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Conservative option strategies, what did you buy or sell today?
(05-06-2020, 08:03 PM)john Wrote:
(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"?

Sell Call, buy call at higher strike. For a net credit.

Sell put, buy put at a lower strike. For a net credit.

Each are credit spreads.
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(05-06-2020, 08:03 PM)john Wrote:
(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"?
First of all don't listen to my bragging.  I have had very good luck but I will lose one eventually.  IMO it's not as conservative as a covered put or call.  If you ever try it I suggest you paper trade it numerous times.      

Mike gave the definition.  It can be used to go short of long.  For shorting I try to find a stock that I believe I know the approximate upper resistance on, getting overbought and no fundamentals to back up the run.  Traders have been running CBRL up and down.  When it was around 95 I sold calls at 100 and bought them at 105 for an immediate credit.  100 and below at expiration I keep all the money.  Lose from 100 to 105 minus the credit already received.  Loss is capped at 105 as I own a 105 call.  You have complete control of your max win or loss by choosing the strikes.  And of course you can close it anytime.  

The bad news is the max loss is higher than max possible gain.  Not technically unlimited like simply shorting shares though.  As I said, not all that conservative.  I do it rarely and only with a stock that I follow the story on.  Certainly wouldn't do it with an upcoming earnings report.  A stock like WEN might be a target.  TSLA or any other Momo stock absolutely not.  You could set this up for a 95% chance of a win, and the net premium credit would be so small it wouldn't be worth the bother.
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I like options. Sold 6 of them for the week ending 5/8/20 they all went my way.
Sold calls on C and CMCSA expired worthless
Sold puts on KMI, KR, PFE expired worthless
This one might start an argument.
I have been selling puts on CCL and getting ~4% return on weekly puts. I think CCL long term will be ok, they have a decent balance sheet.
I will call it my "speculative stock"
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(05-09-2020, 06:49 AM)john Wrote: I like options. Sold 6 of them for the week ending 5/8/20 they all went my way.
Sold calls on C and CMCSA expired worthless
Sold puts on KMI, KR, PFE expired worthless
This one might start an argument.
I have been selling puts on CCL and getting ~4% return on weekly puts. I think CCL long term will be ok, they have a decent balance sheet.
I will call it my "speculative stock"
Selling puts on CCL??? Did you bump your head John?   

Big Grin   Just kidding. It's all about proper balance over the entire port.  If everything you did this month was exercised are you OK with the outcome?  If so, you're good IMO.  On average I would say one month per year every call or put I have in play is exercised unless I frantically roll them all forward a month or two. Personally I think it's good that you are selling a few calls and puts per month. We can't call the market direction anything like perfect over time, and it helps when you haven't set yourself up to lose every single trade.   

It's my opinion we should share the defeats a well as the victories as we go.  Most of us here seem to do that.  Remember just a few months back when you were asking very basic questions?  You could have easily been led astray.  We try to keep it real here as it is helpful to others.
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Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol
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(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO  a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol
Oh, your free trial was over at least a month ago.  Otter should have billed you by now.  Mike's a landlord and he's not afraid to bust a kneecap so don't be late with your check OK?.   Big Grin   

My most recent fail started pretty innocent.  90%+ of my port is conservative.  I was minding my own business in late JAN selling a few puts in awesome sectors like airlines, amusement parks and restaurants.  Nothing crazy but I got steam rolled.  I couldn't have chosen worse sectors on purpose. It's amazing how much a small part of your game can hurt your overall port performance if it gets crushed.
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(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol
Part of learning experience. Also you can't win every trade. Even Buffet can't.
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(05-09-2020, 01:47 PM)vbin Wrote:
(05-09-2020, 12:47 PM)john Wrote: Here you go Fenders my defeat story...
About 2? years ago I subscribed to an "expert options course" at least it didn't cost much lol
1st put I ever sold was on NIO  a 9.00 strike was paying 2.00 on the advise of the "expert"
I didn't know what I was doing and watched in horror as it got "put" to me and quickly dropped and settled to around ~$3-4/share
Lesson learned options are bad!!!
Then I discovered this forum and asked a few questions and did some of my own research.
Yes I am happy with the options expiring worthless.
I would have been ok if they had been exercised .
Thanks to all for all the help from everyone, it has been worth every penny I paid for it lol
Part of learning experience. Also you can't win every trade. Even Buffet can't.
For sure.  We have to learn fast and not repeat mistakes or we might as well buy the index and find a new hobby.  Nobody here wants to do that.
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Had 4 stocks "put" to me this week
F @ $5
CCL @ $13.5
KO @ $ 45
ADM @ $ 34.5 I am ok with the results got paid good to get assigned. KO and ADM have dividends coming up.
I will sell CALLS against all of these this week.
Had 6 expire worthless this week
GEO CALL @ $ 16
WFC CALL @ $ 28
T CALL @ $32
WEN PUT @ $16
BTI PUT @ $35
JETS PUT @ $12
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(05-16-2020, 08:13 AM)john Wrote: Had 4 stocks "put" to me this week
F @ $5  
CCL @ $13.5
KO @ $ 45
ADM @ $ 34.5 I am ok with the results got paid good to get assigned. KO and ADM have dividends coming up.
I will sell CALLS against all of these this week.
Had 6 expire worthless this week
GEO CALL @ $ 16
WFC CALL @ $ 28
T CALL @ $32
WEN PUT @ $16
BTI PUT @ $35
JETS PUT @ $12
Hopefully KO and ADM will run up a buck for you prior to dividend.  

Looks like you'll have to sell the ADM call on Monday as it goes ex-Div on Tues.  I'm an ADM fan but I think it's headed lower after Div. They are facing some headwinds the next few months (VERY low grain prices, saber rattling with China could destroy the current AG trade agreement in a day.  

KO is getting oversold.  I wouldn't  rush that one if the call premium isn't worth it.  KO never stays down too long with that big safe dividend.  

F is tough to sell options on but I would do it to keep the income flowing.  It's stuck down here for a long time I think.   

I rolled a few puts and calls forward this week.  No assignments since the big crash.  Rolling them tends to work out in just a few months or sometimes weeks.  I do have some PFE shares deep in the money on a couple calls I sold too early.  I have many more shares but I got a little impatient and now I'm chasing a couple contracts for who knows how long.

And here is another trick that you might find handy at very specific times.....

You are assigned stock XYZ and it's say $26 and you are in at $28 basis.  The short-term story changed and you are down some and you are now very bearish on the stock.  The closest call is at $30. 15%+ out of the money and the premium is very weak.  You immediately sell the shares and then sell a put at $25 which has a good premium as it's close to the money.  You now have some downside protection without bailing on the stock and conceding the loss.  I did this quite a few times in early MAR when the virus hit.  It was pretty clear which stocks were heading lower.  This is NOT something I do with my core DGI holdings.  Just the income game stocks, which I own very few of in this economy.
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