Returns on margin or notional or some kind of drop loss?
Isn't buying dividend paying stocks for chumps?
- Thread starter Saltynuts
- Start date
Returns on margin or notional or some kind of drop loss?
Return on capital. They are range bound, sell otm puts close to the mean or below, and especially around 52 week low. If assigned i'll hold until ex-dividend date, then sell otm call. Buying stock to dollar cost average when stock drops, then sell otm call.
Capital can be levered (or margin) or notional.
Suppose you sell a 95 strike put (100 stock price) for 1 dollar. Margin is 20 dollars and notional is 100 dollars. Is return 5percent or 1percent?
My calc is based on capital. However, you may calculate whichever way you like.
For a particular trade what is the capital that you employ? Margin or dollar amount if you were exercised or something else?
I sell otm put to be assigned. Most of the time cash, occasionally margin. It's there to be used methodically. As it should be.
Buffet buys preferred convertible preferred paying 7 to9% dividend in private deals while he waits for the turnaround in a troubled company. he also sells way out of the money puts for added income and/or assignment while becoming a buyer at bargain prices.
Buffett knows the value of a dollar in his hands.
Buffett knows the value of a dollar in his hands.
the short answer is - yes
the long answer is - in the income to growth spectrum, you have bonds, preferred stocks, div stocks, growth stocks... if all investors are rational, then everything should be priced 'fairly' in relation to each other. However, recent years after the 2008 crash, as interest rate dropped so low, many people have been hungry for yield had have chased bonds to ridiculous levels... and div stocks are somewhat guilty as well. so in the current environment, the income side is over valued while the growth side is under valued.
the long answer is - in the income to growth spectrum, you have bonds, preferred stocks, div stocks, growth stocks... if all investors are rational, then everything should be priced 'fairly' in relation to each other. However, recent years after the 2008 crash, as interest rate dropped so low, many people have been hungry for yield had have chased bonds to ridiculous levels... and div stocks are somewhat guilty as well. so in the current environment, the income side is over valued while the growth side is under valued.
You want me to put a ribbon on it for you. Took me years to develop a consistent trading methodology and i'm to give it away in summary. You most likely wouldn't get anyway. According to the op, i'm a chump...