OT: Are you doing anything to hedge against the possibility of BrExit….

[Coronita]

Continuing the finance part of the previous discussion….

[quote]
I’m just curious if any of you are doing anything different wrto your finances concerning the possibility of a BrExit. Have you rebalanced away from international stock funds? Are you moving more into cash/bonds or metals? Or are you just doing nothing….

[/quote]

[Coronita]

[quote=SK in CV][quote=flu]
Dumb question. If one thinks the stock is going to rise, why not just buy the stock? What advantage does this put spread have over just buying? Excuse the dumb question…

The only option trading I’ve ever done was to either write covered calls or buy put options as a hedge against company issued stock options or RSUs that were unvested and/or nearly vesting…and that was back a long time ago, when companies didn’t have so many policies about owning derivatives as an employee…So I’m curious how people are using these other strategies.[/quote]

Not a dumb question at all. In fact, it’s one that I’ve asked 100 times. As it happens, the woman sitting next to me has made a living trading futures and options for the last 5 or 6 years. And I’m following her lead. It has to do with use of capital….even though I’m sitting with a lot of cash, I have these derivative non-cash positions that are hopefully making me money. I’m not convinced it’s the right thing.

Diamonds (Dow ETF) is now paying about 2.754% I think. She convinced me that instead of buying a few hundred shares, I should sell a wide put spread and take in (at current volatility) about $100 a month. That’s $12/yr on a $175 stock that I haven’t actually bought. 6.66% is a pretty decent return. Now if I had actually bought it, or it gets put to me, i’d sell covered calls against it every month. I’d limit my upside but increase yield to upwards towards 10%.

As I said, I follow her. I ask her the same question at least once a month. And she’s way smarter than I am. So I listen. (And she doesn’t read here, so I don’t score any points by saying that.)[/quote]

[Coronita]

[quote=SK in CV][quote=flu]

Sorry, I’m not following the 10% yield using covered calls. Care to explain? I’m really slow about these things….

When you first mentioned $1/premium a share….I was wondering why are you doing this for a $1/share…But then you put it into a bigger context for me $12/year for a $175/share… I never thought about it this way. Just curious, I think I know, but what are the worst case scenarios wrto downside risk, beyond what you already sort of highlighted with the example with T? ..I appreciate you sharing…I was just reminded there are a lot of smarter people out their in this world than me, lol….[/quote]

I missed an important step. On the DIA trade, which is where the “$12/yr for a $175/share” came in, I didn’t mention that I’m rolling it every month. The sweet spot is getting in at about 45 days from expiration, and I try to roll at about 15 days. Rolling spreads can be difficult sometimes, particularly when trying to adjust the strikes. Often, I end up buying the current month back and selling the next month. I had orders in to roll spreads in 3 different accounts all day Thurs & Friday and couldn’t get a fill. It was slightly early because I was trying to take advantage of the higher following month volatility. I’ll probably buy them all back on Monday and sell Aug spreads at whatever strikes make sense.[/quote]

[Coronita]

SK. Is the purpose of rolling the option contract because you make more money from the option premimum in the new options that expire much later versus the option premium left on the existing contract that you will close early?

I don’t think I have the skills to really do this myself, but am really curious how people who know what they are doing do this….

Also, just curious… Do you cast a wider net and buy more companies/etfs/etc with fewer contracts each one, or are you concentrating on a few, and loading up on contracts per each one?

Thanks for sharing so far. I appreciate it when smarter people are willing to share things they are doing, even if I probably fvk it up myself if I tried to do the same thing, lol….

[SK in CV]

[quote=flu]SK. Is the purpose of rolling the option contract because you make more money from the option premimum in the new options that expire much later versus the option premium left on the existing contract that you will close early?

