Fills

[Eric]

Mostly because I haven't dabbled in selling puts/calls so I have no idea how this all transpires
I understand buying calls/puts quite well. When you talk about selling the put, is this a weekly put or should we be selling months/years down the road?

I would recommend selling from 1 to about 45 days out till expiration, that's where time value is decaying fastest and your annualized return will be highest. The dollar amounts are smaller but compounding more frequently. You might also want to avoid selling a put on the other side of an earnings report and know a little about the pricing history of your put before offering to sell it.

I have a friend that is considering selling 1 day puts as a large portion of his trading strategy on a stock that he knows inside-out and sideways (he listens to every conference call, and every government regulatory meeting and has been doing so for many years). His theory is that he knows the daily patterns this stock trades in, he knows the open interest, he knows the area of max-pain. He is confident he can sell a Friday put every Thursday and rarely ever get shares assigned, but if they do get assigned he is fully okay with that because this stock is essentially his only "core" holding and the cash to secure the puts was actually obtained by selling already owned shares.

[Budge]

Mostly because I haven't dabbled in selling puts/calls so I have no idea how this all transpires
I understand buying calls/puts quite well. When you talk about selling the put, is this a weekly put or should we be selling months/years down the road?

I would recommend selling from 1 to about 45 days out till expiration, that's where time value is decaying fastest and your annualized return will be highest. The dollar amounts are smaller but compounding more frequently. You might also want to avoid selling a put on the other side of an earnings report and know a little about the pricing history of your put before offering to sell it.

I have a friend that is considering selling 1 day puts as a large portion of his trading strategy on a stock that he knows inside-out and sideways (he listens to every conference call, and every government regulatory meeting and has been doing so for many years). His theory is that he knows the daily patterns this stock trades in, he knows the open interest, he knows the area of max-pain. He is confident he can sell a Friday put every Thursday and rarely ever get shares assigned, but if they do get assigned he is fully okay with that because this stock is essentially his only "core" holding and the cash to secure the puts was actually obtained by selling already owned shares.

One stock - shit happens.

[SOL]

Mostly because I haven't dabbled in selling puts/calls so I have no idea how this all transpires
I understand buying calls/puts quite well. When you talk about selling the put, is this a weekly put or should we be selling months/years down the road?

I would recommend selling from 1 to about 45 days out till expiration, that's where time value is decaying fastest and your annualized return will be highest. The dollar amounts are smaller but compounding more frequently. You might also want to avoid selling a put on the other side of an earnings report and know a little about the pricing history of your put before offering to sell it.

I have a friend that is considering selling 1 day puts as a large portion of his trading strategy on a stock that he knows inside-out and sideways (he listens to every conference call, and every government regulatory meeting and has been doing so for many years). His theory is that he knows the daily patterns this stock trades in, he knows the open interest, he knows the area of max-pain. He is confident he can sell a Friday put every Thursday and rarely ever get shares assigned, but if they do get assigned he is fully okay with that because this stock is essentially his only "core" holding and the cash to secure the puts was actually obtained by selling already owned shares.

One stock - shit happens.

Agree there was a time i thought i thought i knew the pattern of one stock perfectly so i decided to invest two full lots in it, and i got my arse handed to me. In today's what you read means jack. invest in one stock and you are asking for a beating of the likes you cannot even envision

[Eric]

He's not 100% in one stock, maybe 70%. He also probably knows that stock better than some of the board members which is something only a miniscule fraction of retail investors can claim about any stock in their portfolio. At one point he actually owned more shares than one of the board members but then sold a bunch of them and converted to deep-ITM long call LEAPS. Now I think he de-levered and sold most of the leaps to get back into shares with covered calls and cash secured puts.

Also, it's not just knowing the patterns of the stock, it's knowing the company, the industry, and all the major competitors inside-out, up, down, and sideways. He has an exit plan for when the trend changes.

[Budge]

He's not 100% in one stock, maybe 70%. He also probably knows that stock better than some of the board members which is something only a miniscule fraction of retail investors can claim about any stock in their portfolio. At one point he actually owned more shares than one of the board members but then sold a bunch of them and converted to deep-ITM long call LEAPS. Now I think he de-levered and sold most of the leaps to get back into shares with covered calls and cash secured puts.

Also, it's not just knowing the patterns of the stock, it's knowing the company, the industry, and all the major competitors inside-out, up, down, and sideways. He has an exit plan for when the trend changes.

Doesn't have to be the stock. I thought my account with MF Global was safe but then it was Corzined out of existence thanks to that other group of arseholes JP Morgan. Corzine used client money to back his "sure bet" on Greek debt using JPM in London (able to leverage up to 35 times). WTF could go wrong!! I think I got most of my funds back over a period of 18 months.

