04-20-2020, 08:09 AM
(04-20-2020, 07:44 AM)fenders53 Wrote:(04-19-2020, 08:04 PM)john Wrote: I appreciate the insight, thats why I posted the trades I had made. I was hoping for others to critique them for better or worse.
I think you're doing OK. You're learning and seem to be keeping the bets small. Over time you'll find a strategy that suits you. You really need to consider the worst likely scenario. I know the premiums are very tempting now. Some month the market WILL turn on you. Stick yourself with a bunk of junk at once and your capital is now tied up. That encourages selling at a loss just to escape owning companies you aren't actually comfortable with long-term. It's OK to trade F if you like, just don't have most of your positions in similar quality There is almost always something out there with half decent credit you can ride out the storm with if you get stuck. The premium may be a little less of course.
In the same vein, the (risk) premium is what it is. When premiums are overly large, so is the risk you are taking on. That is how options work. Higher risk= more premium=farther away strike prices. One needs to be further away because of the risk/premium involved.
When learning, I visualized it as a marionette with risk pulling the strings. Others like the no free lunch principle.
Stick to liquid, high quality names and you'll be fine. Sometimes eschewing large (risk) premiums is the way to go.