[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.

[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.

[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.)

[SK in CV]

[quote=flu]SK, forgot to ask earlier also. What kind of put spread are you doing on VZ and T?[/quote]

On T, I think I sold a put at $40 and bought a put at $35, and took in about $1 premium. Options are quoted as a single share but trade on a 100 share contract, so I took in about $100. (Actually 2, since I sold/bought 2 contracts) My max risk is the difference between the two or $500. If the stock falls below $40, it can be put to me, and I just ended up buying T for $39/sh. With its current dividend, I wouldn’t mind owning it at $39. VZ was similar, I think the strikes were $52/47 and I didn’t take in quite a buck. That was right at the open when vol was really high. If the bottom falls out, i’m out $500. If nothing happens, I keep my premium. If it falls a few bucks, i’m in at $51 and change.

[SK in CV]

[quote=flu]SK, if you don’t mind me asking. What do you mean by “junk” silver and gold? Are these jewelry/home furnishing items?…If so, have these actually appreciated from the time you bought them? I’m just curious how this works outside of the traditional coin/bullion….I was under the impression that most other forms of precious metals have terrible appreciation, but I don’t know anything about this.[/quote]

Junk silver is silver coins generally pre-1963 before they started adding copper. They’re 90% silver and sell for 90% of spot price less the dealers vig. The price per dollar stays pretty consistent across silver dollars/halves/quarters/dimes. These are all coins with no numismatic value.

Junk gold is jewelry kind of stuff with no actual jewelry value and they sell at spot price, adjusted for purity, less dealer vig.

None of the jewelry was bought for investment. At least by her. My wife’s late father was sort of an eccentric guy and he started buying metal in the early 60’s, maybe earlier. He had swiss bank accounts and safe deposit boxes at least as far back as ’67. He bought and sold businesses around the world and on most every trip he’d bring back gold jewelry for his wife and daughter (my wife). So she has what seems like an unlimited supply of gold chains, rings, pins, etc. So at least some of that was bought when gold was $35/oz.

Both junk silver and junk gold move the same way as spot gold and silver price. As I said a few weeks ago, to unload this stuff you have to have a dealer that doesn’t take too big a cut. The guy my wife (and occasionally I) deals with has a store that says “we buy gold”. It’s just one of those guys she’s built a relationship with. I don’t know exactly how he disposes of it, but I’m sure he’s doing something with gold and silver futures on a daily basis. I know he has at least a ton of silver on display in inventory. I’m guessing he lays off the gold as quickly as possible, though he has an inventory of at least 1000 gold coins. It’s an expensive business to be in.

[SK in CV]

[quote=flu]Back on topic…So you folks feel gold, silver, platinum is moving higher or are we about done with the volatility?

I’m looking at platinum prices and things really haven’t taken off on platinum yet. Historically, the spread between gold and silver hasn’t been that much and there hasn’t been too many times in the past where 1 ounce of platinum is less than 1 ounce of gold…

Platinum’s industrial use (aside from jewelry) is in the catalytic converters for gasoline engines…

Palladium on the other hand is used in the emissions system of diesels, and I’m not aware of a jewelry/consumer use.

Platinium sells for about $130-140 above spot prices. But it’s also still one of those coins eligible for ebay 8% bux rebate offers, meaning if you wait, you can get them for about $100 off, or $30-40 above spot….

Gold on the other hand, you can find $20-30 above spot, but dealers have been pulling gold from the ebay bux rebate offers….Plus, I’m not convinced gold can hit $1400/ounce anytime soon.

Thoughts?

Speaking of which…

http://www.ebay.com/itm/SPECIAL-PRICE-2016-1-oz-Gold-Great-Britain-Britannia-Brilliant-Uncirculated/121818247497

Now, if only ebay would run it’s 3x ebux offer, you could get $100 off and get this $67 below spot, which still is expensive imho.

or platinum, which usually doesn’t go on sale, but you could get $100 off from ebay
http://www.ebay.com/itm/111916532267%5B/quote%5D

I just came home from the gym to find a 15-20lb bag of junk silver and a tray full of a couple ounces of junk gold sitting on the counter. That means my wife is thinking about going to see her guy. It’s nowhere near a significant piece of her holdings, (I think there’s about 40 similar bags of silver) but she usually sells a bit when she think its somewhere near a short term high. She’s in looking at her charts now. If she comes out with a conclusion I’ll pass it on.

