All my orders are GTC.
I don't place market orders.
Hence, i don't care where a stock is currently trading.
My analysis and trading is based on where I think a stock will trade.
Good luck with your market orders.
Break time!
understanding selling puts
- Thread starter regardspratik
- Start date
I don't place market orders.
Hence, i don't care where a stock is currently trading.
My analysis and trading is based on where I think a stock will trade.
Good luck with your market orders.
Break time!
But that is what a successful put seller is attempting to do. As a put seller you may be agnostic as to its current price but you are trying to say where it will not go (down 40% within 12 months, or 15% down in 60 days etc..)
Successful options traders tend to have a healthy dose of skepticism.
Take a company such as COH sell puts out in time and down in price well below current price after it has fallen hard already doesn't strike me as excessively risky. low leverage and spread out over dozens of high quality companies can achieve decent returns. If you only target high quality companies with at least stable ops and the price decline persists, private equity will take over and leave you short a put well below their buyout price placing you better off than the buyer o' puts (unless he was long the equity as well
.Euro news makes me happy i went flat 90% of my short puts last month.
Good luck tomorrow everyone, may we all make money from this whether long or short.
Quote from metameta:
<<< But that is what a successful put seller is attempting to do. As a put seller you may be agnostic as to its current price but you are trying to say where it will not go (down 40% within 12 months, or 15% down in 60 days etc..)
Successful options traders tend to have a healthy dose of skepticism. >>>
Well stated.
I really don't know why some want to make option investing so complicated, unpredictable, leveraged, and stressful.
<<< Take a company such as COH sell puts out in time and down in price well below current price after it has fallen hard already doesn't strike me as excessively risky. low leverage and spread out over dozens of high quality companies can achieve decent returns. If you only target high quality companies with at least stable ops and the price decline persists, private equity will take over and leave you short a put well below their buyout price placing you better off than the buyer o' puts (unless he was long the equity as well. >>>
COH is actually a pretty good example of your discussion in your 1st paragraph. It's currently trading at $50.40.
Personally, I'm waiting for COH to test the $46 area, and then consider selling a put with a strike of $38 - $40.
The strike, credit and annualized % return I get, will depend on what changes in VIX and IV occur between now and then, as the stock drops and time decays.
Bottom line..... assuming the stock actually drops, I'll have time to do a more detailed and updated stock and probability analysis.
As the stock deteriorates, I'll then get an idea of what the credit premium may be, relative to changes in VIX, IV, and theta, for the strike I desire.
I'll then have an idea of what % return I should shoot for, relative to where I think the stock will eventually trade, relative to the % otm safety cushion I desire, relative to the length of contract I select, ect....
Assuming everything eventually blends into place, I'll then place my GTC order and simply wait.
And if I don't like the more recently updated info/analysis, and/or stock/sector behavior, I'll cancel the GTC order.
Or if the stock doesn't drop enough, and/or the VIX/IV doesn't rise enough, there are planty of other stocks to consider.
Perhaps if put selling were more complicated, unpredictable, leveraged, and stressful, others might find it more appealing.
<<< But that is what a successful put seller is attempting to do. As a put seller you may be agnostic as to its current price but you are trying to say where it will not go (down 40% within 12 months, or 15% down in 60 days etc..)
Successful options traders tend to have a healthy dose of skepticism. >>>
Well stated.
I really don't know why some want to make option investing so complicated, unpredictable, leveraged, and stressful.
<<< Take a company such as COH sell puts out in time and down in price well below current price after it has fallen hard already doesn't strike me as excessively risky. low leverage and spread out over dozens of high quality companies can achieve decent returns. If you only target high quality companies with at least stable ops and the price decline persists, private equity will take over and leave you short a put well below their buyout price placing you better off than the buyer o' puts (unless he was long the equity as well. >>>
COH is actually a pretty good example of your discussion in your 1st paragraph. It's currently trading at $50.40.
Personally, I'm waiting for COH to test the $46 area, and then consider selling a put with a strike of $38 - $40.
The strike, credit and annualized % return I get, will depend on what changes in VIX and IV occur between now and then, as the stock drops and time decays.
Bottom line..... assuming the stock actually drops, I'll have time to do a more detailed and updated stock and probability analysis.
As the stock deteriorates, I'll then get an idea of what the credit premium may be, relative to changes in VIX, IV, and theta, for the strike I desire.
I'll then have an idea of what % return I should shoot for, relative to where I think the stock will eventually trade, relative to the % otm safety cushion I desire, relative to the length of contract I select, ect....
Assuming everything eventually blends into place, I'll then place my GTC order and simply wait.
And if I don't like the more recently updated info/analysis, and/or stock/sector behavior, I'll cancel the GTC order.
Or if the stock doesn't drop enough, and/or the VIX/IV doesn't rise enough, there are planty of other stocks to consider.
Perhaps if put selling were more complicated, unpredictable, leveraged, and stressful, others might find it more appealing.