[/quote]

Yes. With option spreads as I’ve described, there’s a defined risk, but there’s also a smaller defined profit. For securities I continue to want to own, I roll it each month. If it gets too pricey, I move on to something else. (I wasn’t interested in AAPL at $110, but I’ve had positions on since it went to the low 90s) I’d be lying if I said I’m anything more than a novice. For me, closing trades with 50% of max profit is the goal. Or roll it to the next month if the price/premium is still attractive. Occasionally, trades will go my way and it’ll be more than that. When I’ve tried to eek out that last few bucks I’ve gotten into trouble, owning things I never wanted. Next month I’ll probably do some earnings trades, which I haven’t had much time to do the last 4 or 5 earnings seasons.

It’s taken a long time and very fortunately, not cost too much money, learning how to do it, lots of seminars and videos. I just finished an 18 month full time working gig and am just getting back into it. My wife probably averages 10 trades a day. (Her 1099 last year was 399 pages long in her trading account. It came in a box.) She might have 60 different open option trades at a time. She scans for things with high volatility, knows when to get in and out, and trades all kinds of things I don’t understand. She also trades futures (which I rarely do, other than SPX futures). She used to trade forex, but can’t anymore. Surprisingly, her total risk capital in her trading account is pretty low.

[no_such_reality]

How much time is she spending bird dogging that?

When I’ve looked at it, I feel like I’m setting myself to be worrying about the market every day for several hours.a day. Can you set up your trades and worry about the a couple days a month (sans nutttery like brexit)?

[Coronita]

[quote=SK in CV][quote=flu]SK. Is the purpose of rolling the option contract because you make more money from the option premimum in the new options that expire much later versus the option premium left on the existing contract that you will close early?

[/quote]

Yes. With option spreads as I’ve described, there’s a defined risk, but there’s also a smaller defined profit. For securities I continue to want to own, I roll it each month. If it gets too pricey, I move on to something else. (I wasn’t interested in AAPL at $110, but I’ve had positions on since it went to the low 90s) I’d be lying if I said I’m anything more than a novice. For me, closing trades with 50% of max profit is the goal. Or roll it to the next month if the price/premium is still attractive. Occasionally, trades will go my way and it’ll be more than that. When I’ve tried to eek out that last few bucks I’ve gotten into trouble, owning things I never wanted. Next month I’ll probably do some earnings trades, which I haven’t had much time to do the last 4 or 5 earnings seasons.

It’s taken a long time and very fortunately, not cost too much money, learning how to do it, lots of seminars and videos. I just finished an 18 month full time working gig and am just getting back into it. My wife probably averages 10 trades a day. (Her 1099 last year was 399 pages long in her trading account. It came in a box.) She might have 60 different open option trades at a time. She scans for things with high volatility, knows when to get in and out, and trades all kinds of things I don’t understand. She also trades futures (which I rarely do, other than SPX futures). She used to trade forex, but can’t anymore. Surprisingly, her total risk capital in her trading account is pretty low.[/quote]

Thanks for the info…I know what you mean. Every single time I tried to eek out an extra buck or two on anything I did, I just ended up a total disaster…lol…

Just curious, do you have examples of the kind of seminars where you learn this stuff? I’m not sure I would do it, but as anything, there’s a lot of seminars that really aren’t seminars, and there are ones that are actually useful I guess. I’m just trying to understand how to spot the legitimate seminars from the ones that are like Trump University/Robert Kiyosaki), when ends up being an informercial and “training” that consists of trying to buy more training…(No I’ve never spent money on these classes, but did get a few free dinners out of them for just showing up a long long time ago)

[zk]

Donald Trump isn’t eligible to be president because he’s a foreign, illegal alien, immigrant bitch.

Discuss.

[no_such_reality]

you know flu, even those loser seminars may have something worth while.

When I was a snot nosed kid, I forked got pulled in and forked over good money for Carelton Sheet’s No Money Down collection.

Didnt’ go to a seminar, but did go through all his stuff. After spending a lot of time, going over it, I concluded, there’s some interesting approaches to getting a deal done and that I wanted to be nothing like the money grubbing a**hole he seemed to be promoting you needed to be to maximize dollars.

