-2020, 08:37 PM)john Wrote: On 4/9 I sold a CALL on IRM for 7/17 expiration 35 strike for .58 The price of IRM has dropped since then and I could buy my CALL back for .20 leaving ~ $37 profit.
How do you decide when to buy an option back vrs letting it ride?

When to take profits is definitely a black art. I would say that 64% of your max profit in a week would have me taking it off and placing another trade elsewhere.

[fenders53]

(04-15-2020, 08:37 PM)john Wrote: On 4/9 I sold a CALL on IRM for 7/17 expiration 35 strike for .58 The price of IRM has dropped since then and I could buy my CALL back for .20 leaving ~ $37 profit.
How do you decide when to buy an option back vrs letting it ride?

Depends some if I see a better opportunity.  You are already way out on the expiration date so if you want to keep the long shares than you may wish to let it ride.  I wouldn't roll it forward now as that opportunity will remain even if IRM rises some.  I have rolled calls closer to the money for more income if I expect the stock to drop further.  I'm not suggesting that is what you should do now.  Like Mike says it's a black art.