Managing Funds for a Living
- Thread starter paysense
- Start date
- Status
Naked put trades during a downtrend???Good trades to all this morning (it's 9 am LA time) and day. By design the specific approach I developed doesn't require exhaustive monitor-staring. Great for engineers, and various working man professions and jobs.
I simply wake up when I do...roll over look at my cell phone at the finance new of the day, read the pre-market futures to fair value numbers and nineteen times out of twenty go back to sleep.
If things are a bit tight for a particular position (like this morning with AKS) I pull up my portfolio quotes at the open (hopefully wake up about right then), see how things progress for about 5-10 minutes and nine times out of ten go back to sleep for a half or 1 hour more.
If a position is near or at my 'breakeven' (stock purchase less short option price) I look at news, volume, support, market etc. and most always cut bait. Right now I still holding AKS although it ever-so-briefly hit my stop-point.
Then I wash my face...get a cup of coffee, and play all day.
I really appreciate the helpful posts. Like I say...I am not married nor do I have my own children, so I likely will be playing in this sandbox for months on end.
I am and will continue to generate C2 audit. I've been doing this for a while and the results truly do have merit - despite others that feel it could be done better. I can list you covered call company website, Buy-Write indexes, etc. that have never been able to display success from the purported 'potential' from covered calls.
Many outfits make lots of money and are run by so-called high profile industry pros like compoundstockearnings.com. Yeah, they pulled the plug quick on their 'real-time' covered call fund webpage started last year proposing modest goals of achieving x% per month, blah, blah, blah. When summer hit they held their positions and well that was the end of that.
Doesn't stop them from continuing in business all around the nation with radio shows talking up covered calls and seminars charging thousands of dollars to hear about it. So much for the experts.
That being said covered calls will be the instrument of choice...you are right naked "call" trades will be posted here and likely on C2 when we move into correction mode. Also I will likely separately do the naked put strategy in place of covered calls that I've already tested many years back that works well.
As far as collars (which I am familiar), for me and what I do I would only use these with certain biotech holdings to prevent the 1-2 large drawdowns I experience in my funds each year. I don't need the precautionary measure and average annual returns would be more than a bit lower.
Also let's investigate with what has been put forward here as a better (ie synthetic) approach to what I do. Show me more black-'n'-white like how much will be gained in interest, etc.
In the meantime, yesterday's market drop was on a slight pickup in volume for the NYSE and Dow - not for the Nasdaq. Today thus far looks about the same.
Market leaders (AAPL, RIMM, AMZN) are being strongly bought today and so are many highly-rated companies. So is AKS's decline stock specific or market-related?
Still a bit of short option premium to cut now may cut AKS at around 33.4-33.5.
Can move into IOC which looks good at 39.1 x 1.95 for a 6.5 day holding. More often than not...when my positions get cut the market is about to correct so I don't want to be to impulsive to try and recapture gains from AKS that if cut would be a loss, by going quickly into IOC. We'll see.
Paysense aka GIlL
I simply wake up when I do...roll over look at my cell phone at the finance new of the day, read the pre-market futures to fair value numbers and nineteen times out of twenty go back to sleep.
If things are a bit tight for a particular position (like this morning with AKS) I pull up my portfolio quotes at the open (hopefully wake up about right then), see how things progress for about 5-10 minutes and nine times out of ten go back to sleep for a half or 1 hour more.
If a position is near or at my 'breakeven' (stock purchase less short option price) I look at news, volume, support, market etc. and most always cut bait. Right now I still holding AKS although it ever-so-briefly hit my stop-point.
Then I wash my face...get a cup of coffee, and play all day.
I really appreciate the helpful posts. Like I say...I am not married nor do I have my own children, so I likely will be playing in this sandbox for months on end.
I am and will continue to generate C2 audit. I've been doing this for a while and the results truly do have merit - despite others that feel it could be done better. I can list you covered call company website, Buy-Write indexes, etc. that have never been able to display success from the purported 'potential' from covered calls.
Many outfits make lots of money and are run by so-called high profile industry pros like compoundstockearnings.com. Yeah, they pulled the plug quick on their 'real-time' covered call fund webpage started last year proposing modest goals of achieving x% per month, blah, blah, blah. When summer hit they held their positions and well that was the end of that.
