Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Conservative option strategies, what did you buy or sell today?
It's good advice. I sell quite a few puts when it makes sense. It's a battle to not force a strategy and push trades. I really try to abide by some personal rules, even if they are a little general. Not saying I don't bend mine, but I have learned not to go buck wild spitting into the wind.

Selling puts is statistically more likely to succeed when a stock is at least somewhat oversold, or appears to be sitting near support anyway. My rule is to never do the exact opposite of that. This would be when I am considering a call sale if income is the goal. IMO it's pretty rare when selling both a call and a put on a stock would be appropriate. It's one or the other, or possibly neither.
Reply
I do not know how conservative you guys would rate this. Probably not very as we are talking about airlines.
But please do let me know your thoughts. This is one of my first long term option trades, as you guys know I have lots of short term ones under my belt (1-2 weeks) but now I went for almost half a year. This is also my first time "laddering" multiple puts on the same underlying with different strikes.

Spirit Airlines (SAVE) - December 18 puts
1x $15 - premium was $362
2x $10 - premium was 2x $146

Stock stays above $15: I make $654.
Stock is between $10 and $15: 1 put gets assigned. I own 100 shares with an average price of $15. With the premiums taken into account, break even price for these 100 shares is $8.46.
Stock is below $10. I get assigned 300 shares with an average price of $11.67. With the premiums taken into account, break even price for these 300 shares is $9.49.

Overall, I'm quite confident that the airline industry will survive. I'm getting quite a decent amount of premiums for a small amount risked ($3500 total) and of course I still have the possibilities of closing this early or rolling it forward.
Reply
(07-02-2020, 10:40 AM)crimsonghost747 Wrote: I do not know how conservative you guys would rate this. Probably not very as we are talking about airlines.
But please do let me know your thoughts. This is one of my first long term option trades, as you guys know I have lots of short term ones under my belt (1-2 weeks) but now I went for almost half a year. This is also my first time "laddering" multiple puts on the same underlying with different strikes.

Spirit Airlines (SAVE) - December 18 puts
1x $15 - premium was $362
2x $10 - premium was 2x $146

Stock stays above $15: I make $654.
Stock is between $10 and $15: 1 put gets assigned. I own 100 shares with an average price of $15. With the premiums taken into account, break even price for these 100 shares is $8.46.
Stock is below $10. I get assigned 300 shares with an average price of $11.67. With the premiums taken into account, break even price for these 300 shares is $9.49.

Overall, I'm quite confident that the airline industry will survive. I'm getting quite a decent amount of premiums for a small amount risked ($3500 total) and of course I still have the possibilities of closing this early or rolling it forward.
The structure of the trade is sound enough and conservative enough, if you are comfortable with the underlying at the possible assignment prices it's a good trade IMO.
Reply
Thanks for the comment Mike.
SAVE is not one that I wish to buy & hold forever, simply due to it being in the airline industry and it does not pay a dividend. Then again, both of those are true for Ryanair and I am a big believer in them and as such it is part of my portfolio. I just think the low cost model is the way forward.

I do not really want these to get assigned, and I really do not think it'll go below $10 again, but it's definitely a scenario I can live with.
Reply
Doesn't meet my criteria for "conservative", but I like the numbers for a spec play. You are getting those huge premiums for a reason. I do think airline stock prices have bottomed for the companies that aren't headed for BK. SAVE low cost model may work out. I think we are headed for another bailout which they may get in some form or another. The industry can't go away. I think a few carriers will though. Until that happens they will all struggle mightily IMO.
Reply
Any exciting options you guys looking at? @fenders53 ROKU was a good play. Lol.
Reply
I sold a few XOM calls on the uptrend today, already making 25% on those calls
Reply
(11 hours ago)vbin Wrote: Any exciting options you guys looking at? @fenders53 ROKU was a good play. Lol.
Yeah, short my local Buffet owned utility.  Haven't even seen my port for 30 hours.  

This is absolutely not a thread for exciting options.  Believe it or no ROKU was actually fine.  The premiums were stupid good and I collected them more than once.  Got in much cheaper than had I just went long from the stert.  I intended to hold it and I will.  FSLY not so much so far.  Those are far from conservative though so didn't mention them on this thread.  Huge difference in what I do with the other 90%+ of my port.  Just got my internet back so I'll find some more conservative plays to chat about.  I have done a lot of precious metal puts the past few months, but I stick with the majors.  Not informed enough to gamble with this part of the port.  I really enjoy this thread but most of the 30 or so puts I sell each month will put you to sleep so I stopped sharing them.  Conservative option pretty much triples my dividend income so I am beginning to question my minimum dividend yield rules. I've gotten looser with that rule with a few palys each month.  But when it all hits the fan I want to be stuck with above average Divs, but not yield traps in dying industries.  Ask me in five years if that was a good plan, but I'm comfortable enough with it the past few years.
Reply
(11 hours ago)vbin Wrote: I sold a few XOM calls on the uptrend today, already making 25% on those calls

I still play oil but very much in moderation.  No short supply of oil patch dreamers on S.A. but I think the long-term future is very iffy.  No end to the too much supply problem any year soon, for more than a few months anyway.  It;s just a trade and no longer a DGI stock.  The volatility makes for decent premiums though.  I made some money on XOM this month but I don't trust it much past a few weeks when I can avoid it.  Selling oil calls is good when it runs a bit.  You can make money when our long shares pull back and I think the chance of a huge run up is about zip until the economy truly recovers.  That is a few years away.    The market is rejoicing when they match 2017-18 revenue and EPS.
Reply




Users browsing this thread: 1 Guest(s)