My OPTION TRADES..... part 2

Quote from Put_Master:

Sold puts on $13 IGT for Sept.
Credit $0.30
Annualized % return.... 14%

WARNING..... Earnings due out after the close.

On a negative note, the number of shares being shorted have doubled over the past month.
However, the % of shares being shorted remain at a reasonable 7.6%
Another negative, is the company has more debt than I'd like to see.
However, their "interest coverage", (ability to pay their debt), remains at a reasonable 4.3 times.

Technically, I like their support in the $13 - $14 area, per the 2 year chart below.
Hence my strike of $13, with a BE of $12.70
http://finance.yahoo.com/q/bc?s=IGT...l=on&z=l&q=b&c=
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above $13 IGT naked put trade was put to me, so I have now sold a $12 covered call for Nov.
Credit $1.25

Given that I dropped my strike from $13 to $12 for the covered call, I'm effectively only earning a credit of $0.25.
Thus my annuaiized % return on this trade will be..... 14%
 
Quote from Put_Master:

Sold puts on $13 IGT for Sept.
Credit $0.30
Annualized % return.... 14%

WARNING..... Earnings due out after the close.

On a negative note, the number of shares being shorted have doubled over the past month.
However, the % of shares being shorted remain at a reasonable 7.6%
Another negative, is the company has more debt than I'd like to see.
However, their "interest coverage", (ability to pay their debt), remains at a reasonable 4.3 times.

Technically, I like their support in the $13 - $14 area, per the 2 year chart below.
Hence my strike of $13, with a BE of $12.70
http://finance.yahoo.com/q/bc?s=IGT...l=on&z=l&q=b&c=
More...

You could not have sold Sept puts because they expired on Sat.

Your link does not work. Here's one that does:
http://finance.yahoo.com/q/bc?s=IGT&t=1y&l=on&z=l&q=l&c=

There is no longer 'support' at 13/14 since it was crashed through in July.
 
Quote from oldnemesis:

Quote from Put_Master:



You could not have sold Sept puts because they expired on Sat.

Your link does not work. Here's one that does:
http://finance.yahoo.com/q/bc?s=IGT&t=1y&l=on&z=l&q=l&c=

There is no longer 'support' at 13/14 since it was crashed through in July.
More...
The $13 IGT put was sold more than a month ago. It expired Sat.
The top half of my post was a copy of the post i made on Ryan's MY OPTION TRADE thread.
I copied it over to this thread, so readers could read the context of why i am now selling a $12 IGT covered call on it.
If you re-read my IGT post above, you will see the top half was the old naked put post,... and the bottom half was the new covered call post.

As for there no longer being tech support at $13,.... that is why I lowered my strike from 13 to 12 for the new covered call trade of today, .... with it's $1.25 credit.
(Since i lowered my strike by $1.00, my actual credit is only $0.25.... for an annualized % return of 14%.)
I think you may have missed the bottom half of my IGT post above.
 
Sold naked put on $30 LRCX for Nov.
Credit $0.70
Annualized % return.... 16%.

Financially healthy company, and reasonably valued at my strike, with a BE price of $29.30
The 5 year chart below shows tech support in the $29 - $30 area.
http://finance.yahoo.com/q/bc?s=LRCX&t=5y&l=on&z=l&q=b&c=

Be aware.... earnings come out in a few weeks on Oct 15.

I currently have an active $31 LRCX for October.
Now this $30 LRCX for November.
 
Quote from oldnemesis:


You could not have sold Sept puts because they expired on Sat.
More...

I believe he made that trade some time ago and was probably put the stock this week. That is the way I interpreted his post anyway.
 
You are correct.
I was put the Oct 13 naked put Sat, and have now sold a Nov $12 covered call for $1.25.
I really didn't make it as clear as i should have.
Unfortunately, I shared the original $13 trade on Ryan's thread and merely copied it over to this thread.
Thus, I made the context of the trade confusing.
 
LRCX:
At expiration, Cash account:
Nov:
.........................Short Put.......................30/25 Bull Put Spread.......
...........................1 contract..........................2 contracts
Req:....................2,930....................................890........................
Price...............................................................................................Prob>
20.......................(930)......(32%)....................(890)....(100%)..........99%
25.......................(430)......(15%)....................(890)....(100%)..........98%
30.........................70......2.3%.......................110........12%..............69%
35.........................70......2.3%.......................110........12%..............20%
Moment.................30.4..................................49.1

Bull put spread is a better trade by the numbers.

ref:
http://www.amazon.com/s/?ie=UTF8&ke...hvpone=&hvptwo=&hvqmt=e&ref=pd_sl_fa10plphh_e

Moment Calc:
Nkd Put: .69(70) - .02(430) - .01(930) = 48.3 - 8.6 - 9.3 = 30.4
Spread: .69(110) - .02(890) - .01(890) = 75.9 - 17.9 -8.9 = 49.1
 
I don't know what a moment calc is, or where you got some of the numbers for the moment calc.
What is it?

I sold 10 contracts to earn $700.
My goal is to earn $700.
If you are going to compare your spread to my naked put, then you need to earn a similar dollar amount as my naked put.
We all have different commissions, so set that aside. But you need to earn the same $700.
I'm not investing for fun. I do it to earn dollars.
Stores I go to don't accept % return. They want dollars.
So compare dollars to dollars.
Therefore, assuming our goal is to earn $700....

Compare your total potential cash risk to mine if the stock drops $27 - 29.
Compare your plan "B" to mine, if the stock drops 27 - $29.
Compare your potential gain/loss to mine, the day after the stock drops $27 - 29 on monday, following exp.

If the stock drops to $10, 15, or 20 I'll wish i were in a spread. But otherwise, I'd rather be naked and own the stock, vs taking a loss.
 
Just for a bit of context.
If you are investing in stocks obviously over valued, over debted, and with a history of being excessively volatile..... I would NEVER recommend a naked put.
Only spreads are suitable for those situations.
So I don't want to give the impression i am anti spread.
I am only anti excessive margin leverage of spreads.
A spread may not be a bad trade for LRCX, as it is not an excessively high priced stock and strike.
Thus, managing and dealing with the consequences of excessive margin, may not be that much of an issue for a $30 LRCX spread.
 
Quote from Put_Master:
If you are investing in stocks obviously over valued, over debted, and with a history of being excessively volatile..... I would NEVER recommend a naked put. Only spreads are suitable for those situations.
More...


Name one stock that fits that description. I'm not interested in past examples, I want something current.



:)
 
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