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

[crimsonghost747]

(02-26-2019, 10:27 PM)fenders53 Wrote: Here is an example of patience paying off when you sell a call on a stock you don't wish to sell, but are just trying to boost income.  

Wasn't your number one rule not to sell a put in a company you don't want to own? Isn't selling a call in a company you don't want to get rid off kinda the same thing? 

But I have my own trades to criticize too hehe. ACB ran up 10% in the past two days. This stock moves lightning fast so anything is possible but I'm just saying that going long would have given me 10% in 2 days instead of the 2.85% in 5 days that I'm looking at now. And I still have 3 days of risk to absorb as closing the position early doesn't really seem to work with this one. (and this is one of those stocks where a 10% drop in a day is very much possible)

A more regular trade: covered call play with WBA
Went in at $71.36. Sold a $72 call for 8th of March.

[fenders53]

(02-27-2019, 01:31 AM)crimsonghost747 Wrote:

(02-26-2019, 10:27 PM)fenders53 Wrote: Here is an example of patience paying off when you sell a call on a stock you don't wish to sell, but are just trying to boost income.  

Wasn't your number one rule not to sell a put in a company you don't want to own? Isn't selling a call in a company you don't want to get rid off kinda the same thing? 

No, it's not the same thing.  OK, maybe it is. I knew something like that was coming from you.    

Seriously though, the "have my cake and eat it too trick" was complicated this month.  I don't wish to deal with it constantly, with a handful of stocks.  It's just become a market of extremes.  I think everybody here expected the market to bounce, and nobody expected it to go up everyday for months, barely stopping long enough to take a breath.

I thought both my AAPL and HD shares were goners.  I waited for them to run way up before I sold the calls.  I guess the only point I was trying to share is you can often squirm out of expiration. The best compromise is probably to not have calls sold against some of your shares like I do with T.  Unfortunately I don't have a couple hundred extra shares of AAPL laying around lol.  I'll have to be more careful with my expensive shares. I wouldn't be happy if AAPL ran $40 in a month and left me behind.  That is something I consider possible. 

There isn't any doubt that selling puts and calls is much easier to manage in a flat or even a choppy market.  A whole lot easier to do that buy high-sell low thing.   I really don't mind rolling puts forward a few times to get in near a bottom.  MO and XOM are not so volatile (usually), and it is much easier to manage.

[crimsonghost747]

(02-27-2019, 07:54 AM)fenders53 Wrote:

(02-27-2019, 01:31 AM)crimsonghost747 Wrote:

(02-26-2019, 10:27 PM)fenders53 Wrote: Here is an example of patience paying off when you sell a call on a stock you don't wish to sell, but are just trying to boost income.  

Wasn't your number one rule not to sell a put in a company you don't want to own? Isn't selling a call in a company you don't want to get rid off kinda the same thing? 

The best compromise is probably to not have calls sold against some of your shares like I do with T.  Unfortunately I don't have a couple hundred extra shares of AAPL laying around lol.  I'll have to be more careful with my expensive shares. I wouldn't be happy if AAPL ran $40 in a month and left me behind.  That is something I consider possible. 

Yeah if you happen to own 400+ shares then messing around with a call or two becomes possible without sacrificing your whole position. I can count quite a few situations recently where I've looked into it, knowing very well I can't do it because I only own 100 shares or less. 

Either I need to get rich or some of my companies have to do a split. 

[fenders53]

(02-27-2019, 08:04 AM)crimsonghost747 Wrote:

(02-27-2019, 07:54 AM)fenders53 Wrote:

(02-27-2019, 01:31 AM)crimsonghost747 Wrote:

(02-26-2019, 10:27 PM)fenders53 Wrote: Here is an example of patience paying off when you sell a call on a stock you don't wish to sell, but are just trying to boost income.  

Wasn't your number one rule not to sell a put in a company you don't want to own? Isn't selling a call in a company you don't want to get rid off kinda the same thing? 

The best compromise is probably to not have calls sold against some of your shares like I do with T.  Unfortunately I don't have a couple hundred extra shares of AAPL laying around lol.  I'll have to be more careful with my expensive shares. I wouldn't be happy if AAPL ran $40 in a month and left me behind.  That is something I consider possible. 

Yeah if you happen to own 400+ shares then messing around with a call or two becomes possible without sacrificing your whole position. I can count quite a few situations recently where I've looked into it, knowing very well I can't do it because I only own 100 shares or less. 

Either I need to get rich or some of my companies have to do a split. 