Doesn't stop them from continuing in business all around the nation with radio shows talking up covered calls and seminars charging thousands of dollars to hear about it. So much for the experts.
That being said covered calls will be the instrument of choice...you are right naked "call" trades will be posted here and likely on C2 when we move into correction mode. Also I will likely separately do the naked put strategy in place of covered calls that I've already tested many years back that works well.
As far as collars (which I am familiar), for me and what I do I would only use these with certain biotech holdings to prevent the 1-2 large drawdowns I experience in my funds each year. I don't need the precautionary measure and average annual returns would be more than a bit lower.
Also let's investigate with what has been put forward here as a better (ie synthetic) approach to what I do. Show me more black-'n'-white like how much will be gained in interest, etc.
In the meantime, yesterday's market drop was on a slight pickup in volume for the NYSE and Dow - not for the Nasdaq. Today thus far looks about the same.
Market leaders (AAPL, RIMM, AMZN) are being strongly bought today and so are many highly-rated companies. So is AKS's decline stock specific or market-related?
Still a bit of short option premium to cut now may cut AKS at around 33.4-33.5.
Can move into IOC which looks good at 39.1 x 1.95 for a 6.5 day holding. More often than not...when my positions get cut the market is about to correct so I don't want to be to impulsive to try and recapture gains from AKS that if cut would be a loss, by going quickly into IOC. We'll see.
Paysense aka GIlL
I been looking at the VIX and the VXN (Cboe Volatility Index) as a fear guage.
Notice that past market declines coincided with this index - it did so last summer and in late-Feb. I put an alert at 15 and 18 for the vix and vxn, respectively.
They are now jumping. That tells me things may indeed be changing and to be cautious.<<<<<<<<<<<
Couldn't even finish my post AKS went through at 33.17 x .6
Could've caught at a more respectable 33.7 x .7 earlier...but who cares? My web postings and 'real-time' trades alerts are executed by members sometimes at better prices sometimes worse - but the key is to follow all trades, so graph is near-exact to mine.
So am I starting C2 at the exact top of the market? Lol probably. Do we care? No, since I may get a jump on being in cash while the market and others crash. If it this does indeed turn out to be a good correction, our standard entry will again make this dummy look like a genius. Paysense
Now to look at the NYSE and Nasdaq volume for this decline to anticipate a further stop. It a lot easier to be patient and make no money now - knowing what you can do later.
Notice that past market declines coincided with this index - it did so last summer and in late-Feb. I put an alert at 15 and 18 for the vix and vxn, respectively.
They are now jumping. That tells me things may indeed be changing and to be cautious.<<<<<<<<<<<
Couldn't even finish my post AKS went through at 33.17 x .6
Could've caught at a more respectable 33.7 x .7 earlier...but who cares? My web postings and 'real-time' trades alerts are executed by members sometimes at better prices sometimes worse - but the key is to follow all trades, so graph is near-exact to mine.
So am I starting C2 at the exact top of the market? Lol probably. Do we care? No, since I may get a jump on being in cash while the market and others crash. If it this does indeed turn out to be a good correction, our standard entry will again make this dummy look like a genius. Paysense
Now to look at the NYSE and Nasdaq volume for this decline to anticipate a further stop. It a lot easier to be patient and make no money now - knowing what you can do later.
You see once you've traversed with these gains for a year or two, your value may have increased substantially. For example...you took $60,000 and made each trade for 9 months and jumped to $90,000 less commissions. Now being confident, by adding another $50,000 and doing the same exact thing you are up to about $200,000. You took about a tenth your million dollar net worth and now are managing 20% your net worth. These same trades after 1.75 yrs has given a confidence boost.
So now you are "just" up 10% the last 5 months and may have to sit on cash for anothor 3-5 months. However, preserving the $200,000 during this period is HUGE compared to losing 40k back, playing around unknowingly.
You are actually hoping for a 15% tank to the benchmarks since this (ok say 185k) can be leveraged powerfully into another 150k+ in a rather safe manner...
So now you are "just" up 10% the last 5 months and may have to sit on cash for anothor 3-5 months. However, preserving the $200,000 during this period is HUGE compared to losing 40k back, playing around unknowingly.
You are actually hoping for a 15% tank to the benchmarks since this (ok say 185k) can be leveraged powerfully into another 150k+ in a rather safe manner...