Quote from piezoe:
<<< I don't see anything wrong with using an annualized return when comparing trades. No one expects to repeat the same trade ad infinitum to achieve that return. It's just a means of evaluating a particular trade...... >>>
Correct.
I use it as a comparative benchmark.
And also to be sure the trade yields above a certain minimum standard.
I don't want to tie up my cash, and take on risk, if I'm not going to earn above a certain minimum standard.
Some prefer using ROI.
A traders preference may depend on the type of trade being initiated and the length of contract.
But there really should be some "standard benchmark" used, to establish a certain absolute minimum return, and/or comparative analysis,.... before risking ones cash in the market.
<<< I don't see anything wrong with using an annualized return when comparing trades. No one expects to repeat the same trade ad infinitum to achieve that return. It's just a means of evaluating a particular trade...... >>>
Correct.
I use it as a comparative benchmark.
And also to be sure the trade yields above a certain minimum standard.
I don't want to tie up my cash, and take on risk, if I'm not going to earn above a certain minimum standard.
Some prefer using ROI.
A traders preference may depend on the type of trade being initiated and the length of contract.
But there really should be some "standard benchmark" used, to establish a certain absolute minimum return, and/or comparative analysis,.... before risking ones cash in the market.
sorry all for late reply. I didnt have internet access over the weekend.
I just wanted to know if its realistic for ppl to actually sell put if you are bullish on a stock. of course its not going to be easy, if it was everyone would do it.
abt the nok stock, again tht was jst an example. I will stick to buying call for the bullish stocks for now.
thnx all
I just wanted to know if its realistic for ppl to actually sell put if you are bullish on a stock. of course its not going to be easy, if it was everyone would do it.
abt the nok stock, again tht was jst an example. I will stick to buying call for the bullish stocks for now.
thnx all
If you are really bullish on a stock, then buying a call is the way to go.Quote from regardspratik:
sorry all for late reply. I didnt have internet access over the weekend.
I just wanted to know if its realistic for ppl to actually sell put if you are bullish on a stock. of course its not going to be easy, if it was everyone would do it.
abt the nok stock, again tht was jst an example. I will stick to buying call for the bullish stocks for now.
thnx all
But you'd better be right about it's movement, and you'd better be right in the time frame you selected.
If not, you lose money very easily.
The reason to sell a put is mostly because you want to select the specific price to "potentially" buy the stock at.
That being, you don't care about it's current price. You only want to buy it at your specific price.
If the stock does not trade down to your price, you do not have to buy it, and yet, you still get paid for simply offering to buy it.
So either way you are happy.
The downside is, if you select a price of $25, and it trades down to $19, you still have to buy it at $25.
Bottom line,.... you don't need to be bullish on a stock to sell a put, you only have to think it won't drop too much below the strike you selected.
Remember, theta (time decay) works against you when you buy options, like buying a call.
But theta works for you to your advantage, when you sell an option, like selling a put.
<<< COH is actually a pretty good example of your discussion in your 1st paragraph. It's currently trading at $50.40.
Personally, I'm waiting for COH to test the $46 area, and then consider selling a put with a strike of $38 - $40.
The strike, credit and annualized % return I get, will depend on what changes in VIX and IV occur between now and then, as the stock drops and time decays. >>>
Glad to see COH had a nice drop today.
Getting closer to the $46 area I'm hoping for.
I know it upsets certain individuals, that I don't just buy it where it trades or sell a put right now.
But since I'm investing with my money, not theirs, I prefer to do it the smart way.
Hopefully it will continue to drop, and I'll soon have an idea of what strike, credit, and expy date I can select, for the desired annualized % return, otm safety cushion, and high probability outcome.
It's true,... I really don't care where any stock is currently trading.
Personally, I'm waiting for COH to test the $46 area, and then consider selling a put with a strike of $38 - $40.
The strike, credit and annualized % return I get, will depend on what changes in VIX and IV occur between now and then, as the stock drops and time decays. >>>
Glad to see COH had a nice drop today.
Getting closer to the $46 area I'm hoping for.
I know it upsets certain individuals, that I don't just buy it where it trades or sell a put right now.
But since I'm investing with my money, not theirs, I prefer to do it the smart way.
Hopefully it will continue to drop, and I'll soon have an idea of what strike, credit, and expy date I can select, for the desired annualized % return, otm safety cushion, and high probability outcome.
It's true,... I really don't care where any stock is currently trading.
hmm...
Right back at ya.
I'm getting concerned for you, if you really prefer "market orders", over selecting the "blend" of strikes, credits, otm cushion, % return, ect... which you desire.
Apparently we have a different idea, of what the definition of a..... "high probability trade" is.
And how to best achieve it.
Your focus seems to be on maximizing a trades income "potential".
My focus is on maximizing the safety and "probability", of achieving the outcome I desire.
It's the age old battle between potential vs probability.