What Did You Buy Today?

[fenders53]

(08-03-2020, 03:59 PM)NilesMike Wrote:

(08-03-2020, 01:13 PM)fenders53 Wrote:

(08-03-2020, 12:45 PM)vbin Wrote: I wonder how much weekly options u get? Last time I checked T and Mo had $10 for weekly options.

Sorry I wasn't clear.  Weekly options only work for volatile stuff.  I do make $300 or $500 for a weekly option sell in something like QQQ or ROKU with a strike considerably out of the money.  There are no free rides as you know.  The NAS could drop 10% in a week and I own 100s of shares, albeit at a decent price.  

Reqarding the boring stuff game.  I am NOT selling 7 day options in T-KO etc.  I could, but you have to commit to WAY too many shares to make it worth it.  Every week or two when the boring stuff has a down day or two I am selling options that expire 2-5 weeks out.  95% of them expire worthless in a choppy or up market.  Spread out the dates and boring options expiring worthless every week and I rinse and repeat it 2-5 weeks forward.  I should be well past 500 hundred contracts this year.  I spread them out because I have no idea where the market goes from one week to the next.   

Reality is never less than 1% a month return or I don't play.  I target 1 1/2 to 2 1/2% per contact for a months waiting.  Add in the dividends if I can pick the expiration dates right.  Few home runs because i am trying to hit singles and I consistently do.  A $50 to $100 win may not interest most here but 500 times $100 works well enough for me with low risk if you stay disciplined.

I am consistently selling covered calls in T and KO, have a separate account just for them.

I sell 2 calls at what I determine resistance to be, then I buy 1 call a strike or 2 above those call strikes (IRA, can't be naked calls)

When KO was 45ish I sold 2 SEP18 50 calls, bought 1 SEP18 55 call for $1.21 Credit

If KO goes nowhere, I collect 1.21 plus .41 dividend for 1.62. 162/4500= 18% annualized.

If KO moves up to 50, I close the trade, buy the calls back and sell the higher call. Since the trade is positive delta. I make money. The stock would be up $500, the 2 calls would be down and the 3rd call would be up a smidge. Net would be between 250-300 depending on DTE left. 

250/4500= 27% annualized.

Downside? None really for me, I'm not selling KO unless called away, then put on the wheel of fortune by selling puts until I get put my shares again.

Guys who aren't doing some options around their positions are really missing an opportunity to crank your return.
The rub is one needs 100 shares minimum

Good luck to all.

Good post Mike.  This doesn't have to be your whole game.   It sure isn't mine.  When this rarely goes bad it is almost always because I broke my rules and sold a put on a stock I didn't really care to own long-term because  only did it for a big option premium.  Done correctly, your risk is being forced to buy a stock you wouldn't mind holding.  You have to be honest with yourself, and disciplined.  I exchanged a zillion PMs with WaMike and got him started. He is probably about 50 trades in by now and has enjoyed a perfect environment for this.  

It costs about $3K minimum to try this because you have to commit to potentially buying 100 shares.  If you do it with ten dollar stocks the risk changes considerably.  I do this with WY.  I have no problem owning WY for decades  but it is a lot more volatile than a stock like KO or T.  It hasn't happened yet, but I have no problem selling a few WY covered calls if I want to lose some extra shares.  The premium on the call side is just as lucrative. 

Just an income game that crushes dividend yields. Doesn't replace my core DGI holdings.

[fenders53]

And Mike is on the backside of my trade. I sell options until I get forced to buy in low, when it eventually happens revert to what he just described. Get paid until forced to sell higher at some point.

There is a downside though and that is opportunity cost. If you are sure you can just buy stocks that rise 3-5% every month then you should do that instead. Buying random tech stocks has worked better lately. It's far less consistent though.

[NilesMike]

If you are sure you can just buy stocks that rise 3-5% every month then you should do that instead.

LOL

[Binary]

(08-03-2020, 03:59 PM)NilesMike Wrote:

(08-03-2020, 01:13 PM)fenders53 Wrote:

(08-03-2020, 12:45 PM)vbin Wrote: I wonder how much weekly options u get? Last time I checked T and Mo had $10 for weekly options.

