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  1. #1
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    Lose your weenie (selling options thread)

    Think I might set 1/3 of my disaster cash aside right now to sell cash-covered puts as an income play. I'm not advising anyone to do this but welcome thoughts, advice, etc. If you do, please keep in mind you may get stuck buying a lot of stock if the market goes down more (which may or may not be a good thing). I'm planning to pick 10 quality equity names including dividend stocks, and start staggering put sales across expiries for as long as implied vol remains high. Could earn 25 percent or more in six months if it keeps up. If I get put the stocks then I'll own some good companies at a lower price and add some dividend yield that I need anyway for h&b (no actually just kids summer camps). Plus I could sell covered calls on those names to generate more income if shit is still crazy. A lot of work but my job affords some time. Also thinking about writing some short dated covered calls (while short term implied vol is super high, i.e. 1wk implied vol is higher than 1m) against stock I own in my Roth IRA where I won't have any tax liability (can't sell naked puts there without ability to put more cash in).

    First trade Friday, I sold DAL 3/13/20 $40 puts for $0.91 (underlying was $45.30). If stock doesn't sell off the 11 percent or so by the expiry next Friday then I keep the premium which is 2 percent of face value. That is a 100 percent annualized yield, wow.

    What say you finance geeks?

    Benny and Brock/4matic keep in in the lines please
    Last edited by kokomas; 03-07-2020 at 07:30 PM.
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  2. #2
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    https://www.barrons.com/articles/be-...ow-51583361529


    To follow Buffett’s fear dictum, consider the humble cash-secured put strategy, which entails selling puts on quality stocks while setting aside the purchase price of the underlying stock in your brokerage account. Find stocks you can own for a few years or longer, and sell one- to three-month puts with strike prices that are just below the stock’s price.

    Favor stocks like AT&T (ticker: T), with a dividend yield of about 6%, or Verizon Communications (VZ), with a yield of 4.5%. If the virus worsens, people will still speak on their mobile phones, surf the internet, and watch TV. Netflix (NFLX), the king of streaming content, should do well, too.

    The put strategy is simple. If the stock advances rather than declines, you keep the premium. If the stock is at the strike price at expiration, you buy the stock. The real risk is that the stock falls far below the put strike price, and investors must cover the put at a higher price or buy the stock at the strike price even if it is trading lower. The strategy works for any stock you are willing to own until brighter days return.
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  3. #3
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    The market sell-off definitely makes some opportunities for profits. It'll make some speculators rich, and some broke.

    Let us know how it goes, if you decide to try.
    Quote Originally Posted by powder11 View Post
    if you have to resort to taking advice from the nitwits on this forum, then you're doomed.

  4. #4
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    You're making it too complicated. Buy long term treasury funds, wait until the dust is settling, then buy an S&P index as it shoots back up.

    Let's do some livin'
    After, we die

  5. #5
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    Quote Originally Posted by Benny Profane View Post
    You're making it too complicated. Buy long term treasury funds, wait until the dust is settling, then buy an S&P index as it shoots back up.
    Buy treasuries at an all time high? Bold move Cotton.

    Sent from my SM-G930V using TGR Forums mobile app

  6. #6
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    Quote Originally Posted by mcsquared View Post
    Buy treasuries at an all time high? Bold move Cotton.

    Sent from my SM-G930V using TGR Forums mobile app
    Benny is right. Buy short dated treasuries and wait.

    Selling puts in this is stupid.

    Sent from my Redmi Note 8 Pro using Tapatalk

  7. #7
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    Lose your weenie (selling options thread)

    Ask Cono. He’s a pro. If it were easy everyone would do it.

    You are still obligated to buy the stock at the put price so it’s not a great risk reward.

  8. #8
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    Lose your weenie (selling options thread)

    Quote Originally Posted by rod9301 View Post
    Benny is right. Buy short dated treasuries and wait.

    Selling puts in this is stupid.
    Wait for what? When vol is 12 and premium is worth nothing?

  9. #9
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    I pulled all the cash out of my properties to put it on Red at the Indian Casino. Tell me I am nutz.
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  10. #10
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    Well vol of 120 percent in the front expiry is pretty juicy. Looking at selling calendar spreads as well which covers some of the Greeks abit
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  11. #11
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    Was gonna hold off on anything energy related until oil prices got below shale threshold anyway. But this saudi stuff sounds like game on. Oil going to 20 until Russia cries uncle. Ain't selling puts on cvx yet
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  12. #12
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    Save your cash to wipe your ass with.

