Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Conservative option strategies, what did you buy or sell today?
Fenders you are in Iowa?
Agree on the reasons ADM should go lower,
Election year the powers that be won't let the ag economy suffer to much trade agreement or not.
MFP anyone? lol
Reply
(05-16-2020, 06:13 PM)john Wrote: Fenders you are in Iowa?
Agree on the reasons ADM should go lower,
Election year the powers that be won't let the ag economy suffer to much trade agreement or not.
MFP anyone? lol

Yes I live on the east coast of Iowa, hometown of the American Pickers and spittin' distance from Deere world HQ.  Smile  Corn is worthless as oil.  DE is going to start laying off within weeks and they are late with that.  The meat packing plants are about the only place over-run with Covid.  It's a mess.  American farmers would be BK in a year without big subsidies.  Flushing the trade agreement would by incredibly foolish right now.  Corn won't even be worth planting this year.
Reply
(05-16-2020, 05:49 PM)fenders53 Wrote: 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.

I'm not following this Fenders.

Put stock @28, now trading @26. Sell the shares? Trade over, a loser.

Sell a new put @25? New trade. May be a winner or a loser. Irrelevant to the earlier put that was assigned.

I have a couple of friends who do significant amount of "defending" a trade. Rolling down and out etc. There are no repairs to be made. Each trade stands alone, the only connection is the ticker symbol.

I want to be clear, Rolling locks in a loss on original trade and places a new trade on the same underlying, there is no repairing of the earlier position.
Reply
(05-17-2020, 09:44 AM)NilesMike Wrote:
(05-16-2020, 05:49 PM)fenders53 Wrote: 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.

I'm not following this Fenders.

Put stock @28, now trading @26. Sell the shares? Trade over, a loser.

Sell a new put @25? New trade. May be a winner or a loser. Irrelevant to the earlier put that was assigned.

I have a couple of friends who do significant amount of "defending" a trade. Rolling down and out etc. There are no repairs to be made. Each trade stands alone, the only connection is the ticker symbol.

I want to be clear, Rolling locks in a loss on original trade and places a new trade on the same underlying, there is no repairing of the earlier position.
I actually expected you wouldn't care for this.  I don't like some of your trades either.   Big Grin  I think we are both good with that.

During the last two downturns fall 2018 and Mar 2020 I got steam rolled pretty hard on my specs.  Not that it matters but I was holding about 40 stocks I was comfortable holding long term and about a half dozen where the story had changed.  I dumped some trash immediately.  Two I kept were DAL and DOW.  I didn't actually consider them spec at the time, but not true LT core holdings either for reasons I probably don't need to explain.  Anyway, I didn't now where the bottom was but option premiums were sky high.  I did find my escape and dumped them a bit higher, after I sniped about five puts and calls on each in a matter of month.  I was getting several percent back in a matter of 2 or 3 days at the time.  Half my overall port recovery since March is option income.  I have plenty of dividend income but my options crush my Divs most months.  I have plenty of LT stocks that are still way down but I can't sell calls on them anytime soon or I'll regret it eventually.  I pretty sure I got hit worse than most here as I had the perfectly horrible port for the Covid.  Not sure I could have done it on purpose.  Anyway, I roll puts and calls forward ALOT when the market turns against me.  It's a hassle but it's worked out far more often than it hasn't. I just checked and the reality is I am dead even with SPY the past 20 months. That's not a fail I guess but it's not inspiring after the considerable effort into something I could have done with my mutual funds. I've replaced capital loss with income. 

Back to John's options.  He has more specs than I would consider having in play at once.  (If his port is the same as he shared a few months ago.)  He better learn to dance with options soon.  He is going to have to pick his spots to sell calls and get out of positions that are exercised.  You can't just wake up the Monday after you got assigned and auto-sell calls at whatever price.  That just won't work out over time.
Reply
I still don't understand selling puts when you have a bearish outlook on a stock?

Selling puts is a bullish strategy??

I get that you had success with it but I don't think it's an advisable and sound exit strategy for stocks put to you and are still dropping???

