10-01-2019, 08:09 AM
That's a pretty good graphical representation. ATM premiums drop like a rock when you get close to expiration, and the whole premise of selling puts to enter virtually all my long stock entries. If it takes two attempts to enter you have often collected more than a full year of dividend income. Pick the DTE carefully and you might also collect your first dividend within a month of going long.
The chart might not be flat enough from 90 days and further out. If the market gets a little choppy premiums just sit there. I sold a handful of calls as much as 6 months out this year to get some decent premiums. My real life experience says don't do that anymore. There are greener pastures elsewhere. You can circle back and grab it later. Remember back in FEB when I said I was going to sell some long dated puts in NWL? I sold a SEP strike 17 put when the stock was 19+. $2.10 premium. Looked good on paper and I was counting on the high dividend to save it until the company turned it around. The stock went sub $14 and the put was way upside down for almost the entire time I held it. A good earning report saved me with under 30 days left. I did hold until it expired worthless. The stock was so volatile and the premium decay was stubborn. The return was fine in the end but it was not a good way to play it. Way too much can happen in 6+ months. I'll leave that for the long part of my port. I'm hesitant to even go 60 days now. I see few examples where it makes any sense for an individual stock.
The chart might not be flat enough from 90 days and further out. If the market gets a little choppy premiums just sit there. I sold a handful of calls as much as 6 months out this year to get some decent premiums. My real life experience says don't do that anymore. There are greener pastures elsewhere. You can circle back and grab it later. Remember back in FEB when I said I was going to sell some long dated puts in NWL? I sold a SEP strike 17 put when the stock was 19+. $2.10 premium. Looked good on paper and I was counting on the high dividend to save it until the company turned it around. The stock went sub $14 and the put was way upside down for almost the entire time I held it. A good earning report saved me with under 30 days left. I did hold until it expired worthless. The stock was so volatile and the premium decay was stubborn. The return was fine in the end but it was not a good way to play it. Way too much can happen in 6+ months. I'll leave that for the long part of my port. I'm hesitant to even go 60 days now. I see few examples where it makes any sense for an individual stock.