That's an excellent sentence, very good indeed ........ Have you considered going into politics?
My OPTION TRADES..... part 2
- Thread starter Put_Master
- Start date
That's an excellent sentence, very good indeed ........ Have you considered going into politics?
PM,
You did very well on Oct expirations. As of Friday expiration closing prices:
STK......Exp Close (10/19/2012)
ARO........13.19
ATVI........11.18
CNX.........35.21
IGT..........13.00
LRCX...... 35.37
TRLG.......25.88
WMS.......16.65
Looks like you kept all the premiums on those and your only
loss was small on the MRVL Nov 9 Puts.
Good job finishing out October expirations!
Jeff
Hi PM,
very enjoyable thread and enlightening for the options noob, and i even enjoyed the lulz.
one question: i believe you mention that you look for multi tested tech support levels when doing analysis for entries (strikes), how do you factor in the number of tests price has had (in the 5yr charts iirc)? i mean, the more touches (especially if recent) then do you see this as greater potential to break through and thus discount this as a significant level?
or perhaps price has slowly consolidated towards a key 5 year level in a weekly wedge or diamond formation indicating a potential breakout lower?
thks.
g/l.
very enjoyable thread and enlightening for the options noob, and i even enjoyed the lulz.
one question: i believe you mention that you look for multi tested tech support levels when doing analysis for entries (strikes), how do you factor in the number of tests price has had (in the 5yr charts iirc)? i mean, the more touches (especially if recent) then do you see this as greater potential to break through and thus discount this as a significant level?
or perhaps price has slowly consolidated towards a key 5 year level in a weekly wedge or diamond formation indicating a potential breakout lower?
thks.
g/l.
What is the lulz?
With respect to how i select my L-T tech support....
I keep it pretty simple.
For most stocks I use the 2 year chart.
For some if the one year is strong enough that I'm happy with the tested support, and the number of times tested, then that is enough.
And for some, I'll review the 5 year if the 1 - 2 year is a bit messy.
All I'm looking for is a general area of support at or near my strikes.
There can be deep dips below it, as long as the L-T chart shows general support in my area over time.
That being,... "value investors" tended to start buying when in that area.
Also, depending on how strong the stocks overall fundamentals are, also plays into how picky i am, in evaluating a stocks tech support, and how much flexibility I allow.
I also evaluate things like a stocks BETA, the companies dividend support, insider buy/selling, how long my contract is, ect.... They all play into a stocks potential support when it's dropping.
So I really don't have a simple answer for you. It's really more about the big picture for me.
A stock with a tech support that is a bit messy, will be given more flexibility by me, if they have a solid dividend, show insider buying, have stong fundamentals, a low BETA, earnings report is due AFTER my contract expires, or have a L-T history of meeting or beating their expectations, ect...
On the other hand, the weaker the fundamentals, and/or the more volatile the stock, ect.... the stronger and longer the tech support must be.
With respect to how i select my L-T tech support....
I keep it pretty simple.
For most stocks I use the 2 year chart.
For some if the one year is strong enough that I'm happy with the tested support, and the number of times tested, then that is enough.
And for some, I'll review the 5 year if the 1 - 2 year is a bit messy.
All I'm looking for is a general area of support at or near my strikes.
There can be deep dips below it, as long as the L-T chart shows general support in my area over time.
That being,... "value investors" tended to start buying when in that area.
Also, depending on how strong the stocks overall fundamentals are, also plays into how picky i am, in evaluating a stocks tech support, and how much flexibility I allow.
I also evaluate things like a stocks BETA, the companies dividend support, insider buy/selling, how long my contract is, ect.... They all play into a stocks potential support when it's dropping.
So I really don't have a simple answer for you. It's really more about the big picture for me.
A stock with a tech support that is a bit messy, will be given more flexibility by me, if they have a solid dividend, show insider buying, have stong fundamentals, a low BETA, earnings report is due AFTER my contract expires, or have a L-T history of meeting or beating their expectations, ect...
On the other hand, the weaker the fundamentals, and/or the more volatile the stock, ect.... the stronger and longer the tech support must be.
Its definition?
"lulz: Beginning as a plural variant of lol, Lulz was originally an exclamation but is now often used as a noun meaning interesting or funny internet content."
With respect to fundamentals, do you analyse in detail the company accounts? I am not trading equities at the moment, but am interested to what detail you wld go into.
One concern I would have in writing naked puts on stocks is with respect to the accounting practices...is it possible there are companies with hidden toxic (off) balance sheets eg Enron/Lehmans style? I know these are close to black swan events but share price could very quickly go to 0. Apparently a lot of the banks are not mark to marketing real estate foreclosures on their balance sheets. I am not suggesting you are privy to that info, just wondering if the accounting is considerably more transparent than in previous years, if you stay away from the 'risky' stocks etc.
Thanks for the response.
I am now enjoying Mr Shirleys thread.
