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

[fenders53]

I have seen similar articles on SA. Violates some of my core option rules but interesting thoughts to consider.

[mid range]

(09-26-2021, 07:57 PM)NilesMike Wrote: Anyone ever check out No Guess Trading? Interesting concept.

I subscribed for a month. Couple that run it are very well educated in mathematics and run it professionally. I am retired so the stocks they used at that time were not the type I would want to own, so I fell back to "boring" stocks.

[NilesMike]

(09-28-2021, 01:30 PM)mid range Wrote:

(09-26-2021, 07:57 PM)NilesMike Wrote: Anyone ever check out No Guess Trading? Interesting concept.

I subscribed for a month. Couple that run it are very well educated in mathematics and run it professionally. I am retired so the stocks they used at that time were not the type I would want to own, so I fell back to "boring" stocks.

Thanks Mid

[fenders53]

I do employ a few options a month in a similar manner and it does work out most of the time. The average option income is enhanced. For most of my positions I have to be very OK with owning them. I put myself at risk of owning some volatile stocks and perhaps I don't like the assignment price as much as I did when I placed the trade. I'll deal with it because it's a minority position.. But I trade lot of capital at times. Corrections happen and I am not going to be OK with suddenly owning $300k worth of crap stocks. That is how it would end eventually. Recently is a decent example. Forced into a bit more oil than I liked but my thesis was reasonable. If this dip continues I am overweight BMY, HRL, solar and UTEs. I won't stress it because I know the companies well. I can sell some calls and correct the allocations.

[fenders53]

Covered calls have been my friend lately, but careful option sells in general actually. I certainly don't overperform when the bull runs wild, but I am finding comfort in my ability to be immune from small market pullbacks. Even a bit more severe dips are thwarted enough. It's happening often enough that I think I have found my spot. I love the instant gratification of a higher premium on a covered call sell close to the money but not doing that initially has paid off. Not selling calls on my entire position makes it more manageable as well. If you sell a bit farther out of the money you have wiggle room to enjoy more of the run when it happens.

On a less happier note my DLTR puts got killed last week. I closed the trade and ate the loss when I should have rolled forward. Would have been completely cured in ten days with a profit on top. Water over the dam but hard not to look back for awhile.

[Dividendwayfarer]

My option journey has not been very rewarding. Despite some small wins along the way, my XOM & QCOM (due this Friday) got assigned and I left over $1k on the table. Perhaps I am not doing it right but some of those big misses make me wonder if I pick the wrong stock to play options.

[fenders53]

(11-04-2021, 10:11 AM)Dividendwayfarer Wrote: My option journey has not been very rewarding. Despite some small wins along the way, my XOM & QCOM (due this Friday) got assigned and I left over $1k on the table. Perhaps I am not doing it right but some of those big misses make me wonder if I pick the wrong stock to play options.

Second attempt at a response.  Can you share trade details?  Price of shares at time of trade.  Cost basis.  Strike price and dates of course.  Before you even answer, quality tech stocks are tough.  You have to be at peace with the getting exercised.  I tend to wait until I am profitable, and the stock would have to run considerably higher to exercise me.  Even then it doesn't always work out.

[Dividendwayfarer]

(11-04-2021, 11:01 AM)fenders53 Wrote:

(11-04-2021, 10:11 AM)Dividendwayfarer Wrote: My option journey has not been very rewarding. Despite some small wins along the way, my XOM & QCOM (due this Friday) got assigned and I left over $1k on the table. Perhaps I am not doing it right but some of those big misses make me wonder if I pick the wrong stock to play options.

Second attempt at a response.  Can you share trade details?  Price of shares at time of trade.  Cost basis.  Strike price and dates of course.  Before you even answer, quality tech stocks are tough.  You have to be at peace with the getting exercised.  I tend to wait until I am profitable, and the stock would have to run considerably higher to exercise me.  Even then it doesn't always work out.

XOM I did it a while ago but you kind of know the story as the stock went up quickly from $55 to low $60s during a 2-week period. My strike price was $60. 

For QCOM, I sold a call for $45, strike at $146 on 11/1, expiring on 11/5. My cost basis was $134.6. I expect a good quarter but look at their price now (hit $159 today). I still make $$ but will leave a ton on the table. And I have to pay taxes.

[fenders53]

The XOM trade was fine IMO. Selling calls on XOM worked for years. We never know. I sold XOM puts the past few weeks on dips. Over time the less volatile stocks work out. It's a percentage of successful trades game.

The QCOM trade was awful. Not because it didn't work out, but the risk reward was never their. For about 1/3% premium you forfeited the right to any real upside on the earnings announcement. Had it fallen 10% instead you were insulated from only 1/3%. Still bad option sell. Something further out in duration and strike might have been better. Hard to protect yourself from a 10%+ move.