Anyone concur with stats from this recent quip:
"...volume was sharply below yesterday's weak levels on both exchanges, which was a silver lining amid the selling."
I'm seeing heightened NYSE trade.
Perhaps this will be another 'buying' opportunity...either way the distribution days are adding up.
With the days end approaching, it's feast or famine with the daytraders in ET land. It may soon be time for me to dust off the naked index option strategy.
I'd bet we'll go lower. Er um, I'll take (a sell) x amount of djx and spx call options, no give me july's at say 138 and 1550, respectively. How much you say, hmmmm....ok 150k's worth (total) in my 1M account - after all I need to make $$$ during downturns or money will run. QUICK!! Gimme my money! We can add NDX later for another 100k if this indeed is the vaultingly lower market.
Don't forget my stops at 35% less value. (I forget what number I used). Well we can work it out.
I'll admit, at this I am a novice.
Paysense
"...volume was sharply below yesterday's weak levels on both exchanges, which was a silver lining amid the selling."
I'm seeing heightened NYSE trade.
Perhaps this will be another 'buying' opportunity...either way the distribution days are adding up.
With the days end approaching, it's feast or famine with the daytraders in ET land. It may soon be time for me to dust off the naked index option strategy.
I'd bet we'll go lower. Er um, I'll take (a sell) x amount of djx and spx call options, no give me july's at say 138 and 1550, respectively. How much you say, hmmmm....ok 150k's worth (total) in my 1M account - after all I need to make $$$ during downturns or money will run. QUICK!! Gimme my money! We can add NDX later for another 100k if this indeed is the vaultingly lower market.
Don't forget my stops at 35% less value. (I forget what number I used). Well we can work it out.
I'll admit, at this I am a novice.
Paysense
>>BULLETIN: DOW FALLS 198 POINTS, 400 IN THREE DAYS.
Cbs.Marketwatch.com
Late in the session I unwound a second position, JADE - halving the exposure I started the day with.
Due to my recent cash buildup, I am now only 20.7% vested.
I only recently entered 2 positions at C2. Both AKS and JADE were unwound today.
The benchmarks did close at the lows - breaching several support and 'psychological' levels, as a worsening session pushed both the S&P 500, Dow, NYSE and Nasdaq closer to their 50-day moving average lines on accelerated selling.
Hmmm, how are those late-session naked options purchases doing...eroding fast = money in the bank!
15:30 pm EST
DJX at 133.45
STO (455) DJYGG Jul 137's @1.1
or $50,000
SPX at 1500
STO (90) SXMGI Jul 1545's @ 11
or $100,000
I realize it is too late to start a C2 account with these trades, but it's been 5 years since I've deployed this strategy so this may be just a running start. Any help with actual margin requirements/breaches would shed some light.
In other words could 150k have been brought in a 1M account at these prices? I'm thinking ok. How much am I currently margined with this virtual trade?
If market further tanks perhaps the (way) OTM NDX calls can be sold short.
...and uh, I remember now - my stop-loss target was about 50% - not 35% as stated previously.
Yes...it's all coming back to me, lol. Awful quiet on the ET front, - I'm thinking more than a few head-scratching events have transpired.
PayS
Cbs.Marketwatch.com
Late in the session I unwound a second position, JADE - halving the exposure I started the day with.
Due to my recent cash buildup, I am now only 20.7% vested.
I only recently entered 2 positions at C2. Both AKS and JADE were unwound today.
The benchmarks did close at the lows - breaching several support and 'psychological' levels, as a worsening session pushed both the S&P 500, Dow, NYSE and Nasdaq closer to their 50-day moving average lines on accelerated selling.
Hmmm, how are those late-session naked options purchases doing...eroding fast = money in the bank!
15:30 pm EST
DJX at 133.45
STO (455) DJYGG Jul 137's @1.1
or $50,000
SPX at 1500
STO (90) SXMGI Jul 1545's @ 11
or $100,000
I realize it is too late to start a C2 account with these trades, but it's been 5 years since I've deployed this strategy so this may be just a running start. Any help with actual margin requirements/breaches would shed some light.
In other words could 150k have been brought in a 1M account at these prices? I'm thinking ok. How much am I currently margined with this virtual trade?
If market further tanks perhaps the (way) OTM NDX calls can be sold short.
