Anyone using covered puts

[crimsonghost747]

fenders53 Wrote:Please do not misinterpret my tone. It is not my intent to anger you and your last post gives me that impression.

No not at all. I quite like debating with you, we might have different views but as long as we can back them up with something then we both stand a chance to learn a thing or two. And that's the whole point, right?

That last post was more directed at Mike's last post... I'm not a big fan of it when someone sets their minds to something and refuse to listen to facts or other opinions, simply claiming that they are right because they have decided that they are right. Reminds me of religious fanatics.

fenders53 Wrote:I'm not sure why we are talking about KO but KO just blew their quarter. You may have missed the earnings report details a few days ago? I do not believe KO is going to run hard for quarters.

KO is there simply because from what I understood it's your latest "buy and hold" stock that you're aiming at with these options? I could be mistaken. And the fact that it's a very well known and often used DGI stock makes it a good fit as a real world example.

fenders53 Wrote:-This part of my port has yielded an 18% return since SEP 18. That works for me annualized.

That is definitely a great return. And while it's only for 5 months, if you can keep that up long term then you'll definitely beat the market. But I would like to point out that we are still down from September and as I proved in the other thread, selling puts is a strategy that is the most profitable in the short term when we are in a flat or slightly declining market. There is no denying that your timing has been great and you've definitely out gained the market (and probably most of us) in this time period but based on historical data, the most common market is one that is trending upwards, not downwards. 5 months is a very short time to be used in determining if a strategy is effective or not.

fenders53 Wrote:-DEC 18 was horrible. The worst market in about a decade I think. You would think I would be assigned in most every position. That's not what happened. I was assigned shares of MO, BAC, MET, ABT, KHC In DEC. Some bounced, some didn't, we can't see the future, especially short term so irrelevant.

Firstly, yes it was 10-15% drop in general so yeah I would have expected that the majority of your puts expire in the money.
And isn't that exactly what you are after? From what I understand you sell the puts to generate cash flow while waiting for good entry points. Wasn't December one of the best entry points we have had in a long long time?

At least ALL of those positions that you got assigned are now in the green. Of course it's still too early to say for sure but at least in the short term it looks like December was a pretty damn good moment to add to your long term holdings.

As a pure income generating strategy, ie selling the puts and having them expire worthless, I agree it's a good strategy as long as you can pick the right timing and prices so that you don't get assigned. As I said I do those trades too once in a while. But what you have been saying all along is that your ultimate goal is to go long in stocks that you like, so I'm not too sure if this is really the best way to do that. The old wisdom says that time in the market beats timing the market.