[SK in CV]

[quote=flu]Just curious, do you have examples of the kind of seminars where you learn this stuff? I’m not sure I would do it, but as anything, there’s a lot of seminars that really aren’t seminars, and there are ones that are actually useful I guess. I’m just trying to understand how to spot the legitimate seminars from the ones that are like Trump University/Robert Kiyosaki), when ends up being an informercial and “training” that consists of trying to buy more training…(No I’ve never spent money on these classes, but did get a few free dinners out of them for just showing up a long long time ago)[/quote]

Go here:

https://www.tastytrade.com/tt/learn

Now that I’m not working, I listen to Tom Sosnoff almost every morning from 5 to 8:30 They do tons of research, and know their shit. I’ve seen them present a few times, usually in conjunction with TD/Ameritrade Market Drive events. (Not a whole lot of selling stuff either.) So do the TD guys. I use their TOS platform (which Sosnoff developed and sold to Ameritrade for jillion dollars) to trade.

[SK in CV]

[quote=no_such_reality]How much time is she spending bird dogging that?

[/quote]

All of it.

[Coronita]

[quote=SK in CV][quote=flu]Just curious, do you have examples of the kind of seminars where you learn this stuff? I’m not sure I would do it, but as anything, there’s a lot of seminars that really aren’t seminars, and there are ones that are actually useful I guess. I’m just trying to understand how to spot the legitimate seminars from the ones that are like Trump University/Robert Kiyosaki), when ends up being an informercial and “training” that consists of trying to buy more training…(No I’ve never spent money on these classes, but did get a few free dinners out of them for just showing up a long long time ago)[/quote]

Go here:

https://www.tastytrade.com/tt/learn

Now that I’m not working, I listen to Tom Sosnoff almost every morning from 5 to 8:30 They do tons of research, and know their shit. I’ve seen them present a few times, usually in conjunction with TD/Ameritrade Market Drive events. (Not a whole lot of selling stuff either.) So do the TD guys. I use their TOS platform (which Sosnoff developed and sold to Ameritrade for jillion dollars) to trade.[/quote]

Merci! Look into it when I have free time….

[Coronita]

[quote=zk]Donald Trump isn’t eligible to be president because he’s a foreign, illegal alien, immigrant bitch.

Discuss.[/quote]

Thanks a lot ZK..:)

[joec]

The only consistent options strategy that has worked for me is covered calls.

Have the stock or don’t mind waiting for the stock to hit a certain price and don’t mind holding it and just sell calls against the position so while I wait, it generates a small return on positions that I probably won’t exit or want to sell at a certain price.

Great for company stock options or equity since you have a lot of shares.

Nets usually 5-10%? returns over a year or so? Depends on volatility of the stock.

In terms of recent trades, I manage my parents account and sold in May more so because they need more cash (they are house rich/cash poor) and felt the Brexit vote (I had no clue where that would head and am surprised like everyone else) and the US election can lead to increased volatility and general market unease. (that’s playing out now).

Also, if you look at it over the long term, stocks are near fairly high in terms of a few traditional metrics so why hold more equity now?

Due to being poor now, I don’t hold many stock positions personally, but do have VZ and a utility for yield and more defensive overall.

Overall, I think trying to trade is probably a losers game for most people since it takes too much time to get really good at it and even then, most people lose…

Note that however that I think even if you do 5-10% better than the average person (say 50% odds guessing on trades), you will do very well over the long term assuming you have enough capital to ride out investing for 10-20 years.

Most people don’t have that much time or money to bother honestly.

[no_such_reality]

[quote=SK in CV][quote=no_such_reality]How much time is she spending bird dogging that?

[/quote]

All of it.[/quote]

Hopefully it’s a hobby like enjoyment then.

I have a five year old, I prefer to spend my time bird dogging him on the tandem bike.

[Author]

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