Anyone selling premium only

[1245]

AAPL dropped from 720 to around 425. HPQ dropped from 30 to 12 in less than a year. BP dropped from 48 to 37. JCP 40 to 18.

Shit happens to companies in every industry. I've been in the business since 1980. I'm telling you this happens to companies when you least expect it. You can't assume any company is safe. The point is, if it were the same company, it would not drop that much. If it were because the market crashed, the valuation of that company is not the same. This is not rare. It happens almost every week.

I still like selling options, I just prefer to stick to SPX or RUT. No company specific risk. It helps you sleep at night as some said.

1245

 

[1245]

Quote from newwurldmn:

+1. The other strange argument is: sell puts in names that you would like to own anyway. If you would like to buy them then presumably you think there is upside. You should be long them now instead of selling puts.

The only reason to sell a put is because you think the market is overpricing the likelihood that the stock will get to the strike price.

Or, you believe there is a high probability that it will expire worthless.

 

[optionbull]

Quote from metameta:

Everything is risky.

I just am giving my opinion. If i had $25k i would focus almost exclusively on buying call spreads. I would study and wait for quality companies to reach reasonable levels and do maybe 5-10 independent call spreads on them.

Risk is losing everything, on each one of the trades.

But if you lose a little (10% down stoploss wow) and get stopped out 5 times in a row on SP futures you risk losing everything as well, just takes a little longer i suppose.

The risk/reward on that WAG at $29 was so compelling that when someone like myself who does 90% of my trading from the shorting put side does a call spread it must have been decent. Breakeven at $32? within a year? at $41 within 4-5 months? i predicted the move, but not the speed of it.

This market is too bullish. Look at how the market brushed off seriously negative situation in YUM. It could take many quarters to get back chinese consumers to KFC stock recovered in couple days, no problem mr market says.

learn all you can and sit on the sidelines for a while, this market is too bullish. I'm flat, booked profits and will watch for now.

Guys that can pull $50k out a year trading sp futures on $25k deposit are impressive. I cannot match them, i will not even try.
I don't think they are lying. I just think they are in the top 5% of traders and I am not.

Ok thnks for input, appreciate it

 

[optionbull]

Quote from 1245:

AAPL dropped from 720 to around 425. HPQ dropped from 30 to 12 in less than a year. BP dropped from 48 to 37. JCP 40 to 18.

Shit happens to companies in every industry. I've been in the business since 1980. I'm telling you this happens to companies when you least expect it. You can't assume any company is safe. The point is, if it were the same company, it would not drop that much. If it were because the market crashed, the valuation of that company is not the same. This is not rare. It happens almost every week.

I still like selling options, I just prefer to stick to SPX or RUT. No company specific risk. It helps you sleep at night as some said.

1245

I am thinking of trying to make 10 percent or so on 25k

Sell put spreads OTM with maybe a 75-100 spread in strikes, do this quarterly, maybe 2 contracts.

stop assuming no flash crash would be 1.5 times credit, so it really would take 3 complete losing trades/quarters in a row to begin to ding account by as much as 25 percent ?

look at 1200 1100 put spread in June SP mini for example.... its not that rich but...

 

[metameta]

Quote from newwurldmn:

+1. The other strange argument is: sell puts in names that you would like to own anyway. If you would like to buy them then presumably you think there is upside. You should be long them now instead of selling puts.

To not mind owning something like PG at say $55 is not the same as wanting to own PG at $75.

Maybe someone does not believe or wants to gamble that it goes any higher but at the same time would be willing to speculate that it will not go below a certain strike.

I just don't find that strange. But that's what makes a market.

 

[optionbull]

Quote from metameta:

Quote from newwurldmn:

+1. The other strange argument is: sell puts in names that you would like to own anyway. If you would like to buy them then presumably you think there is upside. You should be long them now instead of selling puts.

To not mind owning something like PG at say $55 is not the same as wanting to own PG at $75.

Maybe someone does not believe or wants to gamble that it goes any higher but at the same time would be willing to speculate that it will not go below a certain strike.

I just don't find that strange. But that's what makes a market.

I agree with you I just don't have account size.

I would like to look at doing this with T (ATT stock) as well.

 

[metameta]

Quote from 1245:

AAPL dropped from 720 to around 425. HPQ dropped from 30 to 12 in less than a year. BP dropped from 48 to 37. JCP 40 to 18.

Shit happens to companies in every industry. I've been in the business since 1980. I'm telling you this happens to companies when you least expect it. You can't assume any company is safe. The point is, if it were the same company, it would not drop that much. If it were because the market crashed, the valuation of that company is not the same. This is not rare. It happens almost every week.

I still like selling options, I just prefer to stick to SPX or RUT. No company specific risk. It helps you sleep at night as some said.

1245

I can't help it. AAPL, tech (ever changing). HPQ, tech (ever changing). BP, environmental tail risk (ever present). JCP, WMT/TGT/AMZN makes them obsolete (prices too high; better operators exist). I get what you are saying and you are correct about single company risk. The only reason i sell puts on individual names vs spy for example is the implied volatility is sometimes double that of spy. if WMT volatility was currently double spy i'm selling WMT premium (remember mexico scandal; ah sh*t so WMT's now going to 25? congress shuts down WMT?) come on mr market.

All i'm saying is that if you combine fundamental analysis with good stock selection I think you would come ahead of index premium sellers. So WMT valuation goes from 14 p/e to 7 p/e in market crash? ok, i'll sit while they retire 20% of the float.

 

[1245]

Quote from metameta:

I can't help it. AAPL, tech (ever changing). HPQ, tech (ever changing). BP, environmental tail risk (ever present). JCP, WMT/TGT/AMZN makes them obsolete (prices too high; better operators exist). I get what you are saying and you are correct about single company risk. The only reason i sell puts on individual names vs spy for example is the implied volatility is sometimes double that of spy. if WMT volatility was currently double spy i'm selling WMT premium (remember mexico scandal; ah sh*t so WMT's now going to 25? congress shuts down WMT?) come on mr market.

All i'm saying is that if you combine fundamental analysis with good stock selection I think you would come ahead of index premium sellers. So WMT valuation goes from 14 p/e to 7 p/e in market crash? ok, i'll sit while they retire 20% of the float.

I don't disagree with your strategy, just the idea that if I sell a naked put, I'd be happy to buy the stock if it drops. Only a Warren Buffet can say that and mean it.

 

[metameta]

Quote from optionbull:

I agree with you I just don't have account size.

I would like to look at doing this with T (ATT stock) as well.

I just think call spreads with that account size would work best.

Try call spreads with 10% of your account and give them time to mature.

Maybe sell a few puts.

Just start small until you understand the mechanics of everything you are doing.

I don't know just my two cents.

 

[metameta]

Quote from 1245:

I don't disagree with your strategy, just the idea that if I sell a naked put, I'd be happy to buy the stock if it drops. Only a Warren Buffet can say that and mean it.

but its so fun dammit