Edit added: She put it all away. She not sure it’s going higher.

[SK in CV]

[quote=bearishgurl]Is there something wrong with that, FIH? Just because someone “wants their country back,” it doesn’t make them “`Pitchfork peasants” (who) ‘are riled up nativist-populists. non college educated and non cosmopolitan.'” [/quote]

What does it make them? What do you think those words mean? From who or what do they want it back from? What good old days are they longing for?

[SK in CV]

[quote=bearishgurl][quote=SK in CV][quote=The-Shoveler]”British millenials are ticked off”

I am not sure that is not just the media talking for them like they do here saying they want a condo and bike to work when they really want a house in the suburbs and a BMW.[/quote]

I think they are. I think they googled “what’s the EU?” this morning and realized that they should have been paying attention.[/quote]LOL …[/quote]

Sadly, I did not make that up. I probably should have worded it differently. I KNOW they googled “what’s the EU”. (Google said so.) I THINK they then realized they should have been paying attention.

[SK in CV]

[quote=The-Shoveler]”British millenials are ticked off”

I am not sure that is not just the media talking for them like they do here saying they want a condo and bike to work when they really want a house in the suburbs and a BMW.[/quote]

I think they are. I think they googled “what’s the EU?” this morning and realized that they should have been paying attention.

[SK in CV]

[quote=carlsbadworker]It doesn’t look like Yellen will do anything now for the rest of the year, she might as well go to legoland too.[/quote]

I wouldn’t be so sure of that. The fed will remain data dependent. 30 days from now this could be no more than a blip. The longer the fed waits, the fewer options they have in the long term. Sept we could see another bump, even if the economy is still limping along. .25 to .50 basis points just isn’t going to change anything. They need to get to 2% to have any flexibility at all.

Saddest part of that is that fiscal policy is always going to be more effective than monetary policy during a slow down.

[SK in CV]

[quote=spdrun]Realistically, what % of San Diego residents are here on H1 visas?[/quote]

Interesting question. Seems there isn’t a whole lot of published data. I did find something from a couple years ago that indicated that the total number is about 650,000 across the country as of a few years ago. Because the annual number remains pretty stable, and the term remains stable, the guy who came up with that number seems to think the total also remains pretty stable.

This site:

http://h1base.com/visa/work/H1BvisaJobSponsorshipTopUSstates/ref/1573/

ranks SD as the 10th most popular source of H1B visa applications. It wouldn’t surprise me if the really big population centers (NY,LA,CHI) have 50-100K each. Same for the bay area and Washington. Wouldn’t surprise me if half the national total were in those 5 places.

[SK in CV]

I don’t do anything with the UDOW, but I did put on wide put spreads on VZ and GE. I’ve had an AT&T position on for a few days, mildly surprised it hasn’t gone ITM.

[SK in CV]

Irrespective of BrExit, today was expected to be the heaviest trading day of the year, as the Russell 2000 rebalances. It has a lot less international exposure than any of the Dow or S&P, and it’s currently down less. It’s possible the ETFs might not fare that well.

[SK in CV]

[quote=flu]…and if trump wins??? 🙁

Hey, just playing the worst case scenario…People didn’t think BrExit was going to happen..So I’m not going to discount a trump with either. Seems like the world’s pendulum is swinging toward “low-information stupid”[/quote]

Completely agree. I’m still pretty confident it can’t happen…. but then, H. L. Mencken said 90 years ago.

“No one in this world…has ever lost money by underestimating the intelligence of the great masses of the plain people.”

he continued…

“The mistake that is made always runs the other way. Because the plain people are able to speak and understand, and even, in many cases, to read and write, it is assumed that they have ideas in their heads, and an appetite for more. This assumption is a folly.”

[SK in CV]

I think it will bounce back to close to where we are in 6 weeks. Nothing happened. Unless 3 or 4 other countries decide to start talking about doing the same thing. Ford isn’t going to sell fewer cars. Google and Facebook aren’t going to stop selling advertising. Cat isn’t going to stop selling heavy equipment in China. Good thing is the UK never adopted the Euro. That would have been a pain to unwind. I could change my mind by 6:30 but this could be an opportunity.

[Author]

Posts