Don't give up but maybe stick with some lower potential stocks that won't break your heart until you get some repetitions in. This gets easier with time.

[Dividendwayfarer]

(11-04-2021, 02:43 PM)fenders53 Wrote: The XOM trade was fine IMO.  Selling calls on XOM worked for years.  We never know.  I sold XOM puts the past few weeks on dips.  Over time the less volatile stocks work out.  It's a percentage of successful trades game.  

The QCOM trade was awful.  Not because it didn't work out, but the risk reward was never their.  For about 1/3% premium you forfeited the right to any real upside on the earnings announcement.  Had it fallen 10% instead you were insulated from only 1/3%.  Still bad option sell.  Something further out in duration and strike might have been better.  Hard to protect yourself from a 10%+ move.

Don't give up but maybe stick with some lower potential stocks that won't break your heart until you get some repetitions in.    This gets easier with time.

Great points. I have also been selling puts after my shares got called away (all of them expired so I kept the $$). Though with the trend, I wonder if it is actually better to hold the stock and collect dividend. My investment philosophy will still be buy & hold quality stocks while collecting dividend. 

I plan to hold QCOM long term and with their peg ratio they still have a ton of room to grow.  I now even consider buying back the call on QCOM. At least I can keep the shares and do cap loss harvesting. It’s painful!

[fenders53]

(11-04-2021, 03:48 PM)Dividendwayfarer Wrote:

(11-04-2021, 02:43 PM)fenders53 Wrote: The XOM trade was fine IMO.  Selling calls on XOM worked for years.  We never know.  I sold XOM puts the past few weeks on dips.  Over time the less volatile stocks work out.  It's a percentage of successful trades game.  

The QCOM trade was awful.  Not because it didn't work out, but the risk reward was never their.  For about 1/3% premium you forfeited the right to any real upside on the earnings announcement.  Had it fallen 10% instead you were insulated from only 1/3%.  Still bad option sell.  Something further out in duration and strike might have been better.  Hard to protect yourself from a 10%+ move.

Don't give up but maybe stick with some lower potential stocks that won't break your heart until you get some repetitions in.    This gets easier with time.

Great points. I have also been selling puts after my shares got called away (all of them expired so I kept the $$). Though with the trend, I wonder if it is actually better to hold the stock and collect dividend. My investment philosophy will still be buy & hold quality stocks while collecting dividend. 

I plan to hold QCOM long term and with their peg ratio they still have a ton of room to grow.  I now even consider buying back the call on QCOM. At least I can keep the shares and do cap loss harvesting. It’s painful!

Sometimes you have to make the best of it.  Will it bother you if you do that and QCOM dips $5 next week?  Sometimes doing nothing is best while you regroup.  I often own more than 100 shares and it takes some of the sting away.  I'd probably just sell puts and wait for it to pick you up.  You can't fix what already happened.

[Dividendwayfarer]

(11-04-2021, 04:02 PM)fenders53 Wrote:

(11-04-2021, 03:48 PM)Dividendwayfarer Wrote:

(11-04-2021, 02:43 PM)fenders53 Wrote: The XOM trade was fine IMO.  Selling calls on XOM worked for years.  We never know.  I sold XOM puts the past few weeks on dips.  Over time the less volatile stocks work out.  It's a percentage of successful trades game.  

The QCOM trade was awful.  Not because it didn't work out, but the risk reward was never their.  For about 1/3% premium you forfeited the right to any real upside on the earnings announcement.  Had it fallen 10% instead you were insulated from only 1/3%.  Still bad option sell.  Something further out in duration and strike might have been better.  Hard to protect yourself from a 10%+ move.

Don't give up but maybe stick with some lower potential stocks that won't break your heart until you get some repetitions in.    This gets easier with time.

Great points. I have also been selling puts after my shares got called away (all of them expired so I kept the $$). Though with the trend, I wonder if it is actually better to hold the stock and collect dividend. My investment philosophy will still be buy & hold quality stocks while collecting dividend. 

I plan to hold QCOM long term and with their peg ratio they still have a ton of room to grow.  I now even consider buying back the call on QCOM. At least I can keep the shares and do cap loss harvesting. It’s painful!

Sometimes you have to make the best of it.  Will it bother you if you do that and QCOM dips $5 next week?  Sometimes doing nothing is best while you regroup.  I often own more than 100 shares and it takes some of the sting away.  I'd probably just sell puts and wait for it to pick you up.  You can't fix what already happened.

Agree. Thanks for the comment!