It's commendable he knows the stock, the industry etc inside out. That he knows more than some of the board members means squat, most of them are just seat warmers. That he's found what works for him and he's comfortable with it is key.

[Centeron631]

Here is a good article about Asana. Even though this stock price keeps dropping, everything about this company sounds promising. I use Asana for my bookkeeping business. It is the most widely used workflow management program. Click Up is second. https://www.marketwatch.com/articles/as ... quote_news

Today's price is at 29.66. I am assuming we are adding to our positions at this price?
Do you all set a 25% stop as recommended on the website, or are we holding longer?

I am currently filled at 37 with 3 lots. So far its my biggest losser at almost -20%. I will consider adding a 4th lot if it trends even lower tomorrow.

why not sell puts if you have the funds to purchase the shares. As stated before it's like getting paid to put in a limit order. If the shares are put to your account you get in lower than a person that put a straight limit order as you received a payment when you sold the puts. If the shares are not put to your account, the premium you received will lower your cost. Once the stock reverses and trends higher you could keep selling puts as you were planning on purchasing the fourth lot, used this way it can generate quite a decent rate of return. However puts should never be sold on a stock you are not willing to own, then a low-risk venture turns into a potentially high risk venture

Sol how far out would u go on these puts for this lower priced stock and what % out of the money? thks

[SOL]

I am currently filled at 37 with 3 lots. So far its my biggest losser at almost -20%. I will consider adding a 4th lot if it trends even lower tomorrow.

why not sell puts if you have the funds to purchase the shares. As stated before it's like getting paid to put in a limit order. If the shares are put to your account you get in lower than a person that put a straight limit order as you received a payment when you sold the puts. If the shares are not put to your account, the premium you received will lower your cost. Once the stock reverses and trends higher you could keep selling puts as you were planning on purchasing the fourth lot, used this way it can generate quite a decent rate of return. However puts should never be sold on a stock you are not willing to own, then a low-risk venture turns into a potentially high risk venture

Sol how far out would u go on these puts for this lower-priced stock and what % out of the money? thks

If you have already invested the full amount assigned to this play, it might not be a wise idea to add more. Having said that, when it comes to puts you have to define what price sounds attractive to you. Let's say you find 25 to be attractive. Then you could sell puts with 1, 2, 4, 5 or even 12 months of time on them. If you have the time then selling puts with less time premium is the way to go. You can keep repeating the process and collect more in premium over one year (as Eric pointed out) than by simply selling a 1 year put. When it comes to selling options, less time is better and vice versa. However, only sell options on stock you are sure you want to own.

[Yodean]

Then you could sell puts with 1, 2, 4, 5 or even 12 months of time on them. If you have the time then selling puts with less time premium is the way to go. You can keep repeating the process and collect more in premium over one year (as Eric pointed out) than by simply selling a 1 year put. When it comes to selling options, less time is better and vice versa. However, only sell options on stock you are sure you want to own.

Cool, this answers some of my questions regarding SPTO (Selling Puts To Own).

[Eric]

I am currently filled at 37 with 3 lots. So far its my biggest losser at almost -20%. I will consider adding a 4th lot if it trends even lower tomorrow.

If you have 100+ shares you could sell a May $40 covered call right now with ASAN around $28.40 for $0.60/share ($60 per contract). If the stock gets called away for $40, you made $3.60/share and you have the ability and available funds to sell a June Put to potentially get the shares back. If the stock does not get called away for $40/share then you lowered your cost basis from $37 to $36.40.

Sol how far out would u go on these puts for this lower priced stock and what % out of the money? thks

From what I've picked up on you, your risk tolerance is very low. Keep the expiration date close, you'll reduce your risk and earn a higher total return by re-racking the strategy multiple times over the year. You should also avoid selling a put with the expiration date on the other side of a future earnings call if you want to minimize risk. ASAN earnings is going to be reported in the first week of June so you should sell a May put. You could sell a $22.50 put for $0.95/share ($95/contract). If the shares get put to you, you would essentially be getting them for $21.55/share or $6.85 per share less than if you "bought the dip" today. If the shares do not get assigned to you (the stock never crosses below $22.50) then you made $95 on $2,250 of cash security which is 4.2% gain in 24 days or a 64% annualized return.

Heck, sell a $20 put for $0.45/share. If you get shares put to you your basis is $8.85/share less than if you bought the dip today, and if they don't get assigned you make $45 on your $2,000 of cash security which works out to 2.25% total gain in just 24 days (or 34% annualized).

@TripleThought: You asked me (I think in PM quite a while ago) where I find these puts that pay 65% annualized... Here's one.

