Conservative Options Trades

Do you do all these trades? when do you get out? do you wait till the end? (I guess you should because if you get out early, I believe your profit will halve because of the commission and slippage.
If you have all those trades, your account should be a mess (lots of positions).
 
I think I answered this question earlier but I will answer again:

In my mind there are several steps to creating my portfolio. This is just one step.... trade discovery. My portfolio may or may not be ready to take in the trade.

I usually carry between 10 and 20 positions in my portfolio at a time... I actually have two different portfolios with 10 to 20 positions each.

It is just a matter of creating you own mutual fund and is not that hard. If there was a mutual fund that did what I do I would just buy the fund. It would be much harder if I didn't restrict myself to the most stable stocks and use positions that are very high probability positions. These are stocks I don't have to worry about, and if they become worrysome I tend to quickly liquidate the trade.

In creating the portfolio from the trades I consider things like correlation between positions and use positions in bonds and inverse ETF's to strike a risk balance.

I review the portfolio every day and it takes less than an hour using two screens and walking through graphs and headlines on YAHOO.

I try to let the trades expire for reasons you noted.

Please also note that I do not intend to record here whether or not the trade is taken, nor when the trade is ended. Also I am not interested in having prolonged conversations about these trades or my methods... and I make heavy use of the ignore function to keep the flow clean for my review.

If my trades interest you fine... if not please pass them by.
 
Quote from danshirley:

I think I answered this question earlier but I will answer again:

In my mind there are several steps to creating my portfolio. This is just one step.... trade discovery. My portfolio may or may not be ready to take in the trade.

I usually carry between 10 and 20 positions in my portfolio at a time... I actually have two different portfolios with 10 to 20 positions each.

It is just a matter of creating you own mutual fund and is not that hard. If there was a mutual fund that did what I do I would just buy the fund. It would be much harder if I didn't restrict myself to the most stable stocks and use positions that are very high probability positions. These are stocks I don't have to worry about, and if they become worrysome I tend to quickly liquidate the trade.

In creating the portfolio from the trades I consider things like correlation between positions and use positions in bonds and inverse ETF's to strike a risk balance.

I review the portfolio every day and it takes less than an hour using two screens and walking through graphs and headlines on YAHOO.

I try to let the trades expire for reasons you noted.

Please also note that I do not intend to record here whether or not the trade is taken, nor when the trade is ended. Also I am not interested in having prolonged conversations about these trades or my methods... and I make heavy use of the ignore function to keep the flow clean for my review.

If my trades interest you fine... if not please pass them by.
More...
I read the few pages of this thread and then the last few pages. I did not go through all the pages so I did not know that you had already answered my questions. It is like the approach that I take and I have been very profitable. Your method is more conservative than mine and that makes it more interesting. I also wish we had some ETFs that were following strategies like yours. But unfortuanately we have lots of mutual funds just holding AAPL, MSFT, CSCO, WMT,.... This way the manager relaxes and collects his 1% managemnet fee on 10B dollars and do nothing. By the way, good luck in your tradings.
 
AWR:
http://finance.yahoo.com/news/american-states-water-company-announces-120000807.html

http://finance.yahoo.com/q/ks?s=AWR+Key+Statistics

http://investing.money.msn.com/investments/financial-statements?symbol=AWR

http://finance.yahoo.com/q/bc?s=AWR&t=5y&l=on&z=l&q=l&c=

Trade:
Sell the Dec $30 put for a net credit of $75 with the intent of being put at $30 and subequently selling covered calls.
Yield = 75/2925 = 2.56% in 229 days or 4.1% annualized.

Covered calls to day yield around 4% annualized plus a dividend of 3.1% gives a net of 7% annualized.
 
 
NWN:

http://finance.yahoo.com/news/nw-natural-reports-solid-first-100000176.html

http://finance.yahoo.com/q/bc?t=5d&s=NWN&l=on&z=l&q=l&c=&ql=1&c=^GSPC

http://investing.money.msn.com/investments/financial-statements?symbol=nwn

http://finance.yahoo.com/q/ks?s=NWN+Key+Statistics

http://finance.yahoo.com/q/bc?t=5y&s=NWN&l=off&z=l&q=l&c=&ql=1&c=^GSPC

http://finance.yahoo.com/q/bc?s=NWN&t=5y&l=off&z=l&q=l&c=

Trade:
With NWM at 45.88
Sell the Dec 45 put for $185 with the intent of being put and subsequently selling covered calls and collecting dividend.
The CC is anticipated to yield 4.3% annualized plus a dividend of 3.8% should give an annual yield of 8.1% total.

The yield on the naked short put is 185/4315 = 4.3% in 227 days or 6.9% annualized.
 
Quote from danshirley:
NWN:
With NWM at 45.88
Sell the Dec 45 put for $185 with the intent of being put and subsequently selling covered calls and collecting dividend.
The CC is anticipated to yield 4.3% annualized plus a dividend of 3.8% should give an annual yield of 8.1% total.

The yield on the naked short put is 185/4315 = 4.3% in 227 days or 6.9% annualized.
More...
I am trying to undestand the logic of these trade (the thread caught my attention) and how you come up with the stocks to sell puts on.

Do you use some sort of fundamentals screen to select candidates for these trades? When you are making determination of selling X strike/expiry put, do you look at vol, at B/E stock level or if you like the stock and don't mind owning it? Also, what is the logic of selling virtually ATM put - are you using it as a limit order?

E.g. NWN is a low beta stock (so, a good candidate in my book) but the implied vol is pretty low too and the implied/realized ratio is not in the favor of selling. Just sayin...
 
 
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