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

[fenders53]

I need to sell done puts soon. Hoping political rhetoric will cause some chop. Though it's mostly just noise to the market IMO, a Senate flip could cause some wild sector rotations. I don't think it's going to happen but the market is probably going to get nervous if it takes days to determine. I better not go all in Monday.

[NilesMike]

What's often overlooked is that a covered call position has the same risk profile as a naked put. (dividend notwithstanding)

[fenders53]

If you will check the thread daily I will post up my live T trade details for discussion. All of us know T and we can share how we would manage the position(s). I currently own 300 shares, have two open covered puts and three open covered calls. Several of them should definitely be closed now and move along to a new option or just wait for T to move.

Option prices are math based, but how you manage them is art. You have to understand your personal risk profile and there is only one way to find out. How comfortable you are being assigned etc. I desire to own 300 shares at today's price. I would be ok with owning 600 or even zero shares at a different SP. Reality at time of trade definitely affects my selected strikes and expiration choices. Moving the strike $1 greatly alters your annual return rate and probability of being exercised.

[pdaignau]

(01-03-2021, 11:07 AM)fenders53 Wrote: If you will check the thread daily I will post up my live T trade details for discussion.

I don't post too often, but I usually check the site several times a week.  If you don't mind sharing, I'd be more than happy to learn.

I too have 300+ shares of AT&T.  I have this on DRIP.  I personally don't think AT&T is high enough to start writing covered calls.  I'm not sure I'd risk that on these 300 shares.

I did write 2 cash secured puts for Feb. 5th at $27.00.  I don't think AT&T will get this low unless the whole market tanks.  If I did end up with 200 more shares, I'd either sell them or write covered calls against them.

Paul

[fenders53]

(01-03-2021, 07:36 PM)pdaignau Wrote:

(01-03-2021, 11:07 AM)fenders53 Wrote: If you will check the thread daily I will post up my live T trade details for discussion.

I don't post too often, but I usually check the site several times a week.  If you don't mind sharing, I'd be more than happy to learn.

I too have 300+ shares of AT&T.  I have this on DRIP.  I personally don't think AT&T is high enough to start writing covered calls.  I'm not sure I'd risk that on these 300 shares.

I did write 2 cash secured puts for Feb. 5th at $27.00.  I don't think AT&T will get this low unless the whole market tanks.  If I did end up with 200 more shares, I'd either sell them or write covered calls against them.

Paul

OK, I will post the details tomorrow.  NilesMike and I will likely have a different spin and that's OK.   You don't have to adopt a strategy with hard and fast rules, but you can if you prefer.  What you shouldn't do is randomly buy and sell them at any given strike or expiration.  For a long time I just let them all expire.  There are a lot of times that is far from an optimum plan, for a number of reasons.  The tax status of your account has some bearing on decisions as well.  Of course you don't have to sell covered calls on your current T position.  For income stocks I tend to do that with at least some of my shares unless the stock is rock bottom and or below my basis.  I usually wait for the stock to run some, but not always.  Selling covered calls is a good way to give your shares away too cheap in a quality growth stock in a bull market.

[fenders53]

Paul, here's what going on with my T before the open this AM. Note I am not particularly bullish or bearish on T in the 29 range and that is when most of the option sells occurred. I do this every month with about five lower risk stocks. I get serious with a larger amount of contracts only when a stock is truly over or under sold. It's a safe enough place to park a little cash most anytime if you stick to decent quality stocks with dividends.

300 shares long with basis around 28.50. (excluding monthly premiums received while holding the shares). I don't wish to sell many shares under my cost. My true cost is about $27 if you want to consider premiums received on calls that expired worthless previous to now.

PUT Strike 28 EXP 1/15 Premium received 51. Currently 41 Up 10
PUT Strike 29 EXP 1/8 57/86 Down 29
CALL Strike 28 EXP 1/15 60/65 Down 5
CALL Strike 30 EXP 1/8 38/11 Up 27
CALL Strike 32.50 EXP 1/22 54/3 Up 51

This is all about consistent income for me. I have no emotional attachment to T. T pays a div this week so that is mostly locked in. I have collected $260 premium up front on these contracts and the extrinsic values should fall rapidly as expirations approach. This doesn't have to work out perfectly to be a win. We'll see what happens.

That strike 28 CALL is potentially problematic. It's in the money with EX-div approaching. We'll keep a close eye on that one.
The strike 32.50 CALL should have been closed end of last week. I was working a lot of hours. Too many positions to keep an eye on. It doesn't expire for over two weeks and it could have been closed for about $5. If T hits 32.50 that fast this mess will still be quite profitable.

I may or may not roll a put or call forward this week and if so I will explain why I did or didn't. If the math doesn't work I'll let it all play out, or buy back the option for a small loss. For my boring income stocks like T-MO-KO-MET-HRL this is a game of inches for me. Collect 10 fifty dollar bills up front and try to only give 1-2 back. It's not about fighting to the death to "win" every trade. It's about consistent as possible monthly income from options.

When I get bored I will add up income received on any one of these boring stocks that went nowhere for all of 2020.

[fenders53]

Sold GOLD strike 25.50 EXP 1/29 covered calls for $51. Got exercised into GOLD at $23 just last week and it ran 6%+ today. Sold puts for 5 months before I finally got exercised. I am always very wary of holding anything gold for long. I was never good with the 5% of your port always "rule" because I think it is generally dead money. The option premiums are very good, Barrick has a dividend and it worked this year. No matter how this position plays out I have already collected about 20% premiums at the end of it all. I don't see gold crashing with all the money printing going on and a new administration that will try to spend money we don't have. It will remain a small part of my game.

[john]

Bought 100 T this morning @ 29.17 sold a 29.50 covered call for 2/5/21 expiration for .57
If expires worthless collected .019 return for the month
if exercised collected .03 for the month
If exercised plus dividend this week collected .048 return for the month
already own 225 shares of T

[fenders53]

(01-04-2021, 01:23 PM)john Wrote: Bought 100 T this morning @ 29.17 sold a 29.50 covered call for 2/5/21 expiration for .57  
If expires worthless collected .019 return for the month
if exercised collected .03 for the month
If exercised plus dividend this week collected .048 return for the month
already own 225 shares of T

Not crazy at all about that trade on a day T spikes and an imminent x-div this week.  What is the thesis?  Feel free to sharp shoot the trades I posted.  They aren't perfect either and this forum is about learning IMO.  Do you have calls sold on your existing shares?

[john]

Do not have calls sold on original shares at the moment
was a little cashy and looked like a return I was comfortable with no matter the above outcome.

[john]

I meant to do this last week when it was lower, patience is not my strong suit

[fenders53]

You fought the tape more than a little lol. I truly hope it works out, but I don't see the rationale for selling a close so close to the money with a call and an imminent x-div. Could it work out that just buying the shares was a win? Sure, and I hope that is how it ends.