Any company can hide stuff, or legally manipulate the numbers, if they want to. So it's always risky to go long any stock. Part of my analysis is looking for signs the company is manipulating the numbers, to make them look better than they actually are.
I sell puts naked because if I end up long, I want to pick the break even price I think is reasonable and/or recoverable, if the stock drops.
I generally don't invest in banks and real estate as that is a different world then I'm used to evaluating.
I am not a master in evaluating stocks. I just read a lot of books over the years, and have certain criteria I look for, in terms of how everything blends together to tell a story.
When one part of the story doesn't blend with other parts, that is a warning sign.
Just a few examples would be,.... the companies inventories are rising, they are paying their bills slower than usual, they are cutting back on R+D, they are selling assets, there is excessive insider selling, the ability to cover their debt obligations is considerably worse than their peers in the industry, the stock is heavily shorted, ect.....
A blend of some or all of the above would paint a negative picture, even if the stocks PE, PEG, cash flow, tech support ect looked reasonable. A stocks PE ratio or cash on hand means nothing, if you are not able to evaluate the quality and sincerity of how those numbers were arrived at. Were they real or legally manipulated?
So it's really all about the blend of criteria.
I evaluate about 50 items, trends, and ratios, to get a picture of what's going on.
No company is perfect. It's mostly a matter of determining whether the good stuff out weighs the negative stuff.
If investors are not willing to do some homework, it would not be wise to sell puts naked. Nor to take on excessive leverage, either via being naked or via spreads.
Hedging is often used in place of doing an analysis.
For me, doing an analysis is my hedge.
I'm usually correct. But not always.
I sell puts naked because if I end up long, I want to pick the break even price I think is reasonable and/or recoverable, if the stock drops.
I generally don't invest in banks and real estate as that is a different world then I'm used to evaluating.
I am not a master in evaluating stocks. I just read a lot of books over the years, and have certain criteria I look for, in terms of how everything blends together to tell a story.
When one part of the story doesn't blend with other parts, that is a warning sign.
Just a few examples would be,.... the companies inventories are rising, they are paying their bills slower than usual, they are cutting back on R+D, they are selling assets, there is excessive insider selling, the ability to cover their debt obligations is considerably worse than their peers in the industry, the stock is heavily shorted, ect.....
A blend of some or all of the above would paint a negative picture, even if the stocks PE, PEG, cash flow, tech support ect looked reasonable. A stocks PE ratio or cash on hand means nothing, if you are not able to evaluate the quality and sincerity of how those numbers were arrived at. Were they real or legally manipulated?
So it's really all about the blend of criteria.
I evaluate about 50 items, trends, and ratios, to get a picture of what's going on.
No company is perfect. It's mostly a matter of determining whether the good stuff out weighs the negative stuff.
If investors are not willing to do some homework, it would not be wise to sell puts naked. Nor to take on excessive leverage, either via being naked or via spreads.
Hedging is often used in place of doing an analysis.
For me, doing an analysis is my hedge.
I'm usually correct. But not always.
Sold puts on $17.5 ACTG for Dec.
Credit $0.40
Annualized % return.......... 14%
otm safety cushion... 24%
The 2 year chart below shows tech support in the $22 - $23 area, and the 5 year chart shows support again in the $17 area.
http://finance.yahoo.com/q/bc?s=ACTG&t=2y&l=on&z=l&q=b&c=
Fundamentals are mostly reasonable.
Credit $0.40
Annualized % return.......... 14%
otm safety cushion... 24%
The 2 year chart below shows tech support in the $22 - $23 area, and the 5 year chart shows support again in the $17 area.
http://finance.yahoo.com/q/bc?s=ACTG&t=2y&l=on&z=l&q=b&c=
Fundamentals are mostly reasonable.
Sold puts on $24 NTAP for Dec.
Credit $0.48
Annualized % return......... 12 - 13%
otm safety cushion 17%
Financially healthy company.
Reasonable L-T tech support in the $24 area per the 5 year chart below.
http://finance.yahoo.com/q/bc?s=NTAP&t=5y&l=on&z=l&q=b&c=
More near term, there is tech support in the $28 - 29 area, where it is currently trading.
http://finance.yahoo.com/q/bc?s=NTAP&t=6m&l=on&z=l&q=b&c=
Credit $0.48
Annualized % return......... 12 - 13%
otm safety cushion 17%
Financially healthy company.
Reasonable L-T tech support in the $24 area per the 5 year chart below.
http://finance.yahoo.com/q/bc?s=NTAP&t=5y&l=on&z=l&q=b&c=
More near term, there is tech support in the $28 - 29 area, where it is currently trading.
http://finance.yahoo.com/q/bc?s=NTAP&t=6m&l=on&z=l&q=b&c=
thks for the response and examples, its a lot of data you are dealing with. do you use any paid for services for fund' news or is it all widely available for free on the web?
and the reason for not writing naked calls is cos of the 'unlimited' upside?