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Conservative option strategies, what did you buy or sell today?
(05-03-2020, 05:13 PM)NilesMike Wrote: I am doing something similar. I got rid of my speculative account, long story, and am going to just grind out wheel trades on quality dividend payers. Sell puts until I get the stock, then covered calls until it's called away. Rinse and repeat. Right now I'm on a CC with T. Sold the October 32 strike. If it's called away, max profit is 11.9% for 168 days. If not called it's 8% return, with capital risk. Should be able to grind out 12-15% a year on these.

My DGI portfolio is down about 11% from ATH, livable.
My true DGI port is down 11-12% and tbat is fine with the SPY down a similar amount.  It required dozens of trades off the dip to make it that good.  My speculative bucket was not that large but it was absolutely devastated.  I couldn't have chosen worse sectors on purpose after the virus hit.  Smile  I had no choice but bail and wait for re-entry if they don't go BK.    

I am going to hope the market has a rough week or two so I can sell puts with more confidence.  The list of stocks I feel completely safe with is very short unless we get a little pull back.  Stocks like T and MO become easy choices when the market gets roughed up.  That probably happens soon enough.  If it doesn't I'll proceed with ultra boring picks fpr now.
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I have to say, I'm finding the idea of selling puts until I get assigned into a position I want very attractive. How far out are the expiries on the puts you guys typically sell? For example, was looking at the 08/21/20 option chain on KO (a little over a quarter away). Could sell a $40 Put and collect probably $155 or so in premiums, which is almost a year's dividend on the underlying position.
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(05-04-2020, 04:11 PM)Otter Wrote: I have to say, I'm finding the idea of selling puts until I get assigned into a position I want very attractive. How far out are the expiries on the puts you guys typically sell? For example, was looking at the 08/21/20 option chain on KO (a little over a quarter away). Could sell a $40 Put and collect probably $155 or so in premiums, which is almost a year's dividend on the underlying position.

I usually am 35-45 day out but there is absolutely nothing wrong with your choice. It is well reasoned and meets YOUR goals, which is all that really matters.

Good luck
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(05-04-2020, 04:11 PM)Otter Wrote: I have to say, I'm finding the idea of selling puts until I get assigned into a position I want very attractive. How far out are the expiries on the puts you guys typically sell? For example, was looking at the 08/21/20 option chain on KO (a little over a quarter away). Could sell a $40 Put and collect probably $155 or so in premiums, which is almost a year's dividend on the underlying position.

I knew you would come around Otter.  I'd be broke by now if this was a bad idea after 600 trades.  I've lost track, it might be 800.  Getting a years dividends up front and then worst case being forced long at a good price relative to just going long today is a beautiful thing.  I sometimes pick the expiration date carefully so I qualify for the first dividend days after I might be assigned.  It's mathematical of course, but more art than science in execution.  In some cases it depends on how much spare time you have to manage option positions.  A few general rules I take the liberty of bending only slightly for best results.  

-Required that you are willing to own the stock, that's obvious.  
-A stock that has sold down some. Doesn't have to be extremely oversold, but over-bought is generally not a good idea if the DTE is a month or more away.
-Don't chase extraordinarily high premiums.  No different than yield chasing.
-Just a personal rule but if I can't get 1% yield in under a month I don't sell it.  That's not a problem now.  It's more like a week right now.      

The time will return when this doesn't work nearly so well for lowish beta stocks but IV is still high enough now.  I have targeted KO as well. REITs coming soon again.  You have the resources so my recommendation is spread it out over a few strikes and dates for the experience.  Option premium time decay accelerates around 45 days.  Normally I make more money doing two or more shorter options over that same 90 days.  Sell at least one contract well short of 45 for the purposes of experience.  Roll it forward if that makes sense.  There are times I chase a stock way lower for a better entry, or it expires worthless.  Whether that makes sense varies from one trade to the next.

I normally go 30-45 days like Mike. Lately I have not and it is working very well only because IV is so high. I've made nice income for 2-3 days of exposure at times.
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Another detail for consideration. This is an income strategy that you rinse and repeat until you end up long on a market dip. If the market treads sideways or up it's normally just an income game. Market nose dives and you own a bunch of shares. Mike had to get on me about taking unnecessary risks with little reward....

You sell 45 day contracts of XXX, 1.00 premium and the stock's annual dividend is .75. A few days or a weeks later the stock pops on good news and you are sitting on a put you could buy back for .15 or so a month before expiration, or you wait a month for it to expire worthless. You got your dividends in the bag and it's highly likely you are not getting assigned. Buy it back and redeploy the capital. You might even sell a new option on the same stock at the same DTE at a higher price if you really want the shares.There are times I am busy with too many trades and let an option slowly expire, but sitting on options for weeks when you have a quick 75-90% profit is not efficient. The risk of doing nothing may be small, but the risk/reward and opportunity cost is just not there. Look for the next "dividend" to scalp instead.

What I just described will happen often in an up market.
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Bought a "time bomb" Call butterfly for .35 BYND

19JUN20 110/115/120

Will be profitable between 110-120 and hopefully she lands right around 115 (would be worth 4.50)
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(05-05-2020, 08:07 PM)NilesMike Wrote: Bought a "time bomb" Call butterfly for .35  BYND

19JUN20 110/115/120

Will be profitable between 110-120 and hopefully she lands right around 115 (would be worth 4.50)
Keep it up and you'll be getting comp rooms and meals with Otter.  That's a pretty tight range for BYND but I realize you can close it early.

By the end of the week I am probably going to close my MAY15 CBRL 100/105 call spread I shorted.  I am at about  85% of max profit in a few weeks.  High chance it will go to 100% in nine days but I should probably take the money and run.

EDIT: I had no idea BYND had launched today when I typed that Mike. That one looks like it's going to be a wild ride.
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Forgot that I also bought a put calendar on DIS

Jun/July 95
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Closed my CBRL credit spread for an 85% gain well short of expiration date. I'm still undefeated at this strategy. On the prowl for my next short victim.
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(05-06-2020, 03:58 PM)fenders53 Wrote: Closed my CBRL credit spread for an 85% gain well short of expiration date.  I'm still undefeated at this strategy.  On the prowl for my next short victim.

What is a "credit spread"?
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