[Yodean]

From what I've picked up on you, your risk tolerance is very low. Keep the expiration date close, you'll reduce your risk and earn a higher total return by re-racking the strategy multiple times over the year. You should also avoid selling a put with the expiration date on the other side of a future earnings call if you want to minimize risk. ASAN earnings is going to be reported in the first week of June so you should sell a May put. You could sell a $22.50 put for $0.95/share ($95/contract). If the shares get put to you, you would essentially be getting them for $21.55/share or $6.85 per share less than if you "bought the dip" today. If the shares do not get assigned to you (the stock never crosses below $22.50) then you made $95 on $2,250 of cash security which is 4.2% gain in 24 days or a 64% annualized return.

Hmmm, most interesting indeed. Thanks for the info. I have started playing with some of these strategies.

[froggo]

froggo fills:
25/4/22, buy, VALE @ $16.30

[Centeron631]

Eric et al im not sure exactly who Eric referring to as ur risk tolerance is low . As to myself i rate myself lowishmoderate . However in current circumstances where my cash is low about 15% i am trying to spread it out as much as possible and attempt to participate in likes of Asana and Vale of which i now hold 0 shares. The other day i sold an Apil 2023 80 put contract on AMD and from the proceeds bought 2 April 2023 135 AMD net cost to me $45. (of course on these long term call options one might be concerned about take -overs/mergers at lower than market value or my strike price sending the call option to zero). So any suggestion for my circumstance would be appreciated.

I actually do not have enuf energy to go in and out of put sells on a frequent bases and another reason is Revenue Canada could possibly change my status if too frequent on trading from capital status to business income (100% taxable on gains); not sure if IRS has something similar.

[SOL]

Eric et al im not sure exactly who Eric referring to as ur risk tolerance is low . As to myself i rate myself lowishmoderate . However in current circumstances where my cash is low about 15% i am trying to spread it out as much as possible and attempt to participate in likes of Asana and Vale of which i now hold 0 shares. The other day i sold an Apil 2023 80 put contract on AMD and from the proceeds bought 2 April 2023 135 AMD net cost to me $45. (of course on these long term call options one might be concerned about take -overs/mergers at lower than market value or my strike price sending the call option to zero). So any suggestion for my circumstance would be appreciated.

I actually do not have enuf energy to go in and out of put sells on a frequent bases and another reason is Revenue Canada could possibly change my status if too frequent on trading from capital status to business income (100% taxable on gains); not sure if IRS has something similar.

On selling puts, it's best to limit them to stocks that are labelled green until you understand what you are doing fully. What you did with AMD is would technically be called a credit spread as you laid out some money. When selling options you if you don't want to put in the extra time, then 4-6 months timelines are good. If you just want to take it easy, then aim for the 1-year options.

When dealing with spreads, as in selling a put to buy a call, it's best to make sure you get paid for the whole thing. In other words, the transaction to purchase the calls should be close to free which in your case it came pretty close. A lower risk option would be to sell one Put and use the proceeds to buy one call only and save the rest to lower your cost in AMD in case the shares are put into your account.

I will talk about other low-risk strategies in more detail when time permits and post them in the section that limits anyone from posting comments. It will be read-only for 96% of readers. Those that have interesting tools or feel they have ideas that can be put into practical use will be invited and allowed to post in that section. This section will be hyper-focused on strategies. It is the last thread on this forum at the moment

[Eric]

Eric et al im not sure exactly who Eric referring to as ur risk tolerance is low . As to myself i rate myself lowishmoderate . However in current circumstances where my cash is low about 15% i am trying to spread it out as much as possible and attempt to participate in likes of Asana and Vale of which i now hold 0 shares. The other day i sold an Apil 2023 80 put contract on AMD and from the proceeds bought 2 April 2023 135 AMD net cost to me $45. (of course on these long term call options one might be concerned about take -overs/mergers at lower than market value or my strike price sending the call option to zero). So any suggestion for my circumstance would be appreciated.

I actually do not have enuf energy to go in and out of put sells on a frequent bases and another reason is Revenue Canada could possibly change my status if too frequent on trading from capital status to business income (100% taxable on gains); not sure if IRS has something similar.

I was talking about you when I said I think your risk tolerance is low. On a risk tolerance scale of 0-11 I estimated you to be around a 2.5-3, compared to me being around an 8-8.5

I just opened a TI Dead-Butterfly spread on VALE. Sold a May 20th $17P for $95, bought a September $19C for $91. After commissions brought in $2.70 net credit.

https://youtu.be/gG7965Deehw?t=00m52s

[MarkD]

I did a similar trade on PLUG. Sold a Jan24 20P and bought a Jan24 22.5C. No income as the put sale paid for the call, just $2k residing in IRA to buy the shares if needed.