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

[fenders53]

(04-14-2019, 03:50 AM)crimsonghost747 Wrote: Quick question on rolling forward
I imagine the tactic is slightly different for calls and puts.
But say you have a covered call that looks to be expiring in the money. You just buy it back and sell one for the next week/month/whatever at the same strike? Or do you also mess around with changing the strike to adjust? Timeframe? I guess you guys regularly sell monthly options? I would be mainly interested in using these on a weekly basis, still worth it or not?

With puts I guess it's a pretty decent way to avoid getting assigned? Have you ever been in a situation though that you need to sell a put with a higher strike in order to get enough premium to make it worth it?

I'll try to make the answer brief. Let me know if I am not clear.  The short answer is yes, sometimes and maybe. 

-puts and calls are pretty much require the same strategy, just the inverse in SP movement of course.
-sometimes I am rolling forward at the same strike, often I can roll it in my direction some.  With higher bet stocks the time value is high and I can almost always change the next strike.
-timeframe completely determined by individual situation.  How much time do I think I need for a good chance stock will reverse?  For a put, Is the stock still in free fall, or does it appear to be consolidating after a protracted decline?
-For a stock like AAPL, I've sold a cover call and the stock has run up fast.  My call is deep in the money.  Maybe I sold it initially at $2 I'll buy it back now for 12 and sell a new one further out for only 9 or 10.  If I can move the strike 5 higher I might be willing to be down 1 for now.  Maybe I have to do this again next month?  With time, I have repeatedly held my shares and it moved the right eventually.  I am on defense at this point.  I have moved my strikes much higher on AAPL and HD calls.  If I give up now, I am selling my stock at a much hgher price.       

I'll use made up numbers but here is how I have entered most of my pharma stocks like this.....

Sell puts on ABT for months and it finally falls in the money.  Maybe I roll it forward one more time and get an entry another a few points cheaper.  Or maybe the stock is saying a nice div in a week so I just take  my new shares and move on.  In my perfect world the stock swings higher and I can sell a cover call if I want to.  I try to always account for x dividend dates when I open any position.   I accepted assignment in DEC and after it ran I started selling calls.  Had to roll my calls forward once on ABT but it;s sitting pretty as a play over all.

Same process with MET.  I do own 200 shares but I've collected about 10 monthly premiums.  The SP is right where it was 6 months ago.  I've sold about 10 options and collected dividends.  Put premiums are high enough to cover a missed dividend if that is how it plays out.  I did roll puts nce during the late 2018 market down draft.  Certain stocks are just made for this income strategy.   

And yes rolling weeklies could work, but be prepared to have to go out a month because you will likely need to sell more time if you are upside down.  If the option is sitting on near zero time value you are at risk of early exercise.  Rare in my experience, but it definitely happens.  I've had shares stolen right before x-dividend at least twice. I make that harder to happen now by choosing expiration date wisely.  Push your luck on a dividend monster like T and you'll lose your shares, or get your put assigned shortly after the x-div date.

[crimsonghost747]

Thanks for the answers guys. It's an interesting concept, I think I'll give it a try if/when the situation presents itself.

[fenders53]

(04-15-2019, 02:03 AM)crimsonghost747 Wrote: Thanks for the answers guys. It's an interesting concept, I think I'll give it a try if/when the situation presents itself.

You have to wait for your particular situation.  With the wild swings approx OCT-JAN, it made it easy to get out of trouble.  It also made it easy to get upside down in a trade in the first place of course.  I prefer my markets lightly choppy.  I find my strategy simple to manage then.   

I have felt it was prudent to roll about six times during the past 4 months.  Usually to get out of selling my long position way under current market value.  That is where I am finding it the most challenging lately.  It's worth it to move my strike $10.  Especially if the cost is free, or very close to free.  As Mike said there are times when you just move on.  Especially if the story has actually changed in the meantime.  I may get some more practice with UNH later this week. 

My forum chatter is probably further confusing because I am doing two things. Attempting to hold a basket of DGI stocks long term, using options for better entry, and more income after I own them. And of course some option trades on the side because that is just fun lol. Underlying is always as stock I am OK with owning for an extended period of time if necessary. If I don't roll now and then, my base port is going to evolve into a continuously traded basket. Now that could work of course, but I need 50 good ideas on hand per quarter, and if I am honest I usually don't have 20. That's too much research. So most of my rolling has the purpose of holding my best stocks, or entering 5% cheaper when I can . But you gotta let it go sometimes as Mike stated. Trying to "beat a stock" will get you hurt. Emotion is now in play.

You have a pretty good idea what I am up to overall so hoping that explanation made some sense.

[fenders53]

A very busy day. I have a lot of options that needed to be addressed. I rolled put and call positions forward for KO,BP,VTR,PFE so far. Mostly small moves with little consequence. All in the money options with expiration tomorrow. A few transactions cost me $10.
The net gain on all the moves was about $100 gain and moved a few strike prices in my favor a few % if I am exercised next month. Or maybe I need to do this again next month? Some near term dividends were saved so that factors in. It's all I could do to avoid transactions at less than optimal current prices.

I'll share details on UNH as I dance through the fire. This is pretty typical when I get on on the wrong side of a trade.

Sold a very short expiration option last month for $117 (commissions included) and it expired worthless. Sold a new put for $397 after that so I am now up $514. Then the free-fall started and i just bought back to close that option for $1998. Immediately pushed it out a month with an expiration in May at only $1822, but I dropped the strike from $235 to $230. Still have $348 cash profit in the account after all these trades but I am very upside down in the new put of course. $23,000 is tied up as option collateral, but it's earning nice interest. I may be doing this five more times. I a fine with going long with UNH, but I intend to keep selling tie until the entry price is closer to what I desire. Politics really complicate this but I knew that going in. I didn't expect the freefall of course or I would have waited a month to sell a put.

