Fills

[Yodean]

In regards to the markets I have been looking at both the 1973 to 1974 timelines and 2008-2009, after SOL mentioned them.

You might also find it interesting to take a look at the years surrounding 2015, as well as '98, in terms of charts.

[Yodean]

Something I need to test is selling some of my stock and replacing them with in the money LEAPs

Let me know about your experience. I've been doing this with some of my positions - the ones that don't have a dividend. I sell some shares and buy an equivalent amount of LEAPS.

I aim for ITM LEAPS with at least 0.75 delta. So 1 LEAPS = 75 shares (at 0.75 delta). Frees up more cash so I can do a bit of Gentle Kamikaze Cannonballing in the current environment.

Nfa!

[Do-or-Die]

I have used ITM and slightly OTM leaps after very strong market drops. But I only do this if i was smart enough to sell at least half of the my position before the drop. It's amazing how a combination of tenacity and stupidity can sometimes override common sense and make you hold just because your gut (which is generally full of shit) tells you things will work out. Well they eventually do if the company has a decent product and is making some money, but then you have to be patient and wise enough to understand that in the long run this is all a game.

However, when I have used LEAPS the results have generally been good

[chippermon]

TQQQ JAN 23 30.00 Calls where on sale today so I loaded up at 1.18

[Yodean]

TQQQ JAN 23 30.00 Calls where on sale today so I loaded up at 1.18

Looks good ...

[SOL]

TQQQ JAN 23 30.00 Calls where on sale today so I loaded up at 1.18

Fantastic move and congrats.

[kcun333]

When you sell a covered call and the strike price is hit, the call owner may not necessarily exercise the option, so you don’t sell your stock, correct? I’m considering selling covered calls instead of limit orders to sell stock that I own, but would be disappointed to hit my sell/strike point and not sell the stock.

Similarly with selling puts that is mentioned as a strategy in the latest MU, if the buyer doesn’t exercise the option at the strike price, I’ve realized a premium, but I don’t own the shares that I hoped to purchase.

Am I understanding this correctly or do the owners of the calls or puts exercise the options at the strike prices?

[LoriPrecisely]

When you sell a covered call and the strike price is hit, the call owner may not necessarily exercise the option, so you don’t sell your stock, correct? I’m considering selling covered calls instead of limit orders to sell stock that I own, but would be disappointed to hit my sell/strike point and not sell the stock.

Similarly with selling puts that is mentioned as a strategy in the latest MU, if the buyer doesn’t exercise the option at the strike price, I’ve realized a premium, but I don’t own the shares that I hoped to purchase.

Am I understanding this correctly or do the owners of the calls or puts exercise the options at the strike prices?

I have always had my options exercised if the market price hits the strike price.
I have heard, though, that sometimes that may not be the case because the person will take into consideration the amount they paid for the option. But, I have not experienced this.

[kcun333]

Great to know. Selling covered calls and options seems to be a great strategy for entering and exiting trades that I wish I had learned long ago. Thanks!

[SOL]

When you sell a covered call and the strike price is hit, the call owner may not necessarily exercise the option, so you don’t sell your stock, correct? I’m considering selling covered calls instead of limit orders to sell stock that I own, but would be disappointed to hit my sell/strike point and not sell the stock.

Similarly with selling puts that is mentioned as a strategy in the latest MU, if the buyer doesn’t exercise the option at the strike price, I’ve realized a premium, but I don’t own the shares that I hoped to purchase.

Am I understanding this correctly or do the owners of the calls or puts exercise the options at the strike prices?

If the option is exercised, it is always at the strike price. However, if the option is just slightly is at the money, the option buyer might not exercise the right to take or put the shares to your account. I have seen this also happen sometimes when the option is only very slightly in the money like, say 5 to 15 cents.

If you sold puts and the shares were not put into your account. Remember if you can buy them at a discounted price after factoring in the premium. So say you SOLD INTC Jan 27, 2024, put for 3.00 ( I just made up the premium number), and the shares are not put to your account. Well, any price at 24.00 or better would be a good deal when the premium is factored in. SO it could be trading at 29.00, and you would still get a better price. I am assuming here that you kept the full premium, and the puts were no longer in your account for simplicity's sake, but it is easy to adjust all these factors.

[kcun333]

Makes sense, thanks

[deep1nSand]

If the option is exercised, it is always at the strike price. However if the option is just slightly is at the money the option buyer might not exercise the right to take or put the shares to your account. If have seen this also happen sometimes when the option is only very slightly in the money like say 5 to 15 cents.

If you sold puts and the shares were not put into your account. Remember if you can buy them at a discounted price after factoring in the premium. So say you SOLD INTC Jan 27, 2024, put for 3.00 ( I just made up the premium number), and the shares are not put to your account. Well, any price at 24.00 or better would be a good deal when the premium is factored in. SO it could be trading at 29.00, and you would still get a better price. I am assuming here that you kept the full premium, and the puts were no longer in your account for simplicity's sake, but it is easy to adjust all these factors.

If you sell the 12 month PUTs, and the market falls before that, will you buy back the put and buy the shares immediately? I know you also talk about buying calls with the proceeds. If the stock crashes let's say just after 2 months, would we buy the put back and buy calls or stock immediately ? Obviously we will be giving up some of the gains on the originally sold put.

[kcun333]

I think the problem with that strategy is if you write/sell a put and the market drops, the put that you want to buy back is going to be much more expensive than the cost of the original put you sold.

[kcun333]

Even though the put expires in 12 months, it most likely will be exercised when the put falls to the strike price any time before the expiration date. When that happens, you automatically will purchase 100 shares. That’s my understanding.

I’m trying to find a good book on options to better understand strategies.

[Yodean]

I’m trying to find a good book on options to better understand strategies.

For the simple but effective option strategies discussed on these boards (e.g. SCC/SCP/SpinningTheWheel, LEAPS, etc.), this dude's videos are pretty good:

https://www.youtube.com/c/BradFinn/videos

He explains things pretty well without getting bogged down in too many academic details. He's also frank and his enthusiasm is quite infectious. Dude is just as happy to tell you about the $51 he made in a trade, and doesn't hesitate to mention his own mistakes.