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

[fenders53]

Another detail for consideration. This is an income strategy that you rinse and repeat until you end up long on a market dip. If the market treads sideways or up it's normally just an income game. Market nose dives and you own a bunch of shares. Mike had to get on me about taking unnecessary risks with little reward....

You sell 45 day contracts of XXX, 1.00 premium and the stock's annual dividend is .75. A few days or a weeks later the stock pops on good news and you are sitting on a put you could buy back for .15 or so a month before expiration, or you wait a month for it to expire worthless. You got your dividends in the bag and it's highly likely you are not getting assigned. Buy it back and redeploy the capital. You might even sell a new option on the same stock at the same DTE at a higher price if you really want the shares.There are times I am busy with too many trades and let an option slowly expire, but sitting on options for weeks when you have a quick 75-90% profit is not efficient. The risk of doing nothing may be small, but the risk/reward and opportunity cost is just not there. Look for the next "dividend" to scalp instead.

What I just described will happen often in an up market.

[NilesMike]

Bought a "time bomb" Call butterfly for .35 BYND

19JUN20 110/115/120

Will be profitable between 110-120 and hopefully she lands right around 115 (would be worth 4.50)

[fenders53]

(05-05-2020, 08:07 PM)NilesMike Wrote: Bought a "time bomb" Call butterfly for .35  BYND

19JUN20 110/115/120

Will be profitable between 110-120 and hopefully she lands right around 115 (would be worth 4.50)

Keep it up and you'll be getting comp rooms and meals with Otter.  That's a pretty tight range for BYND but I realize you can close it early.

By the end of the week I am probably going to close my MAY15 CBRL 100/105 call spread I shorted.  I am at about  85% of max profit in a few weeks.  High chance it will go to 100% in nine days but I should probably take the money and run.

EDIT: I had no idea BYND had launched today when I typed that Mike. That one looks like it's going to be a wild ride.

[NilesMike]

Forgot that I also bought a put calendar on DIS

Jun/July 95

[fenders53]

Closed my CBRL credit spread for an 85% gain well short of expiration date. I'm still undefeated at this strategy. On the prowl for my next short victim.

[john]

(05-06-2020, 03:58 PM)fenders53 Wrote: Closed my CBRL credit spread for an 85% gain well short of expiration date.  I'm still undefeated at this strategy.  On the prowl for my next short victim.

What is a "credit spread"?

[NilesMike]

(05-06-2020, 08:03 PM)john Wrote:

(05-06-2020, 03:58 PM)fenders53 Wrote: Closed my CBRL credit spread for an 85% gain well short of expiration date.  I'm still undefeated at this strategy.  On the prowl for my next short victim.

What is a "credit spread"?

Sell Call, buy call at higher strike. For a net credit.

Sell put, buy put at a lower strike. For a net credit.

Each are credit spreads.

[fenders53]

(05-06-2020, 08:03 PM)john Wrote:

(05-06-2020, 03:58 PM)fenders53 Wrote: Closed my CBRL credit spread for an 85% gain well short of expiration date.  I'm still undefeated at this strategy.  On the prowl for my next short victim.

What is a "credit spread"?

First of all don't listen to my bragging.  I have had very good luck but I will lose one eventually.  IMO it's not as conservative as a covered put or call.  If you ever try it I suggest you paper trade it numerous times.      

Mike gave the definition.  It can be used to go short of long.  For shorting I try to find a stock that I believe I know the approximate upper resistance on, getting overbought and no fundamentals to back up the run.  Traders have been running CBRL up and down.  When it was around 95 I sold calls at 100 and bought them at 105 for an immediate credit.  100 and below at expiration I keep all the money.  Lose from 100 to 105 minus the credit already received.  Loss is capped at 105 as I own a 105 call.  You have complete control of your max win or loss by choosing the strikes.  And of course you can close it anytime.  

The bad news is the max loss is higher than max possible gain.  Not technically unlimited like simply shorting shares though.  As I said, not all that conservative.  I do it rarely and only with a stock that I follow the story on.  Certainly wouldn't do it with an upcoming earnings report.  A stock like WEN might be a target.  TSLA or any other Momo stock absolutely not.  You could set this up for a 95% chance of a win, and the net premium credit would be so small it wouldn't be worth the bother.

[john]

I like options. Sold 6 of them for the week ending 5/8/20 they all went my way.
Sold calls on C and CMCSA expired worthless
Sold puts on KMI, KR, PFE expired worthless
This one might start an argument.
I have been selling puts on CCL and getting ~4% return on weekly puts. I think CCL long term will be ok, they have a decent balance sheet.
I will call it my "speculative stock"

[fenders53]

(05-09-2020, 06:49 AM)john Wrote: I like options. Sold 6 of them for the week ending 5/8/20 they all went my way.
Sold calls on C and CMCSA expired worthless
Sold puts on KMI, KR, PFE expired worthless
This one might start an argument.
I have been selling puts on CCL and getting ~4% return on weekly puts. I think CCL long term will be ok, they have a decent balance sheet.
I will call it my "speculative stock"

Selling puts on CCL??? Did you bump your head John?   

   Just kidding. It's all about proper balance over the entire port.  If everything you did this month was exercised are you OK with the outcome?  If so, you're good IMO.  On average I would say one month per year every call or put I have in play is exercised unless I frantically roll them all forward a month or two. Personally I think it's good that you are selling a few calls and puts per month. We can't call the market direction anything like perfect over time, and it helps when you haven't set yourself up to lose every single trade.   

It's my opinion we should share the defeats a well as the victories as we go.  Most of us here seem to do that.  Remember just a few months back when you were asking very basic questions?  You could have easily been led astray.  We try to keep it real here as it is helpful to others.

[john]

Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol

[fenders53]

(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO  a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol

Oh, your free trial was over at least a month ago.  Otter should have billed you by now.  Mike's a landlord and he's not afraid to bust a kneecap so don't be late with your check OK?.     

My most recent fail started pretty innocent.  90%+ of my port is conservative.  I was minding my own business in late JAN selling a few puts in awesome sectors like airlines, amusement parks and restaurants.  Nothing crazy but I got steam rolled.  I couldn't have chosen worse sectors on purpose. It's amazing how much a small part of your game can hurt your overall port performance if it gets crushed.