Yes, being rich would make this a whole lot easier lol.  I do have 200 shares of quite a few companies.  Sometimes I do have calls sold against all shares.  Of course our stock, or overall timing will be very flawed at times.  So why would I sell both calls on the same day, rather than stagger the contracts weeks apart?  Oh yeah, to save literally just two dollars on commissions by making it one trade.  I shake my head at myself sometimes.    Anytime you have the chance to spread the risk of being a bonehead, we must do it.

[fenders53]

If I ever write an investing book it should be titled. "Quit being stupid, now!"

[fenders53]

(02-27-2019, 01:31 AM)crimsonghost747 Wrote: A more regular trade: covered call play with WBA
Went in at $71.36. Sold a $72 call for 8th of March.

The plan here is just a quick monthly check, (or a couple weeks), rinse and repeat with solid companies you are OK with holding if they dip? I've been busy with my build a port plan but I have done what you are doing on occasion. I like just a little more upside potential though, unless I really love the stock.

Here is how you screw this up. Do it with about four volatile companies in the same sector. If you don't have the cash then just use some margin because we need to get rich this month before it's too late lol. I did something like this when I was a kid during the tech bubble. I still have nightmares.

[crimsonghost747]

(02-27-2019, 08:48 AM)fenders53 Wrote:

(02-27-2019, 01:31 AM)crimsonghost747 Wrote: A more regular trade: covered call play with WBA
Went in at $71.36. Sold a $72 call for 8th of March.

The plan here is just a quick monthly check, (or a couple weeks), rinse and repeat with solid companies you are OK with holding if they dip? 

Pretty much.
In general these trades are 4-5 days long. I have a set amount of dollars I use for these options, so if something gets freed up on Friday then I try to find a new place for it on Monday but sometimes there is nothing so I keep looking the next day. The majority of the time I sell the call for the Friday same week but I can do 2 weeks too if it makes more sense. I don't think I've ever done more than 2 weeks at a time.

I only trade companies I don't mind holding (though holding is never the idea) and usually only companies that I already own. A decent dividend helps too as it's always more income that I might stumble into along the way if it turns into a longer term ordeal.

If the first call expires worthless then I just sell the best call I can find the next week and indeed, rinse and repeat until the shares get taken away.

[fenders53]

The portion of my port dedicated to this income strategy mostly remains on the sidelines collecting interest. I don't like it but I am trying to be disciplined and not force a trade. FEB income will be down some for sure. Day off from work so I managed to pull off a few option sales.

Sold a covered call on the following. Well enough out of the money and smallish premiums so I will spare you all the details. T, MET, BP, BMY. They have all run up some and I highly doubt they fly much higher real soon and make me sorry.

The HD situation is considerably more interesting as I have been dancing around the recent volatility trying to make some monthly income but not lose my shares and dividend. This is a core holding. Two weeks ago I sold the HD MAR15 190 call for $626. That was a roll forward, not $600 profit. But that was last week and HD dipped about $8. I retired that call today for $55 on this mornings dip so that worked out well. The call expires MAR 15th and the risk/reward is gone so I took the profit. HD recovered a few hours later and I sold an APR 190 call for $205. I'd much rather sell a $195 strike but it's not meant to be right now. That would require entering a date range that violates my thesis of when the BIZ is very likely going to be good or bad. The HD goal is hold the stock through the ups and downs, never miss that new fat dividend, and try to scrape another 8-10% annual income with my option shenanigans I consider conservative. Even if it raises my pressure sometimes trying to avoid being exercised when the stock runs.

Thanks for looking over my shoulder Crimson. I ask myself what you would think before I pull the trigger lol. Seriously though I will always be honest here. I appreciate that you actually read my posts seriously and understand what I profess to be my goal. I will never stop learning from my mistakes, and publishing my decisions in advance causes me to be less impulsive.

[crimsonghost747]

(02-28-2019, 01:55 PM)fenders53 Wrote: Thanks for looking over my shoulder Crimson.  I ask myself what you would think before I pull the trigger lol.    Seriously though I will always be honest here.  I appreciate that you actually read my posts seriously and understand what I profess to be my goal.  I will never stop learning from my mistakes, and publishing my decisions in advance causes me to be less impulsive.

I've noticed it too... before I press the transmit button on my order I think "are the guys going to laugh at me in a week or two?"
I hope that it will limit some of the stupid moves I would otherwise make, then again stupid moves have the tendency to be quite profitable if the market goes the right way. And most certainly lead to big losses when things go wrong. 

