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

[vbin]

(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol

Part of learning experience. Also you can't win every trade. Even Buffet can't.

[fenders53]

(05-09-2020, 01:47 PM)vbin Wrote:

(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO  a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol

Part of learning experience. Also you can't win every trade. Even Buffet can't.

For sure.  We have to learn fast and not repeat mistakes or we might as well buy the index and find a new hobby.  Nobody here wants to do that.

[john]

Had 4 stocks "put" to me this week
F @ $5
CCL @ $13.5
KO @ $ 45
ADM @ $ 34.5 I am ok with the results got paid good to get assigned. KO and ADM have dividends coming up.
I will sell CALLS against all of these this week.
Had 6 expire worthless this week
GEO CALL @ $ 16
WFC CALL @ $ 28
T CALL @ $32
WEN PUT @ $16
BTI PUT @ $35
JETS PUT @ $12

[fenders53]

(05-16-2020, 08:13 AM)john Wrote: Had 4 stocks "put" to me this week
F @ $5  
CCL @ $13.5
KO @ $ 45
ADM @ $ 34.5 I am ok with the results got paid good to get assigned. KO and ADM have dividends coming up.
I will sell CALLS against all of these this week.
Had 6 expire worthless this week
GEO CALL @ $ 16
WFC CALL @ $ 28
T CALL @ $32
WEN PUT @ $16
BTI PUT @ $35
JETS PUT @ $12

Hopefully KO and ADM will run up a buck for you prior to dividend.  

Looks like you'll have to sell the ADM call on Monday as it goes ex-Div on Tues.  I'm an ADM fan but I think it's headed lower after Div. They are facing some headwinds the next few months (VERY low grain prices, saber rattling with China could destroy the current AG trade agreement in a day.  

KO is getting oversold.  I wouldn't  rush that one if the call premium isn't worth it.  KO never stays down too long with that big safe dividend.  

F is tough to sell options on but I would do it to keep the income flowing.  It's stuck down here for a long time I think.   

I rolled a few puts and calls forward this week.  No assignments since the big crash.  Rolling them tends to work out in just a few months or sometimes weeks.  I do have some PFE shares deep in the money on a couple calls I sold too early.  I have many more shares but I got a little impatient and now I'm chasing a couple contracts for who knows how long.

And here is another trick that you might find handy at very specific times.....

You are assigned stock XYZ and it's say $26 and you are in at $28 basis.  The short-term story changed and you are down some and you are now very bearish on the stock.  The closest call is at $30. 15%+ out of the money and the premium is very weak.  You immediately sell the shares and then sell a put at $25 which has a good premium as it's close to the money.  You now have some downside protection without bailing on the stock and conceding the loss.  I did this quite a few times in early MAR when the virus hit.  It was pretty clear which stocks were heading lower.  This is NOT something I do with my core DGI holdings.  Just the income game stocks, which I own very few of in this economy.

[john]

Fenders you are in Iowa?
Agree on the reasons ADM should go lower,
Election year the powers that be won't let the ag economy suffer to much trade agreement or not.
MFP anyone? lol

[fenders53]

(05-16-2020, 06:13 PM)john Wrote: Fenders you are in Iowa?
Agree on the reasons ADM should go lower,
Election year the powers that be won't let the ag economy suffer to much trade agreement or not.
MFP anyone? lol

Yes I live on the east coast of Iowa, hometown of the American Pickers and spittin' distance from Deere world HQ.    Corn is worthless as oil.  DE is going to start laying off within weeks and they are late with that.  The meat packing plants are about the only place over-run with Covid.  It's a mess.  American farmers would be BK in a year without big subsidies.  Flushing the trade agreement would by incredibly foolish right now.  Corn won't even be worth planting this year.

[NilesMike]

(05-16-2020, 05:49 PM)fenders53 Wrote: And here is another trick that you might find handy at very specific times.....

You are assigned stock XYZ and it's say $26 and you are in at $28 basis.  The short-term story changed and you are down some and you are now very bearish on the stock.  The closest call is at $30. 15%+ out of the money and the premium is very weak.  You immediately sell the shares and then sell a put at $25 which has a good premium as it's close to the money.  You now have some downside protection without bailing on the stock and conceding the loss.  I did this quite a few times in early MAR when the virus hit.  It was pretty clear which stocks were heading lower.  This is NOT something I do with my core DGI holdings.  Just the income game stocks, which I own very few of in this economy.

I'm not following this Fenders.

Put stock @28, now trading @26. Sell the shares? Trade over, a loser.

Sell a new put @25? New trade. May be a winner or a loser. Irrelevant to the earlier put that was assigned.

I have a couple of friends who do significant amount of "defending" a trade. Rolling down and out etc. There are no repairs to be made. Each trade stands alone, the only connection is the ticker symbol.

I want to be clear, Rolling locks in a loss on original trade and places a new trade on the same underlying, there is no repairing of the earlier position.

[fenders53]

(05-17-2020, 09:44 AM)NilesMike Wrote:

(05-16-2020, 05:49 PM)fenders53 Wrote: And here is another trick that you might find handy at very specific times.....