Seems like a way to get stuck with even more shares of a stock you are bearish on????
Reply
(05-17-2020, 10:53 AM)NilesMike Wrote: I still don't understand selling puts when you have a bearish outlook on a stock?

Selling puts is a bullish strategy??

I get that you had success with it but I don't think it's an advisable and sound exit strategy for stocks put to you and are still dropping???

Seems like a way to get stuck with even more shares of a stock you are bearish on????
Did you miss the part that I am dumping the shares first, then immediately selling a new put a few bucks (or whatever) cheaper?  There are no new shares.  The same 100 I had (per contract obviously), unless the stock runs as I then incorrectly called the bottom. I'm not averaging down a dog with additional new shares.

What's your exit strategy?  Just sell it and run?  I definitely do that sometimes if it makes sense.

And BTW I didn't know DAL was a sure dog at the time.
Reply
And yes technically selling puts is in fact a bullish strategy.  We just plan for the "bad" outcome.  As you know it's actually my long position entry strategy at some point, though I have no problem rolling them down if my opinion changes on a better entry.
Reply
(05-17-2020, 10:59 AM)fenders53 Wrote: Did you miss the part that I am dumping the shares first, then immediately selling a new put a few bucks (or whatever) cheaper?  There are no new shares.  The same 100 I had (per contract obviously), unless the stock runs as I then incorrectly called the bottom.  I'm not averaging down a dog with additional new shares.

What's your exit strategy?  Just sell it and run?  I definitely do that sometimes if it makes sense.

And BTW I didn't know DAL was a sure dog at the time.

On speculative trades, yes. If it runs too far against me, I buy the put back (for a loss). I never get married to any of those underlyings.

If the put is sold for better entry on a stock which I like, I'll try to sell a covered call if the premium is acceptable. If the premium is too low, I will just sit on it and collect dividends.

I actually opened a new taxable account where I will be selling puts and covered calls in KO only, with all profits going to buy more KO shares.
Reply
(05-17-2020, 12:33 PM)NilesMike Wrote:
(05-17-2020, 10:59 AM)fenders53 Wrote: Did you miss the part that I am dumping the shares first, then immediately selling a new put a few bucks (or whatever) cheaper?  There are no new shares.  The same 100 I had (per contract obviously), unless the stock runs as I then incorrectly called the bottom.  I'm not averaging down a dog with additional new shares.

What's your exit strategy?  Just sell it and run?  I definitely do that sometimes if it makes sense.

And BTW I didn't know DAL was a sure dog at the time.

On speculative trades, yes. If it runs too far against me, I buy the put back (for a loss). I never get married to any of those underlyings.

If the put is sold for better entry on a stock which I like, I'll try to sell a covered call if the premium is acceptable. If the premium is too low, I will just sit on it and collect dividends.

I actually opened a new taxable account where I will be selling puts and covered calls in KO only, with all profits going to buy more KO shares.
I have a lot of puts open for KO right now.  I picked my strikes right and they keep expiring so no shares yet, but I am going to add more.  I am about to add more T and MO puts to the list as well.  I'd like to take some vacations in peace this summer and need to get even more defensive until fall.  

For the record, if you, Otter or Eric lived closer I'd tell my wife to seek advice from you if I were struck by lightning tomorrow.  Take that as a high compliment even if I argue with you guys for entertainment.

You and I can handle ourselves.  John scares me a little lol, and I really am trying to help.  At the risk of annoying him, I think he is still chasing a little too much junk in a sketchy market.  Specs are fun but it has to be a very small part of your game or you'll get burned soon enough.  Even 25% junk can wreck you so bad for years that you'd be better off in an index fund.  CV19 hurt me with only 10% spec when I happened to pick the wrong sectors.
Reply
Thats OK Fenders you are not annoying me. I am kinda like a kid in a candy store with my new found love of options.
And I always welcome to advice.
If you think I am chasing a little to much JUNK here you should see some of the bonehead moves I made when I 1st started.
I bought several High dividend paying CEFs everything was going real good until it didn't...
Reply




Users browsing this thread: 1 Guest(s)