Conservative option strategies, what did you buy or sell today?

[fenders53]

(04-23-2020, 08:26 AM)Otter Wrote:

(04-23-2020, 05:31 AM)fenders53 Wrote:

(04-22-2020, 08:28 PM)Otter Wrote: So, along with today's buying spree in equities, I sold covered calls (weeklies, at most out to May 15) against a number of the added lots. $747.20 in option premium for covered calls sold against new purchases of ADM, EMR, LEG, NNN, NUE, O, ORCL, PFE, SON, TD, VFC, and VZ, with 5-10% gains on the underlying shares if I get called away.

Learned that the options market for BIP is too illiquid (massive bid/ask spreads and thinly traded) to mess with them. Also, premiums for WBA weeklies are pathetic, so I didn't bother.

Only playing this game with newly acquired lots of shares, but fun experiment so far. Suspect the premiums will fall off once volatility dies down, at which point I should just be holding anyhow.

Covered calls are a great temptation for me.  As I've shared before I got bit in 2019 losing shares in several of my stocks that went MOMO.  I keep it to a minimum and target stocks that are not likely to launch in a given market.  Easier with larger positions as I can sell a call or two and keep the rest of the shares ready for a rise if it happens.  I know I repeat myself a lot but I really believe this is not the time for selling options with long expirations.  Sell a few dozen of them months out and you'll be chasing too many of them for a quarter or longer.  I do mix it up though. Some are just a few days and others three weeks or so.  This option doesn't exist for most aristocrat like stocks when the IV settles down.

I enjoy sitting down over coffee and taking in $300 in option premiums, then I go to work and make a hundo lol.  I'd rather just ring up $1000 or more at once, but my market timing clock is often broken.  I seem to do better selling just a few a day so I can be selective and take what the market gives me.  I'm less likely to force a trade just because I want the hundred bucks on 15 stocks.  

Only went with covered calls on the newly acquired lots for several reasons. If I did it on some of those existing positions and got called away, the long term capital gains payable on some of those transactions would negate the option premium, and I wouldn't want to be out of those positions entirely.

If some of them run in the next few weeks and I have to pocket the 5-10% gains plus premiums received, and budget for the short term capital gains on those transactions, that's fine by me. It'll be more cash that I have to figure out where to put next.

I have done the same many times.  I could make great income if that's all I ever did with my entire portfolio since it's a 401K.  Only problem is you have to be willing to keep buying higher during an extended  the market run. That's a flawed strategy that would fail soon enough.  It's a better side game.