You are assigned stock XYZ and it's say $26 and you are in at $28 basis.  The short-term story changed and you are down some and you are now very bearish on the stock.  The closest call is at $30. 15%+ out of the money and the premium is very weak.  You immediately sell the shares and then sell a put at $25 which has a good premium as it's close to the money.  You now have some downside protection without bailing on the stock and conceding the loss.  I did this quite a few times in early MAR when the virus hit.  It was pretty clear which stocks were heading lower.  This is NOT something I do with my core DGI holdings.  Just the income game stocks, which I own very few of in this economy.

I'm not following this Fenders.

Put stock @28, now trading @26. Sell the shares? Trade over, a loser.

Sell a new put @25? New trade. May be a winner or a loser. Irrelevant to the earlier put that was assigned.

I have a couple of friends who do significant amount of "defending" a trade. Rolling down and out etc. There are no repairs to be made. Each trade stands alone, the only connection is the ticker symbol.

I want to be clear, Rolling locks in a loss on original trade and places a new trade on the same underlying, there is no repairing of the earlier position.

I actually expected you wouldn't care for this.  I don't like some of your trades either.     I think we are both good with that.

During the last two downturns fall 2018 and Mar 2020 I got steam rolled pretty hard on my specs.  Not that it matters but I was holding about 40 stocks I was comfortable holding long term and about a half dozen where the story had changed.  I dumped some trash immediately.  Two I kept were DAL and DOW.  I didn't actually consider them spec at the time, but not true LT core holdings either for reasons I probably don't need to explain.  Anyway, I didn't now where the bottom was but option premiums were sky high.  I did find my escape and dumped them a bit higher, after I sniped about five puts and calls on each in a matter of month.  I was getting several percent back in a matter of 2 or 3 days at the time.  Half my overall port recovery since March is option income.  I have plenty of dividend income but my options crush my Divs most months.  I have plenty of LT stocks that are still way down but I can't sell calls on them anytime soon or I'll regret it eventually.  I pretty sure I got hit worse than most here as I had the perfectly horrible port for the Covid.  Not sure I could have done it on purpose.  Anyway, I roll puts and calls forward ALOT when the market turns against me.  It's a hassle but it's worked out far more often than it hasn't. I just checked and the reality is I am dead even with SPY the past 20 months. That's not a fail I guess but it's not inspiring after the considerable effort into something I could have done with my mutual funds. I've replaced capital loss with income. 

Back to John's options.  He has more specs than I would consider having in play at once.  (If his port is the same as he shared a few months ago.)  He better learn to dance with options soon.  He is going to have to pick his spots to sell calls and get out of positions that are exercised.  You can't just wake up the Monday after you got assigned and auto-sell calls at whatever price.  That just won't work out over time.

[NilesMike]

I still don't understand selling puts when you have a bearish outlook on a stock?

Selling puts is a bullish strategy??

I get that you had success with it but I don't think it's an advisable and sound exit strategy for stocks put to you and are still dropping???

Seems like a way to get stuck with even more shares of a stock you are bearish on????

[fenders53]

(05-17-2020, 10:53 AM)NilesMike Wrote: I still don't understand selling puts when you have a bearish outlook on a stock?

Selling puts is a bullish strategy??

I get that you had success with it but I don't think it's an advisable and sound exit strategy for stocks put to you and are still dropping???

Seems like a way to get stuck with even more shares of a stock you are bearish on????

Did you miss the part that I am dumping the shares first, then immediately selling a new put a few bucks (or whatever) cheaper?  There are no new shares.  The same 100 I had (per contract obviously), unless the stock runs as I then incorrectly called the bottom. I'm not averaging down a dog with additional new shares.

What's your exit strategy?  Just sell it and run?  I definitely do that sometimes if it makes sense.

And BTW I didn't know DAL was a sure dog at the time.

[fenders53]

And yes technically selling puts is in fact a bullish strategy.  We just plan for the "bad" outcome.  As you know it's actually my long position entry strategy at some point, though I have no problem rolling them down if my opinion changes on a better entry.

[NilesMike]

(05-17-2020, 10:59 AM)fenders53 Wrote: Did you miss the part that I am dumping the shares first, then immediately selling a new put a few bucks (or whatever) cheaper?  There are no new shares.  The same 100 I had (per contract obviously), unless the stock runs as I then incorrectly called the bottom.  I'm not averaging down a dog with additional new shares.

What's your exit strategy?  Just sell it and run?  I definitely do that sometimes if it makes sense.

And BTW I didn't know DAL was a sure dog at the time.

On speculative trades, yes. If it runs too far against me, I buy the put back (for a loss). I never get married to any of those underlyings.

If the put is sold for better entry on a stock which I like, I'll try to sell a covered call if the premium is acceptable. If the premium is too low, I will just sit on it and collect dividends.

I actually opened a new taxable account where I will be selling puts and covered calls in KO only, with all profits going to buy more KO shares.