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Conservative option strategies, what did you buy or sell today?
#18
(02-19-2019, 12:38 PM)ChadR Wrote: I know I don't have it figured out on my gambling option plays.  This was a one time quick hit that I knew had a small percent chance of burning me.  And it was a very small percentage of my portfolio so if I was burned, it was minimal.

No way this is a common occurrence.  Nearly all of my options are for stocks that I want to buy.  Though if I see a stock that I believe is extremely overvalued, I will buy a put.  Rarely do this as I don't like to spend money and as you say, 90% of the options expire worthless.
I have no problem with somebody buying an option, but you are gambling and those odds are against you.  It depends how you spin it, but I think about 70% of options expire completely worthless.  You could however make money trading that option that will eventually expire worthless.  If you are buying it's a casino pure and simple.  They have done the math.  Now you can buy a put as a hedge against a long position.  I don't do it, but you are in effect buying insurance.  I prefer the be the insurance agent in this scenario.  That is truly how I view this.  You are afraid your HD is going to drop in value?  I'll take your $300 insurance premium for a month and I'll buy 100 shares of HD for $5 under todays price if you are right, because I have no problem owning the stock long-term.  I suppose we can both win in this scenario, but your average Joe is not winning buying calls.  He'll lose in the end because the odds will make that happen.  Play until you lose big, and you will eventually when the market makes a violent move you didn't predict..

All that said, if I was going to buy calls it would be on a bad news over-reaction.  I repeatedly win that bet from a more conservative angle.  That SIX put I sold for $340 late last week can be bought back two trading days later for $225.  That's a pretty sweet profit if I had sold 10 puts, but that would be gambling with my port balance.  I'll leave the position alone for now because I am OK with the owning it long and taking the big Div, given the currently known situation with SIX.
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Messages In This Thread
RE: Conservative option strategies, what did you buy or sell today? - by fenders53 - 02-19-2019, 01:13 PM
T puts ? - by john - 03-17-2020, 09:33 AM
RE: T puts ? - by fenders53 - 03-17-2020, 10:32 AM
RE: WEN options update - by john - 03-23-2020, 09:53 AM
RE: WEN options update - by fenders53 - 03-23-2020, 10:40 AM



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