I am full in cash now even in 401K

hajimow · May 10, 2011

I am not happy the way market is moving and I believe a %5 correction in imminant. I like to sell ITM weekly put for SPY to generate some cash in 401K and sell OTM SPY Calls in my regular account.

newwurldmn · May 10, 2011

how is selling a put consistent with your view of an iminent 5% correction?

emg · May 10, 2011

Quote from hajimow:

I am not happy the way market is moving and I believe a %5 correction in imminant. I like to sell ITM weekly put for SPY to generate some cash in 401K and sell OTM SPY Calls in my regular account.

Gambling your 401K while the odds are more than 90% of small traders lose in a "Spectacular Fashion."

Don't your think gambling your 401K is "Spectacular?" Don't you think using a credit card is better?

hajimow · May 10, 2011

Quote from newwurldmn:

how is selling a put consistent with your view of an iminent 5% correction?

Many people have S&P ETF in their 401K and most of the MF underperform S&P. I sell ITM Puts so if the market drops, I am buying the market at lower price and if the market rallies, I am making a little. If the market tanks, I will lose but about 3% less than other people who hold MFs in their 401K.

newwurldmn · May 10, 2011

you could do nothing and wait until the market drops and then buy the spy or whatever.

hajimow · May 10, 2011

Quote from newwurldmn:

you could do nothing and wait until the market drops and then buy the spy or whatever.

If I were 100% sure that drop would happen soon, I would do that but in the market you can have an idea but you cannot sign it with your blood

Time will tell whther I am right or not. I appreciate your feedback.

hajimow · May 10, 2011

Quote from emg:

Gambling your 401K while the odds are more than 90% of small traders lose in a "Spectacular Fashion."

Don't your think gambling your 401K is "Spectacular?" Don't you think using a credit card is better?

I hear you. I will not gamble. I will not buy SLV or similar stuff. I want less profit and protection. If the market drops 20%, my account will drop 16% or less so I am not 100% protected. I cannot do much in my 401K.

itsame · May 10, 2011

Are you selling the front month puts? Are you always selling ITM puts?

You can sell the July 132 puts for 2.53 right now.

give you 1.87% return on your cash (assumed fully secured cash put)

and the market would need to go down 4.4% before you lose money (no commissions included).

hajimow · May 10, 2011

Quote from itsame:

Are you selling the front month puts? Are you always selling ITM puts?

You can sell the July 132 puts for 2.53 right now.

give you 1.87% return on your cash (assumed fully secured cash put)

and the market would need to go down 4.4% before you lose money (no commissions included).

I am doing weekly options. I get more by doing weekly options. Generally by selling puts I am protecting myslef by about 3-5% cushin and at the same time make some money.

hajimow · May 10, 2011

If you also look at the PUT premiums, they are way expensive than Calls. Market believes that the we have topped and the chance that it goes down is more than going up.