[fenders53]

(02-28-2019, 09:39 PM)crimsonghost747 Wrote:

(02-28-2019, 01:55 PM)fenders53 Wrote: Thanks for looking over my shoulder Crimson.  I ask myself what you would think before I pull the trigger lol.    Seriously though I will always be honest here.  I appreciate that you actually read my posts seriously and understand what I profess to be my goal.  I will never stop learning from my mistakes, and publishing my decisions in advance causes me to be less impulsive.

I've noticed it too... before I press the transmit button on my order I think "are the guys going to laugh at me in a week or two?"
I hope that it will limit some of the stupid moves I would otherwise make, then again stupid moves have the tendency to be quite profitable if the market goes the right way. And most certainly lead to big losses when things go wrong. 

I won't laugh at you because it isn't funny.  I do admit to  reading the "what did you buy today thread", and sometimes thinking "Seriously?.... what were you thinking fool, that pig is gonna sink like the Titanic for at least another week for sure".  

I've really learned a lot about conservative option strategies the past six months.  Not that I had never done it before, but not in this volume.  If I am doing basically the same strat with 15 or more different stocks in a month, I am statistically eliminating the blind luck, or bad luck.  My strategy is basically sound, or it isn't.  Half of my plays are very conservative, so the winning percentage is very high.  (as Mike stated last week).  That also means half the monthly payoffs are fairly small, so I have no room for numerous bonehead moves when I play with a high dollar, fairly volatile stocks like AAPL.  I find some comfort that I was able to navigate out of months when the market moved 10%.  10% is not a normal month, but you have to be prepared for the what if this market goes in the wrong direction scenario.   Dow (DWDP) is my only real regret the past year.  I had no real interest in owning it for a day, never mind long-term.  I cut and ran with a fairly large loss, and got out before it dipped more, which it did.  Rule #1 was violated.  That wiped out the profits that had to be made up with 6-8 more conservative plays.  Basically cut an entire months income in half.  An favorable market month was wasted.  

I'm bad about beating myself up, but dwelling on the bad idea that didn't work out sears them in my memory and it helps next month.  Covered call strategy is my next self-improvement project.  Overall they are working out fine, but I think I am pulling the trigger too fast on the stocks I wish to keep.  I think I forced a few trades in late January.  The straight up market is my excuse, but that will happen again.  Sure I can avoid being exercised, but it can take months to dance out of a bad trade by selling more time.  HD handed me a very quick fix because it moved as I thought it would around earnings.  Not always that easy.  AAPL and MO will end up being a three month project if things go well.  I need AAPL to pull back a bit, and MO to head a couple dollars higher.  That's asking a lot of the market during the same time period.

[fenders53]

Hey Crimson, it was a frantic income strategy end to the month. Still way more cashy than I like, but sold a put on D, VTR, WEC. A call on BMY and T. Rolled a put forward a couple weeks on KO, and a call on HD as previously discussed. I am proud to report I beat FEB19 income earnings by $1.29 a share because I cooked the books at the deadline. All my CFO;s do it so why cant I lol? Unfortunately revenues were barely in line with my estimates, but I have adjusted my forecasts up for FY2019. The future is so bright I had to wear sunglasses while I typed this.

Seriously though, in the interest of honest reporting, my excess cashiness cost me about $5K this month. Still had a great month but my crystal ball is obviously still broken. Maybe I'll make up for it some when I accidentally catch some deals later. This market has to dip sometime right? I am beginning to wonder lol. I would have had to chase stocks to get my normal put income, and selling calls included some fails for sure. I can dance out of getting exercised, but that means no new call income for a month or more on those positions.

[crimsonghost747]

(03-02-2019, 08:34 PM)fenders53 Wrote: Still had a great month but my crystal ball is obviously still broken.  Maybe I'll make up for it some when I accidentally catch some deals later.  This market has to dip sometime right?  I am beginning to wonder lol.  I would have had to chase stocks to get my normal put income, and selling calls included some fails for sure.  I can dance out of getting exercised, but that means no new call income for a month or more on those positions.

Haha yeah cooking the books can make a month look good, the problem is what happens the next month. :p But you have 4 full weeks to figure that one out. My Feb was pretty damn close to last years average per month but my crystal ball was out of tune too, WBA dipped pretty badly on Friday (-6%). I guess I'll also have to pull some magic tricks from my sleeve in order to make March a good month.

I have some cash to use again on Monday so I'll probably make a move or two.