What Did You Buy Today?

[fenders53]

(08-03-2020, 03:59 PM)NilesMike Wrote:

(08-03-2020, 01:13 PM)fenders53 Wrote:

(08-03-2020, 12:45 PM)vbin Wrote: I wonder how much weekly options u get? Last time I checked T and Mo had $10 for weekly options.

Sorry I wasn't clear.  Weekly options only work for volatile stuff.  I do make $300 or $500 for a weekly option sell in something like QQQ or ROKU with a strike considerably out of the money.  There are no free rides as you know.  The NAS could drop 10% in a week and I own 100s of shares, albeit at a decent price.  

Reqarding the boring stuff game.  I am NOT selling 7 day options in T-KO etc.  I could, but you have to commit to WAY too many shares to make it worth it.  Every week or two when the boring stuff has a down day or two I am selling options that expire 2-5 weeks out.  95% of them expire worthless in a choppy or up market.  Spread out the dates and boring options expiring worthless every week and I rinse and repeat it 2-5 weeks forward.  I should be well past 500 hundred contracts this year.  I spread them out because I have no idea where the market goes from one week to the next.   

Reality is never less than 1% a month return or I don't play.  I target 1 1/2 to 2 1/2% per contact for a months waiting.  Add in the dividends if I can pick the expiration dates right.  Few home runs because i am trying to hit singles and I consistently do.  A $50 to $100 win may not interest most here but 500 times $100 works well enough for me with low risk if you stay disciplined.

I am consistently selling covered calls in T and KO, have a separate account just for them.

I sell 2 calls at what I determine resistance to be, then I buy 1 call a strike or 2 above those call strikes (IRA, can't be naked calls)

When KO was 45ish I sold 2 SEP18 50 calls, bought 1 SEP18 55 call for $1.21 Credit

If KO goes nowhere, I collect 1.21 plus .41 dividend for 1.62. 162/4500= 18% annualized.

If KO moves up to 50, I close the trade, buy the calls back and sell the higher call. Since the trade is positive delta. I make money. The stock would be up $500, the 2 calls would be down and the 3rd call would be up a smidge. Net would be between 250-300 depending on DTE left. 

250/4500= 27% annualized.

Downside? None really for me, I'm not selling KO unless called away, then put on the wheel of fortune by selling puts until I get put my shares again.

Guys who aren't doing some options around their positions are really missing an opportunity to crank your return.
The rub is one needs 100 shares minimum

Good luck to all.

Good post Mike.  This doesn't have to be your whole game.   It sure isn't mine.  When this rarely goes bad it is almost always because I broke my rules and sold a put on a stock I didn't really care to own long-term because  only did it for a big option premium.  Done correctly, your risk is being forced to buy a stock you wouldn't mind holding.  You have to be honest with yourself, and disciplined.  I exchanged a zillion PMs with WaMike and got him started. He is probably about 50 trades in by now and has enjoyed a perfect environment for this.  

It costs about $3K minimum to try this because you have to commit to potentially buying 100 shares.  If you do it with ten dollar stocks the risk changes considerably.  I do this with WY.  I have no problem owning WY for decades  but it is a lot more volatile than a stock like KO or T.  It hasn't happened yet, but I have no problem selling a few WY covered calls if I want to lose some extra shares.  The premium on the call side is just as lucrative. 

Just an income game that crushes dividend yields. Doesn't replace my core DGI holdings.