multi-strategy options traders

failed_trad3r · May 5, 2010

Quote from xflat2186:

Ni kidding? wow.

the problem is the moment you collect your div on the stock the stock falls about the amount of the div and all you've done is create a taxable event. You collect the div and pay tax an the stock is now worth the same less the amount of the div, you've not made a dime.

this is a myth. the stock goes down not becoes the company is worth less. Its because other people dont want to pay more. the bid and ask shift thats all. the cash is real and tangible, unlike unrealized capital gains. the cash goes into your hand so you can invest it again. dividends are truly the work of god.

failed_trad3r · May 5, 2010

if youre not sure whether a stock will rise or drop, but pays steady dividends, covered calls and writing puts are the way to go.

MTE · May 5, 2010

Quote from failed_trad3r:

if youre not sure whether a stock will rise or drop, but pays steady dividends, covered calls and writing puts are the way to go.

In light of the thread you started here, I don't think you are qualified to give out any advice on options.

atticus · May 5, 2010

Quote from danshirley:

The guys who post here will tell you you can never make any money no matter what you do because everything is factored in. Baloney, often it is but not always. That's why you choose the stocks you make CC's on and the timing to maximize your chances. Also it works to hold a stock for long term to get dividends and the call writing enhances the dividend. I do it all the time.

I make money every quarter including some CC trades.

If you're right, then all you need to do is sell the put, buy the call and short the stock for certain arb-gains. They have been doing reversals in listed-options since 1973-74.

xflat2186 · May 5, 2010

Quote from failed_trad3r:

this is a myth. the stock goes down not becoes the company is worth less. Its because other people dont want to pay more. the bid and ask shift thats all. the cash is real and tangible, unlike unrealized capital gains. the cash goes into your hand so you can invest it again. dividends are truly the work of god.

Sorry but thats not a myth, and you're wrong.

Take for example a bigger div so the point is clear. A few years back MSFT issued a 2 dollar plus a share div. The moment trading ends on ex div day the stock falls byt the amount of the DIV. The company is not worth any less its just that the DIV is known and since there is no such thing as free money its priced into the stock. You could not simply buy the stock on x div day and collect the div then sell it the next day for the price you bought the stock. The stock falls by the amount of the div since its not going to be priced into the stock any more. The same goes for the calls and the puts. Despite the fact that the stock opens 2 dollars plus lower the next day the calls wont change in price nor will the puts since the div is priced into them.

spindr0 · May 5, 2010

Quote from atticus:

If you're right, then all you need to do is sell the put, buy the call and short the stock for certain arb-gains. They have been doing reversals in listed-options since 1973-74.

Paleeeezee, let's not confuse the self blogging lad with sophisticated concepts like arb concepts.

spindr0 · May 5, 2010

Quote from failed_trad3r:

this is a myth. the stock goes down not becoes the company is worth less. Its because other people dont want to pay more. the bid and ask shift thats all. the cash is real and tangible, unlike unrealized capital gains. the cash goes into your hand so you can invest it again. dividends are truly the work of god.

Another sheer genius moment on ET.

The stock went down because it went ex-dividend.

Coolio · May 8, 2010

Quote from ptrjon:

Hey all. I've been thinking a lot about different strategies and am thinking about beginning to trade using several different strategies. Long calls, long puts, short puts, and covered calls(for dividends). Does anyone else trade like this? Any thoughts?

These strategie are too similar. Take a look at calender spreads, verticals (debit and credit)

In a bear market , covered calls might be a disaster just make sure your stock is going up . There should always be a decent chance of getting called out and you should be happy about that.

I'm probably going to get called out on EGO but I sold $15 calls like 3 months in a row .. so not a bad deal, not a homerun, but not bad.