Anyone using covered puts

[fenders53]

(02-18-2019, 05:32 AM)crimsonghost747 Wrote:

(02-17-2019, 08:09 PM)fenders53 Wrote: I've already profited on expired KO put sales.  I have two open right now.  When the dust settles I may keep 50 or 100 KO shares because these fools will run it up again someday.

But now again relating to this KO example... what I am reading now is that it's a trading strategy, with very little intention to keep the shares for the long term. You're looking at possibly getting assigned 200 KO shares but you only want 0, 50 or 100. Or something in between. So now we are very much talking about pure trading for profit, not using the puts to build your portfolio.

So that is what confuses me. Because sometimes you say it's for building your portfolio but for example in this case (I know it's just one example) it definitely looks like pure trading pattern to me. And of course there is nothing wrong with that, in fact as you know I'm a believer in trading with options. But short term trading and building a long term portfolio are two completely different things, in one the goal is to sell an option that expires worthless to generate income and in the other the goal is to end up with stocks for long term hold. Two completely different strategies with the exact opposite goals.

Yes, KO is a trade for now.  A trade in a company I am willing to own.  A stock I believe is overvalued, but has downside protection because it is KO, and a consumer staple.  I believe it will yield a profit on the put.  I know it has a good dividend if am exercised.  I wouldn't mind holding some shares.  If I owned it and it ran up too fast I'd likely sell a call and continue the income.  I don't see it as a core holding but that could change.  They have competent management.  The earnings season usually offers up a few of these as even a small change in projections for the next quarter cause a market reaction.  I believe PEP will one day be a large holding in this sector.  I'll add to that position slowly unless it pulls back.  I'd sell another PEP put that day.  I already have on small dips but they expired worthless.   

I think it would be fair to say about 80-85% of my put sales are an attempt to go long.  Their is generally a KO in the mix, and a stock or two I consider more speculative.  Even the spec stocks are targeted for their above average DIV.  It's rare for me to target a stock with no dividend.  That may or may not be a good decision.