  13. #13
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    Quote Originally Posted by 4matic View Post
    Wait for what? When vol is 12 and premium is worth nothing?
    Wait until cae is under 10

    Sent from my Redmi Note 8 Pro using Tapatalk

  14. #14
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    Quote Originally Posted by rod9301 View Post
    Wait until cae is under 10

    Sent from my Redmi Note 8 Pro using Tapatalk
    Sorry, CAPE

    Sent from my Redmi Note 8 Pro using Tapatalk

  15. #15
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    Quote Originally Posted by rod9301 View Post
    Sorry, CAPE

    Sent from my Redmi Note 8 Pro using Tapatalk
    Looks like I just squeezed in with DAL
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  16. #16
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    I was talking about the s&p cape, individual stocks can have always a low cape, it depends on the stock

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  17. #17
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  18. #18
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    Quote Originally Posted by kokomas View Post
    Think I might set 1/3 of my disaster cash aside right now to sell cash-covered puts as an income play. I'm not advising anyone to do this but welcome thoughts, advice, etc. If you do, please keep in mind you may get stuck buying a lot of stock if the market goes down more (which may or may not be a good thing). I'm planning to pick 10 quality equity names including dividend stocks, and start staggering put sales across expiries for as long as implied vol remains high. Could earn 25 percent or more in six months if it keeps up. If I get put the stocks then I'll own some good companies at a lower price and add some dividend yield that I need anyway for h&b (no actually just kids summer camps). Plus I could sell covered calls on those names to generate more income if shit is still crazy. A lot of work but my job affords some time. Also thinking about writing some short dated covered calls (while short term implied vol is super high, i.e. 1wk implied vol is higher than 1m) against stock I own in my Roth IRA where I won't have any tax liability (can't sell naked puts there without ability to put more cash in).

    First trade Friday, I sold DAL 3/13/20 $40 puts for $0.91 (underlying was $45.30). If stock doesn't sell off the 11 percent or so by the expiry next Friday then I keep the premium which is 2 percent of face value. That is a 100 percent annualized yield, wow.

    What say you finance geeks?

    Benny and Brock/4matic keep in in the lines please
    Why not go all in and buy some VIX options?

    Sent from my Pixel 2 XL using TGR Forums mobile app
    what's so funny about peace, love, and understanding?

  19. #19
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    Quote Originally Posted by up an down View Post
    Why not go all in and buy some VIX options?

    Sent from my Pixel 2 XL using TGR Forums mobile app
    You mean sell?
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  20. #20
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    Quote Originally Posted by kokomas View Post
    You mean sell?
    Buy puts.... or buy calls.. depending on your bias

    Sent from my Pixel 2 XL using TGR Forums mobile app
    what's so funny about peace, love, and understanding?

  21. #21
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    Quote Originally Posted by up an down View Post
    Buy puts.... or buy calls.. depending on your bias

    Sent from my Pixel 2 XL using TGR Forums mobile app
    LOTS of movement so far tonight... If you like trading action it's the place to be right now... Assuming that you have live streaming quotes

    Sent from my Pixel 2 XL using TGR Forums mobile app
    what's so funny about peace, love, and understanding?

  22. #22
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    Quote Originally Posted by up an down View Post
    LOTS of movement so far tonight... If you like trading action it's the place to be right now... Assuming that you have live streaming quotes

    Sent from my Pixel 2 XL using TGR Forums mobile app
    http://www.cboe.com/products/vix-ind...es/vix-options

    Sent from my Pixel 2 XL using TGR Forums mobile app
    what's so funny about peace, love, and understanding?

  23. #23
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    i'm interested in monetizing people's fear through selling rich insurance on equity names that have staying power and possibility for gov't intervention. VIX is a product on the whole market. your strategy quite different it seems. curious to hear more, what is your edge?
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  24. #24
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    Quote Originally Posted by rod9301 View Post
    I was talking about the s&p cape, individual stocks can have always a low cape, it depends on the stock
    Yep I got that and so far you would be right. This thread (and the OPEC news) got me keeping things to a dull roar at the moment.

    The DAL position will be interesting this week. down 6% in the premkt which is half of my cushion. Administration recommending against air travel could be quite bad. Though a bailout could be in the works too. lower fuel prices also help. my guess is i'll get put by a small margin, will see. Glad I sized the first one small.
    Day Man. Fighter of the Night Man. Champion of the Sun. Master of Karate and Friendship for Everyone.

  25. #25
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    Quote Originally Posted by kokomas View Post
    i'm interested in monetizing people's fear through selling rich insurance on equity names that have staying power and possibility for gov't intervention. VIX is a product on the whole market. your strategy quite different it seems. curious to hear more, what is your edge?
    I am not trading any options... Just holding onto bond etfs and 0% stocks.....what I don't like about selling options during a volatile market is the possibility of margin calls...I have bought and sold corn and soybean options in the past..as well as the futures...the exchange can increase the margin requirements with very little notice...and.. Your broker could also increase the margin requirements..so...you may have to have some very deep pockets if you want to hold onto your trades if they go against you..And of course the advantage of buying options is no margin calls... So you can do it with a smaller amount of $ compared to selling...And probably with less stress....but... You know more about your strategy than I do... I wish you good luck!
    what's so funny about peace, love, and understanding?

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