08-21-2021, 12:30 PM
A post from NilesMike on my retirement thread.....
"If it was smart to buy the options I am selling I'd probably know after a couple thousand trades the past few years."
You are mostly selling naked puts, right? Pretty close to the money as well, right? A neutral to bullish directional opinion. If you or I had a bullish opinion, why we would we buy puts? We wouldn't, but guess who may?
You brought up NUSI strategy of using a collar for protection and capture some of the upside. THAT'S who is buying your puts. They hope the put expires worthless as they capture the upside.
That's the part that gets into people's heads, thinking that you are selling a put to me and I bought it as a speculative trade with bearish opinion. That is definitely not the case.
OK, well first of all I enjoy the back and forth.
I am selling covered puts. With retirement approaching it was safe money yielding 2% and I was good with that until it couldn't happen anymore. Mostly I am selling puts on stocks I'd be fine with adding more to or maybe I don't own them yet. That is half my game with an extremely high win %. The tickers rotate but I straddle something boring like MET-HRL-JNJ for a year at a time as the stock drifts in a range. If I was truly conservative I'd leave it right there. I am selling insurance to some, and I'm sure I am a leg on somebody else's credit or debit spread or whatever.
Next we have the "tweeners". XLE where I am trying to own some but not too much. If the income is still there for another month I will roll again if I think it might work. Some of my buyers are gambling commodities. I am gambling some too as I don't believe in the sector long term.
Then there are the SPAC stocks. 90% of those who went long the past year are deep underwater. Then you have the shorters paying ignorant high premiums buying a put from me. PLTR-SOFI-TTCF. I have lost zero times because these fools take it too far. I'll wait as long as necessary to enter. I can go watch them cry in their beer on Reddit. They post their "loss porn" accounts there daily. It's insane the risk they will take. A couple days ago, whatever day the market dipped this week, a young man took his entire $60K account and bought like 1500 OTM SPY put contracts that expired 6 hours later cuz YOLO. Literally two hours later he left with a 43K loss because it suddenly occurred to him he would be flat broke in another hour or so. Unbelievable!!! I never said it was you, but a lot of these fools will pay a crazy amount of premium for a WAY out of the money contract that expires in a week and the stock is already crushed and sitting on known support. Companies I have researched and I am willing to buy since I maintain almost zero spec long. I always expect to be assigned, but I can usually escape fast because the fools don't understand theta. After about 40 successful trades in a row I'll be OK if I eat one. Same fools will pay too much for a call a few weeks later when the stock bounces a bit.
As I mentioned above my bane was conservative but overvalued stock this month. CMI wiped out some of the easy money trades. I'll learn from that because it was my fault.
Don't be offended when I mock the option buying gamblers. I am not challenging you personally. I am challenging the fools real bad at stats. I doubt I ever run out of them. This trick is worth 3-5K a month 10 months a year, for years now in an up market. When the market resets I'll lick my wounds that month and reset. Nothing works every month but I have some cushion now. I put some of these profits where I can't lose them every month.
Mostly I just stay conservative because it works.
.
"If it was smart to buy the options I am selling I'd probably know after a couple thousand trades the past few years."
You are mostly selling naked puts, right? Pretty close to the money as well, right? A neutral to bullish directional opinion. If you or I had a bullish opinion, why we would we buy puts? We wouldn't, but guess who may?
You brought up NUSI strategy of using a collar for protection and capture some of the upside. THAT'S who is buying your puts. They hope the put expires worthless as they capture the upside.
That's the part that gets into people's heads, thinking that you are selling a put to me and I bought it as a speculative trade with bearish opinion. That is definitely not the case.
OK, well first of all I enjoy the back and forth.
I am selling covered puts. With retirement approaching it was safe money yielding 2% and I was good with that until it couldn't happen anymore. Mostly I am selling puts on stocks I'd be fine with adding more to or maybe I don't own them yet. That is half my game with an extremely high win %. The tickers rotate but I straddle something boring like MET-HRL-JNJ for a year at a time as the stock drifts in a range. If I was truly conservative I'd leave it right there. I am selling insurance to some, and I'm sure I am a leg on somebody else's credit or debit spread or whatever.
Next we have the "tweeners". XLE where I am trying to own some but not too much. If the income is still there for another month I will roll again if I think it might work. Some of my buyers are gambling commodities. I am gambling some too as I don't believe in the sector long term.
Then there are the SPAC stocks. 90% of those who went long the past year are deep underwater. Then you have the shorters paying ignorant high premiums buying a put from me. PLTR-SOFI-TTCF. I have lost zero times because these fools take it too far. I'll wait as long as necessary to enter. I can go watch them cry in their beer on Reddit. They post their "loss porn" accounts there daily. It's insane the risk they will take. A couple days ago, whatever day the market dipped this week, a young man took his entire $60K account and bought like 1500 OTM SPY put contracts that expired 6 hours later cuz YOLO. Literally two hours later he left with a 43K loss because it suddenly occurred to him he would be flat broke in another hour or so. Unbelievable!!! I never said it was you, but a lot of these fools will pay a crazy amount of premium for a WAY out of the money contract that expires in a week and the stock is already crushed and sitting on known support. Companies I have researched and I am willing to buy since I maintain almost zero spec long. I always expect to be assigned, but I can usually escape fast because the fools don't understand theta. After about 40 successful trades in a row I'll be OK if I eat one. Same fools will pay too much for a call a few weeks later when the stock bounces a bit.
As I mentioned above my bane was conservative but overvalued stock this month. CMI wiped out some of the easy money trades. I'll learn from that because it was my fault.
Don't be offended when I mock the option buying gamblers. I am not challenging you personally. I am challenging the fools real bad at stats. I doubt I ever run out of them. This trick is worth 3-5K a month 10 months a year, for years now in an up market. When the market resets I'll lick my wounds that month and reset. Nothing works every month but I have some cushion now. I put some of these profits where I can't lose them every month.
Mostly I just stay conservative because it works.
.