Sorry I wasn't clear.  Weekly options only work for volatile stuff.  I do make $300 or $500 for a weekly option sell in something like QQQ or ROKU with a strike considerably out of the money.  There are no free rides as you know.  The NAS could drop 10% in a week and I own 100s of shares, albeit at a decent price.  

Reqarding the boring stuff game.  I am NOT selling 7 day options in T-KO etc.  I could, but you have to commit to WAY too many shares to make it worth it.  Every week or two when the boring stuff has a down day or two I am selling options that expire 2-5 weeks out.  95% of them expire worthless in a choppy or up market.  Spread out the dates and boring options expiring worthless every week and I rinse and repeat it 2-5 weeks forward.  I should be well past 500 hundred contracts this year.  I spread them out because I have no idea where the market goes from one week to the next.   

Reality is never less than 1% a month return or I don't play.  I target 1 1/2 to 2 1/2% per contact for a months waiting.  Add in the dividends if I can pick the expiration dates right.  Few home runs because i am trying to hit singles and I consistently do.  A $50 to $100 win may not interest most here but 500 times $100 works well enough for me with low risk if you stay disciplined.

I am consistently selling covered calls in T and KO, have a separate account just for them.

I sell 2 calls at what I determine resistance to be, then I buy 1 call a strike or 2 above those call strikes (IRA, can't be naked calls)

When KO was 45ish I sold 2 SEP18 50 calls, bought 1 SEP18 55 call for $1.21 Credit

If KO goes nowhere, I collect 1.21 plus .41 dividend for 1.62. 162/4500= 18% annualized.

If KO moves up to 50, I close the trade, buy the calls back and sell the higher call. Since the trade is positive delta. I make money. The stock would be up $500, the 2 calls would be down and the 3rd call would be up a smidge. Net would be between 250-300 depending on DTE left. 

250/4500= 27% annualized.

Downside? None really for me, I'm not selling KO unless called away, then put on the wheel of fortune by selling puts until I get put my shares again.

Guys who aren't doing some options around their positions are really missing an opportunity to crank your return.
The rub is one needs 100 shares minimum

Good luck to all.

Been doing the same. Sell cash secured puts until you get called, then sell calls against. One thing I'm not sure I understand in your strategy: why are you buying the 55 call? You never really want to sell your shares and while the two puts lose value when share price is 50 you gain money on the one call that offsets it? Or am I gettig this wrong?

[NilesMike]

Been doing the same. Sell cash secured puts until you get called, then sell calls against. One thing I'm not sure I understand in your strategy: why are you buying the 55 call? You never really want to sell your shares and while the two puts lose value when share price is 50 you gain money on the one call that offsets it? Or am I gettig this wrong?

It is calls not puts.

Visualize a covered call and a call spread.  The 55 call "covers" one of the short 50 calls. Can't have a naked cal in an IRA. The stock covers the other short 50 call.

Collect 2 short call premiums, buy a cheap call above to "cover", collect premium, dividend and possible 10% stock appreciation (less buyback cost of short calls)

In the spirit of educating, you need to tighten up the definitions. When stocks are PUT to you, they are ASSIGNED. When a call expires in the money it is CALLED away. Thinking of it his way will make things more clear for you.

[Binary]

(08-03-2020, 11:19 PM)NilesMike Wrote: Been doing the same. Sell cash secured puts until you get called, then sell calls against. One thing I'm not sure I understand in your strategy: why are you buying the 55 call? You never really want to sell your shares and while the two puts lose value when share price is 50 you gain money on the one call that offsets it? Or am I gettig this wrong?

It is calls not puts.

Visualize a covered call and a call spread.  The 55 call "covers" one of the short 50 calls. Can't have a naked cal in an IRA. The stock covers the other short 50 call.

Collect 2 short call premiums, buy a cheap call above to "cover", collect premium, dividend and possible 10% stock appreciation (less buyback cost of short calls)

In the spirit of educating, you need to tighten up the definitions. When stocks are PUT to you, they are ASSIGNED. When a call expires in the money it is CALLED away. Thinking of it his way will make things more clear for you.