[Otter]

TSLA looks like a pretty safe bet to head to $0. The numbers just don't add up for them. Destroying $700 million in the first quarter, no realistic growth catalysts on the horizon, and the CEO talking about branching out into insurance on the latest earnings call. Am actually considering buying a put for the first time in my life. Missed out on Enron.

[fenders53]

(04-25-2019, 08:44 AM)Otter Wrote: TSLA looks like a pretty safe bet to head to $0. The numbers just don't add up for them. Destroying $700 million in the first quarter, no realistic growth catalysts on the horizon, and the CEO talking about branching out into insurance on the latest earnings call. Am actually considering buying a put for the first time in my life. Missed out on Enron.

I'm not quite that pessimistic yet.  They'll have to issue shares soon.  They are still solid enough to do that. They are six months late.  I don't wish them bad luck, but I knew their base model car at $50K+ wasn't going to work out past the initial demand surge.  Until recently that was about as cheap as you could get one.  I'll be surprised in the stock goes anywhere but slowly down for now.  The cult is still in tact, but I can't imagine the big money isn't dumping right now.   Elon's new idea of the week makes him sound absolutely unhinged.  Tesla insurance?  That's a good one.  Pretty sure you need sterling credit and huge cash reserves.  Not to mention getting licensed in 50 states.

[Otter]

(04-25-2019, 07:41 PM)fenders53 Wrote:

(04-25-2019, 08:44 AM)Otter Wrote: TSLA looks like a pretty safe bet to head to $0. The numbers just don't add up for them. Destroying $700 million in the first quarter, no realistic growth catalysts on the horizon, and the CEO talking about branching out into insurance on the latest earnings call. Am actually considering buying a put for the first time in my life. Missed out on Enron.

I'm not quite that pessimistic yet.  They'll have to issue shares soon.  They are still solid enough to do that. They are six months late.  I don't wish them bad luck, but I knew their base model car at $50K+ wasn't going to work out past the initial demand surge.  Until recently that was about as cheap as you could get one.  I'll be surprised in the stock goes anywhere but slowly down for now.  The cult is still in tact, but I can't imagine the big money isn't dumping right now.   Elon's new idea of the week makes him sound absolutely unhinged.  Tesla insurance?  That's a good one.  Pretty sure you need sterling credit and huge cash reserves.  Not to mention getting licensed in 50 states.

Supposedly Musk hits a margin call around $232/share, and he recently took out $61 million in mortgages on residential property holdings of his in California. Things could get very interesting soon.

Short interest in TSLA is up to about 26% now. I suspect a big part of that is Goldman. Their recent downgrade provides a $190 price target.

Panics usually start as a trickle, but the stampede for the exits can develop quickly.

[fenders53]

(04-26-2019, 09:15 AM)Otter Wrote:

(04-25-2019, 07:41 PM)fenders53 Wrote:

(04-25-2019, 08:44 AM)Otter Wrote: TSLA looks like a pretty safe bet to head to $0. The numbers just don't add up for them. Destroying $700 million in the first quarter, no realistic growth catalysts on the horizon, and the CEO talking about branching out into insurance on the latest earnings call. Am actually considering buying a put for the first time in my life. Missed out on Enron.

I'm not quite that pessimistic yet.  They'll have to issue shares soon.  They are still solid enough to do that. They are six months late.  I don't wish them bad luck, but I knew their base model car at $50K+ wasn't going to work out past the initial demand surge.  Until recently that was about as cheap as you could get one.  I'll be surprised in the stock goes anywhere but slowly down for now.  The cult is still in tact, but I can't imagine the big money isn't dumping right now.   Elon's new idea of the week makes him sound absolutely unhinged.  Tesla insurance?  That's a good one.  Pretty sure you need sterling credit and huge cash reserves.  Not to mention getting licensed in 50 states.

Supposedly Musk hits a margin call around $232/share, and he recently took out $61 million in mortgages on residential property holdings of his in California. Things could get very interesting soon.

Short interest in TSLA is up to about 26% now. I suspect a big part of that is Goldman. Their recent downgrade provides a $190 price target.

Panics usually start as a trickle, but the stampede for the exits can develop quickly.

It's an interesting story I spend too much time reading about.  The cultists will stick around and end up holding the bag.  TSLA is worth $50.  That's still twice book value the other automakers are awarded. That's probably appropriate for blazing the EV trail. EV is going to become mainstream, but TSLA will run out of money WAY before it happens.  If Musk would stand down I think they would survive. That is the wildcard.  He's always been impulsive but it's on another level now.  He is panicking.  Institutions are leaving now IMO.  They won't scare the market to excess until they have liquidated.

[fenders53]

Sold a PFE 39 and a BMY 45 May put. Already own some and they are cheap enough to add more IMO. Premiums are good if I don't get assigned.

[fenders53]

Not too much in play right now. I am about to pounce on a UPS put sale. It's looking very attractive since I wish to own it if I underestimate how low it may go in the near future. I could be deep in BMY soon. I already own it and have a few puts sold that are barely in the money. I'm good with getting exercised right here.

[fenders53]

Sold a BP May 40 and a May D 72.50 put today. Already have some long shares. Watching MMM close for an entry but I think that looks risky without a real trade deal.

[fenders53]

BWA and UPS back in the sweet spot. Way out of the money DE puts looking good too. I'm extremely light on industrials so I'm convincing myself now is as good a time as any for stocks on my watch list with good or better valuations. Sold puts on all three this morning.