It's not my thing.
If I can't consider buying it, I don't want to consider investing in it.
Just a personal preference. It means nothing.
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Advantages of weekly vs monthly options ?
- Thread starter rfriend73
- Start date
If I can't consider buying it, I don't want to consider investing in it.
Just a personal preference. It means nothing.
I sell puts naked most of the time.
I only sell put spreads on the occasional stock that is extremely volatile, and/or has no tech support, and/or is extremely over valued and/or over debted, and whose contract runs through an earnings cycle.
If I'm not afraid to potentially own the stock at my strike, I'll generally go naked. And I'm generally not afraid of the stocks and prices I invest in. I don't fear temporary stock ownership. I only fear ownership of a stock that may not be "recoverable".
I prefer monthly.
Why? Because I am picky about the stocks and prices I invest in. Both in terms of it's fundamentals and technical.
It takes a lot of time and work to find them, via the tedious process of elimination.
If I finally find one that meets my criteria, I'm not going to risk losing it in a week, for some puny weekly premium.
The calculated % returns may be super large on the weeklies, but the actual dollars are generally puny.
Hence, my trades generally last 1 - 3 months.
How far otm I select my strikes, depends mostly on how volatile the stock and sector are, and where I see it's L-T tech support.
Strike selection is all about tech support for me.
Thus, sometimes I'm 8 - 10% otm and other times 20 - 22% otm.
I rarely hedge, because I am picky about the stocks and prices I select, and thus i don't fear ownership of those stocks, at those prices. I'm happy to sell covered calls and collect dividends, while i wait for recovery.
There are more ways to manage risk, then simply buying put protection.
The fact is, excessive over reliance on basic put protection, can actually wipe out your account pretty quick in a crash.
If you can't consider stock ownership, all you can do is close for losses. Perhaps massive losses.
Put selling can be better than covered calls, as there is only one transaction most of the time. There’s a strategy, as explained here, to sell the Put, then if Put to, sell the covered calls until called away, and then sell the Put again. I, and many others, have done this with the very liquid SPY, and with LEAPS Puts.
The one thin though, Put_Master, is your gains are capped (I assume you’re perfectly ok with that, most folks aren’t or have regret in "missing out"), e.g. your short Put returns 5-15% as an example, yet the stock rallied 30-50%.
How do you handle the rally, do you close the short put out early?