Aaah, much clearer now The IRA part is unknown to me (greetings from Europe ) plus now do I understand correctly that in the above example you own 100 shares and not - as I probably falsely assumed - 200?

[NilesMike]

Aaah, much clearer nowSmile The IRA part is unknown to me (greetings from Europe Wink ) plus now do I understand correctly that in the above example you own 100 shares and not - as I probably falsely assumed - 200?

The above example is PER 100 shares.

If one did the trade with 300 shares it would be sell 6 calls @50 and buy 3 calls @55

[fenders53]

(08-03-2020, 06:41 PM)NilesMike Wrote: If you are sure you can just buy stocks that rise 3-5% every month then you should do that instead.

LOL

Dammit, I keep trying to do that with some of my port Mike. 

I have talked some into giving an income strategy a try.  It is difficult to conceptualize the reality that you can generate significant monthly income on boring blue chips stock trapped in a smallish trading range without trading it constantly.  

This doesn't replace my DGI core holdings, index funds or an occasional spec play.  It does outperform them often though.  I don't think my SPY fund is up much over 5% the past two years.

[MikeWa]

(08-03-2020, 04:27 PM)fenders53 Wrote: ......
I exchanged a zillion PMs with WaMike and got him started. He is probably about 50 trades in by now and has enjoyed a perfect environment for this.  
.........

It's over 60 by now. :-)

Now, about the "perfect environment"...
It is a full time job with a decent pay and also some fun, but it takes a lot of time.
I am sure my technique needs some improvement, but I spend a lot of time daily to find good deals, not always with good or any results.

And there is of course fire fighting. I had to do several rollouts last Friday to avoid assignments and one stock to be called. Not that I'd mind owning these stocks, but the goal is to get premiums without buying shares.

[MikeWa]

(08-04-2020, 09:33 AM)MikeWa Wrote:

(08-03-2020, 04:27 PM)fenders53 Wrote: ......
I exchanged a zillion PMs with WaMike and got him started. He is probably about 50 trades in by now and has enjoyed a perfect environment for this.  
.........

It's over 60 by now. :-)

Now, about the "perfect environment"...
It is a full time job with a decent pay and also some fun, but it takes a lot of time.
I am sure my technique needs some improvement, but I spend a lot of time daily to find good deals, not always with good or any results.

And there is of course fire fighting. I had to do several rollouts last Friday to avoid assignments and one stock to be called. Not that I'd mind owning these stocks, but the goal is to get premiums without buying shares.

BTW. I didn't want to sound negative. I still enjoy it, especially premiums.... And I have plenty of time. lol

[fenders53]

(08-04-2020, 09:52 AM)MikeWa Wrote:

(08-04-2020, 09:33 AM)MikeWa Wrote:

(08-03-2020, 04:27 PM)fenders53 Wrote: ......
I exchanged a zillion PMs with WaMike and got him started. He is probably about 50 trades in by now and has enjoyed a perfect environment for this.  
.........

It's over 60 by now. :-)

Now, about the "perfect environment"...
It is a full time job with a decent pay and also some fun, but it takes a lot of time.
I am sure my technique needs some improvement, but I spend a lot of time daily to find good deals, not always with good or any results.

And there is of course fire fighting. I had to do several rollouts last Friday to avoid assignments and one stock to be called. Not that I'd mind owning these stocks, but the goal is to get premiums without buying shares.

BTW. I didn't want to sound negative. I still enjoy it, especially premiums.... And I have plenty of time. lol

Fire fighting is a a necessary skill if you lose your mind and go all in on this.  I could never manage so many positions if I worked full-time.  I have just enough time to do this.  In a normal market you can dance your way out of most problems by selling a little more time decay. Doesn't always work, and it doesn't have to.  I retire for real in two years.  I am about a month away from funding my first two years of retirement in cash to tide me over until my big pension and SS checks come.  I allotted 36 months to do this using this strategy and it's going to be closer to 18 months.  If the market gets slammed it will still work out well enough.

[EricL]

(07-22-2020, 08:51 AM)EricL Wrote: Bought a little SLV in my trading account. Silver broke the $20 level recently, and with all the money printing being done around the world, I think it will continue higher.

SLV up another 4.5% today, and now up 15% since I bought.