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

[NilesMike]

The volume on the IRM trade is so small, you may just have to let it expire.

[NilesMike]

(04-15-2020, 04:57 PM)NilesMike Wrote: UNH IC -295C long 300C
-267.5P long 262.50P

1 MAY 20

Wound up with just a call spread 300/305 (price ran up after my 1st posting). Just could not get filled on the put side unless one went very close to ATM.
Interesting learning that.

[fenders53]

(04-17-2020, 03:03 PM)NilesMike Wrote:

(04-15-2020, 04:57 PM)NilesMike Wrote: UNH IC -295C long 300C
          -267.5P  long 262.50P

1 MAY 20

Wound up with just a call spread 300/305 (price ran up after my 1st posting). Just could not get filled on the put side unless one went very close to ATM.
Interesting learning that.

The market only goes up now.  Who would buy a put from you?  

[john]

Had my AAL 4/17 $11 put expire worthless yesterday +$32
OZK 4/17 $22.50 call expire worthless+$5
Had a WEN 4/17 call expire $16 called away that was put to me @ $12 3/23 plan on selling a put on that next down day
Bought 100 F @ $4.92 thursday then sold a 4/17 $5 Call for $10 got called away +$18
Nickle and dimeing my way to something lol

[fenders53]

(04-18-2020, 09:24 AM)john Wrote: Had my AAL 4/17 $11 put expire worthless yesterday +$32
OZK 4/17 $22.50 call expire worthless+$5
Had a WEN 4/17 call expire $16 called away that was put to me @ $12 3/23 plan on selling a put on that next down day
Bought 100 F @ $4.92 thursday then sold a 4/17 $5 Call for $10 got called away +$18
Nickle and dimeing my way to something lol

I think you're doing OK and learning the process.  Just make sure you apply some self discipline, especially when selling puts.  It might go perfect for six months, but at some point the market will turn on you and you'll stick yourself with a bunch of shares.  I took a break from selling puts the past few weeks because nothing good is oversold.  We are spoiled right now as IV is still pretty high.  It's not hard to get 1-2% for a very short term expiration.  When normal volatility returns you might have to sell them a month out to get 1- 1 1/2%.  

If you want to play with airlines target one that won't likely go BK.  I know AAL and F are cheap and easy to chase an option nickel but you are playing with fire.  If the market was rational AAL would be $5 now.  F may be headed for a another haircut as well.  Both of them have junk debt ratings.  AAL should be BK.  With premiums high there is no reason to force yourself into junk.      

Sorry if it sounds like I am trying to find fault in all your ideas.  I wouldn't be nearly as scared to get stuck with some WEN or OZK.  There are a million more stocks in similar shape.  

Another tip I use when I sell puts on lower option premium  stocks.  Catch a boring higher yield stock on a good dip a few weeks before it's ex-div date.  T-MO-DOW-MET-IP-ADM are examples of lower priced stocks that might interest you.  There are many more.  They usually run up just a bit or at least stabilize right before the x-div.  Nobody will early assign you (put) if you are slightly in the money if a good div is coming in just a few days.  I've done this literally 100 times and it usually works out.  Worst case you get stuck with a pretty decent stock likely to maintain it's dividend, and get the dividend due now.  Always pay attention to the x-div with EVERY option play.  You'll get some bad surprises if you don't.  Holding a stock like T and having your shares stolen the day you would qualify (call) for the big div stinks.

[john]

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.

[vbin]

I sold some $40 calls(covered) on eBay stocks for $46 expiring may 1st. Happy to get them assigned at $40. They have earnings on 29th and I think they will do well given e-commerce been real busy past 1 month.


I also sold puts on xle for $29, 28, 27. The premium was rediculous. Happy to get XLE in that range as well. Won't be selling it till oil goes back to $40+ even if that takes 5 years.

[fenders53]

(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.

[fenders53]

(04-19-2020, 11:38 PM)vbin Wrote: I sold some $40 calls(covered) on eBay stocks for $46 expiring may 1st. Happy to get them assigned at $40. They have earnings on 29th and I think they will do well given e-commerce been real busy past 1 month.


I also sold puts on xle for $29, 28, 27. The premium was rediculous. Happy to get XLE in that range as well. Won't be selling it till oil goes back to $40+ even if that takes 5 years.

I am getting close to getting back long on some oil.  Oil could drop even lower, but something has to give before long.  As the saying goes low oil prices will cure low oil prices.  It always works out like that.  We may not see 50 for years, but sub 20 can't last.

[NilesMike]

(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.

[fenders53]

(04-20-2020, 08:09 AM)NilesMike Wrote:

(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.

John, 

I absolutely agree with Mike.  Over time you will learn this game is all about risk management.  Success can lead to excessive risk taking.  I'm pretty conservative, but I'm not immune.  From my personal experience I might go 6 months in a row with very high success.  200 option trades and 90%+ of them go my way.  Month seven the market turns on me and I suddenly own 1000+ shares at a less than optimal entry price, (puts).  In hindsight I usually forced some trades that should not have happened.  

Mike and I probably trade more options than anyone here.  We also own a core portfolio of DGI stocks.  A few small option errors are a small percentage of our overall port.  Otter makes a lot of trades lately. Some of them are high risk. Don't ever copy a trade you see on the forum without understanding the thesis behind it, and the risk or lack thereof.       

Maybe for now you take 4-5 positions per month and only one can be higher risk.  Discipline is your friend, especially with a new port.  You don't want to be forced to start over.  You'll have to make your own rules.  It's hard to truly appreciate your personal risk tolerance until you get your nose bloodied on too many positions when the market turns suddenly.  You seem to mix put and call sales. That is a form of hedging your overall risk. I usually do the same.

[john]

Looking for more nickels.
What is USO? I get that its a oil ETF and that its very cheap, is it price of oil only that makes it move?
Was away from computer today and missed the oil meltdown today. Looking to either sell a PUT on it or maybe just buy 100 and sell a CALL.
On a sidenote my brother works for Marathon, fairly high up. When Saudi Arabia and Russia got into a pissing match I asked him what his breakeven was he said $42 /barrel they were makin a little $ High $30s they were starting to lose.