Writing Half as many Puts as Calls

[william the wie]

I write covered options on shares that are selling for less than 25% of tangible assets/share (25% of book value) and selling for less than $10/sh. Is this the optimal strategy if I exit the issue at 50% of book or $20/sh. I do this on the principles that buying options is stupid and doing so for shares selling for less than $10 is even more so.

 

[Toddsterpatriot]

Uncovered puts.

 

[william the wie]

I'll have to wait until Tuesday to get release of the funds and their posting to know exactly how much I made but it looks like 3-5% for two weeks at risk.

 

[Cellblock2429]

I write covered options on shares that are selling for less than 25% of tangible assets/share (25% of book value) and selling for less than $10/sh. Is this the optimal strategy if I exit the issue at 50% of book or $20/sh. I do this on the principles that buying options is stupid and doing so for shares selling for less than $10 is even more so.

I'm a short term option trader mostly selling covered calls on the 3x ETF- TNA

 

[william the wie]

Yeah, I've looked at that. Buying puts on the ETF components while selling puts on the ETF. That is purportedly safer but I haven't seen back testing showing the risk/return ratio makes sense. Have you looked at the Michael O'Higgins "Beating the Dow" approach? That has 50-60 years of back testing and it works on any index worldwide reasonably well if you want to sell puts on the issues most likely to go up.

 

[Cellblock2429]

Yeah, I've looked at that. Buying puts on the ETF components while selling puts on the ETF. That is purportedly safer but I haven't seen back testing showing the risk/return ratio makes sense. Have you looked at the Michael O'Higgins "Beating the Dow" approach? That has 50-60 years of back testing and it works on any index worldwide reasonably well if you want to sell puts on the issues most likely to go up.

No, but I will. Thanks

 

[william the wie]

And straight from the twilight zone I took a closer look at my assignments and on one issue SDRL both the puts and calls were exercised. They were sold at the same strike price with sky-high premiums. I like the money. The bizarro counterparties take some getting used to.

 

[Cellblock2429]

Yeah, I've looked at that. Buying puts on the ETF components while selling puts on the ETF. That is purportedly safer but I haven't seen back testing showing the risk/return ratio makes sense. Have you looked at the Michael O'Higgins "Beating the Dow" approach? That has 50-60 years of back testing and it works on any index worldwide reasonably well if you want to sell puts on the issues most likely to go up.

---that book Beating the Dow is from 1992. I doubt it's still relevant

 

[william the wie]

The data still supports the model and the revised model is out too on Amazon. The really big problem is that the model is very boring to follow. The next biggest problem with the model is a 1-4 is scary.

 

[USApatriotz]

Forget covered calls. I just generally do short term directional calls & puts. Mostly calls for a quick swing trade usually 1 to 3 days and also a few daytrades.

There are a lot of opportunities in the FANG stocks & other tech stocks along with ETFs like SPY, QQQ, XLF, etc.

In addition there are always opportunities in the hot sector or trend of the moment.

 

[william the wie]

Me, I take Buffett's warning about not losing the money seriously and Graham's warning about margin of safety even more seriously. Being smarter than everyone else in the short run is hard. Acting smarter than nearly everyone in the long-run and taking advantage of small (less than $1m) portfolio opportunities is easy.

 

[USApatriotz]

But many people don't have that kind of money! With options you can literally start with a few hundred to a few thousand bucks!!

What would you do if you only had a few thousand bucks to spare? ALL the experts say options are the best way if you have a limited amount of money. Of course you have to be active and watch it. You can't just invest in it & forget it.

 

[william the wie]

you need six to ten issues for effective diversification at $2,000 portfolio, I have a bit more than that, I would look for optionable issues selling for less than $500. Given the usual high percentage of net premiums at this price level you should be able to get 6 put issues. Place calls on all issues put to you and gradually use premiums to expand your portfolio.

 

[USApatriotz]

I keep it simple & use charts & TA to play mostly weekly options that expire in 1 to 4 days. We're still in a bull market so I mainly buy calls.

There is so much volatility in AAPL, AMZN, FB, NFLX, & GOOGL along with SPY, QQQ, & DIA that people can make a killing playing options only on those issues!!

 

[william the wie]

Until the music stops and you lose your shirt, yes that is true. But if you are that good at calling the indexes then you want the much higher rates of margin available in the futures markets.

 

[USApatriotz]

So you mean playing the futures on the ES, NQ, & YM?

 

[danielpalos]

I write covered options on shares that are selling for less than 25% of tangible assets/share (25% of book value) and selling for less than $10/sh. Is this the optimal strategy if I exit the issue at 50% of book or $20/sh. I do this on the principles that buying options is stupid and doing so for shares selling for less than $10 is even more so.

i am looking into straddling options with some hot blonds, does that count?

 

[danielpalos]

options can be optional. over the counter can be fun.

 

[william the wie]

So you mean playing the futures on the ES, NQ, & YM?

If you're that good at predicting market moves then yes but I doubt that you are that good.

 

[USApatriotz]

So you mean playing the futures on the ES, NQ, & YM?

If you're that good at predicting market moves then yes but I doubt that you are that good.

Instead of futures I sometimes play the QQQs & SPYs during market hours for swing or daytrades. On Thursday the market ranked so I bought QQQ & SPY calls near the bottom & sold each yesterday for a 200%+ gain for EACH!

I admit the markets could've opened down yesterday but futures looked good and there was no imminent gloom that would tank the markets Fri. am.

I could've also sold on Thursday b4 close as a daytrade and a smaller profit.