...and uh, I remember now - my stop-loss target was about 50% - not 35% as stated previously.
Yes...it's all coming back to me, lol. Awful quiet on the ET front, - I'm thinking more than a few head-scratching events have transpired.
PayS
Hey I'm not the only one who gets it wrong...
U.S. stock futures point to recovery on Wall St.
Thu Jun 7, 2007 5:27am ET
LONDON, June 7 (Reuters) - U.S. stock futures rose on Thursday, suggesting investors may use this week's sell-off to buy back into equities even with bond yields at nine-month highs as worries mount over rising interest rates.
U.S. stock futures point to recovery on Wall St.
Thu Jun 7, 2007 5:27am ET
LONDON, June 7 (Reuters) - U.S. stock futures rose on Thursday, suggesting investors may use this week's sell-off to buy back into equities even with bond yields at nine-month highs as worries mount over rising interest rates.
No, this would require margin something to the tune of >$3,000,000 in a retail account.
I'm gonna help you out a bit more too since the talk about synthetics seems to be completely unfamiliar to you.
A covered call and a naked put are the exact same thing. Hence the term "synthetic equivalents". In simple terms:
Buy 100 share XYZ @ $50
Sell 1 JUL 55 call @ $2.50
Buying power used = ~$2,375
Commission = $5
This is the exact same thing as:
Sell 1 JUL 55 put @ $7.50
Buying power used = ~$800
Commission = $0.75
The two positions make/lose the exact same amount under any and all circumstances. They are equal until you consider that commission for the covered call is almost 7 times that of the naked put. Similarly, buying power used for the covered call is almost 3 times that of the naked put.
Let's figure that we can make this trade 8 times per year and a 5% risk free rate. If we compare annual returns side-by-side:
Covered Call
Max Annual ROI using 100% of capital = 787% compounded
Naked Put
Max Annual ROI with same lot size as CC = 820% compounded
So you can see why we were saying that the covered call is inferior to the naked put. The risk of the two is exactly the same, but the commission savings and buying power usage allow for additional investment in risk free vehicles. You are giving up 4% of your returns for no reason.
thx CL
So what % of 150k (naked call premium) would be (~) allowed in 1M retail account?
Also, ~1/3 less buying power needed for naked put sell equates to equal risk?
Yes...it's free money if I am so sure of market and stock and we never fluctuate down (not a real-life scenario).
Stock will naturally fluctuate with these premiums quite likely below my comfort or 50-2.5 or 47.5 - (near) breakeven.
Naked put becomes ITM (not sure if right term) to likely drop 2.5 or now be priced at 10. Huge percent (33.3%) loss unless I'm comfortable holding longer to maybe go up (which I'm not unless a broader instrument like my earlier posts).
Big risk. Granted it is a large percent loss to position but to portfolio is the same as if I just owned the stock and it fell 2.5 - not like CC which as stated above is breakeven.
To me commissions are a non-factor with a somewhat larger account. I don't look at these individual trade impacts since I plan on 1/5 of 1M being in AAPL etc.
Also exactly what am I gonna get even with 50% of 1M available buying power making interest?
I will look into ROI figures and 'giving up 4%', but I gotta go tonite.
again thx Ps
So what % of 150k (naked call premium) would be (~) allowed in 1M retail account?
Also, ~1/3 less buying power needed for naked put sell equates to equal risk?
Yes...it's free money if I am so sure of market and stock and we never fluctuate down (not a real-life scenario).
Stock will naturally fluctuate with these premiums quite likely below my comfort or 50-2.5 or 47.5 - (near) breakeven.
Naked put becomes ITM (not sure if right term) to likely drop 2.5 or now be priced at 10. Huge percent (33.3%) loss unless I'm comfortable holding longer to maybe go up (which I'm not unless a broader instrument like my earlier posts).
Big risk. Granted it is a large percent loss to position but to portfolio is the same as if I just owned the stock and it fell 2.5 - not like CC which as stated above is breakeven.
To me commissions are a non-factor with a somewhat larger account. I don't look at these individual trade impacts since I plan on 1/5 of 1M being in AAPL etc.
Also exactly what am I gonna get even with 50% of 1M available buying power making interest?
I will look into ROI figures and 'giving up 4%', but I gotta go tonite.
again thx Ps
- Status