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Conservative option strategies, what did you buy or sell today?
Nilesmike and I disagree on the theory of rolling puts options forward. I will share success stories later but my EGO isn't that big and I'm not trying to amaze anyone here. You can take or leave my advice. but you will deal with this decision if you sell enough options. In the interest or fair and balanced reporting, here is a bad trade where I tried to make lemonade. I sure won't call it a win but I can't see the future. Here is what happened. I sold a few options in RDS with strikes at 30 and 27.50 starting in July. OMG why do I get sucked into big oil but here it is. Obviously the 30 strike was the worst. Just a single contract because my inner voice said go slow in case this is another potential bad oil stock adventure. So only $3K of capital is tied up in oil fiasco episode 5 (at least lol). I'll spare you the exact dates.

So RDS was trading around 31.50 IIRC and I was cool with a $30 assignment. I was OK with paying $31.50 to be honest. Sold and rolled puts something like this from July. The strikes are 2.50 apart so I am already very limited.

Sold for 1.15
Buy back a month later for .95 so I am up .20
Immediately resell for 1.55, now up 1.75
Buy back for 3.70 and resell another month for 3.70, still up 1.75 on premiums

Just got assigned today at $30. Stock is worth about $24.50, my basis is $28.25 so down $3.75. Hindsight is 20/20 but I could have just took about a $2 loss a month ago. I also could have just skipped the options and went long at $31.50 because I thought this was a good entry. Point being it could have been worse.

So now my choices are...

1. Sell the 100 shares at a loss and move on?
2. Hold the shares and hope for a bounce? Where the hell is the bottom for RDS?
3. Selling a call at a higher price would be my normal reaction but the strikes are too far spread like a lot of lighter traded ADRs. Not a real option unless I wait and hope oil stocks bounce. I'm not optimist that happens soon.
4. Sell an in the money option, accept some of the loss and buy myself give the stock a chance to bounce and make it better?

My success rate with number 4 is well over 50%. We'll see what I do. I am willing to hold RDS long-term but if I can lower my basis with extrinsic premiums I will likely do it. I could share dozens of success stories but the downside is a more useful conversation.

I'd would be happy if this was a bunch of contracts. Its just $3K. Be gentle Mike.



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Messages In This Thread
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
RE: Conservative option strategies, what did you buy or sell today? - by fenders53 - 10-08-2020, 08:46 AM



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