Joining the CME gang

booked little over $40k for May. insane, i know. but i just followed my setup..and increased the betting size accordingly. Will wait to see what the final month statement looks like.

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i've pretty much submitted to the dividend game. I'm not that smart to play with options right now

Before i thought that i need to diversify, putting money into different sectors. And i thought, why do i need to do that? It's better to just pick a company that pays dividends over decades and somewhat tracks the index.So i'm all in KO in shares only. It survived recessions and wars, so i feel comfortable just building into this company alone forever.

I'll buy every month if it's undervalued. dont' really care about teh capital gains..just want to build it up so i can pay few bills with the dividends.

I'll look for additional passive income sources elsewhere. cause God knows, how long i can keep up with this futures trading..it's a one hit wonder sometimes..


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If it’s ok with OP would appreciate at least one example from Dest
I mainly trade futures but struggled with stocks/option trades- always felt like gambling with no math behind it

thanks again
 
hilmy83 said:
i've pretty much submitted to the dividend game. I'm not that smart to play with options right now

Before i thought that i need to diversify, putting money into different sectors. And i thought, why do i need to do that? It's better to just pick a company that pays dividends over decades and somewhat tracks the index.So i'm all in KO in shares only. It survived recessions and wars, so i feel comfortable just building into this company alone forever.

I'll buy every month if it's undervalued. dont' really care about teh capital gains..just want to build it up so i can pay few bills with the dividends.

I'll look for additional passive income sources elsewhere. cause God knows, how long i can keep up with this futures trading..it's a one hit wonder sometimes..


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A interesting strategy that people do with a stable stock like KO is to sell calls with a strike above the current price then when they get called they buy back in by selling a cash secured put with a strike price below the current price. You have the potential to greatly enhance the dividend yield by doing this. You only have to know the ABCs of options to do this. Not complicated at all.
 
Illini Trader said:
A interesting strategy that people do with a stable stock like KO is to sell calls with a strike above the current price then when they get called they buy back in by selling a cash secured put with a strike price below the current price. You have the potential to greatly enhance the dividend yield by doing this. You only have to know the ABCs of options to do this. Not complicated at all.
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yea i know about covered calls and cash covered puts; nothing else.

i'm more inclined to try cash covered puts cause i don't run the risk of losing shares. i'm always long position. this is good strategy when market is flying and way overvalued.

If my covered call is exercise, and i lose 100x shares of stock, would the gain in premium compensate for loss in dividends over time?

plus you can never guarantee that i can buy back the shares with the puts if the market is super bullish.

Also having to manage these options on ongoing basis just contradict the whole point of the passive income approach.
 
destriero said:
The div is embedded. You're better off with the chicken than the egg. Start with the short put, get assigned, trade covered call, get flat (via covered assignment), repeat with short put.

Or better still (in this vol): Buy spot, stress synthetic straddle at neutrality, short 2x 25D calls (stressed position a go), cover all on a touch of short strike (or) buy deep strangle to fly it off at a credit. Repeat.
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Remember, he wants to keep the option part very simple so your first suggestion, which was also mine, is probably best for Hilmy.
 
The div is embedded. You're better off with the chicken than the egg. Start with the short put, get assigned, trade covered call, get flat (via covered assignment), repeat with short put.

So the div is embedded in the fwd. Otherwise you would buy shares, short the synthetic at the same price as the natural shares and have zero exposure. The arbitrage would net the dividend, risk free.

(in this vol): Buy spot, stress synthetic straddle at neutrality, short 2x 25D calls (stressed position a go), cover all on a touch of short strike (or) buy deep strangle to fly it off at a credit. Repeat.
 
I finally got the option level 2 approved by fidelity.

So the strategy i will implement going forward is to add cash covered put when KO price is less than 10% off the fair value i've calculated (currently $52.71). The strike price would be $47.40 (10% min discount) and i'll keep doing about monthly expiration until exercise.

If price stay below or drops further after the initial exercise, i'll be buying shares at market on monthly basis. until it gets to less than 10% discount. Then repeat the whole process again.

So in bull market, i'll make some cash. If market gets to be very bullish, i'll make peanuts due to fixed OTM strike.

I'm staying away from covered call cause I don't want to give up any shares.

Will see how this goes.

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