Do folks here use option plays

[myself]

I've been getting my feet wet a little with some option plays. I've only been doing covered calls at this point.
Overall, my portfolio has been holding steady if not above.
I've had one or two small losses, but they were blessings in disguise as the stocks are actually lower than where I sold them at because they were assigned.

The only one I have now that hasn't been assigned is CBRL, but that's due to expire in another 7 days. If it is assigned, I'll be quite happy since even after transaction costs, it will finish up more than $10/shr, not counting divvies - and especially that extra dividend of $3/shr over and above the normal $1.10/shr.

I'm sitting on more cash now after the stocks were assigned, but think I'll let that sit still until Oct this year. I'm guessing that Sept this year will be a big enough drop I can hit the low point a little better, due to the Fed rate questions that loom, and China modifying their currency.

[utrecht]

There are a few option traders here, including me, but not many. Most people here are buy and hold investors, not traders.

[myself]

GTK, thx.

[Senator]

I used to sell covered calls a lot. Even buying index ETF stocks and selling the call as soon as I purchased to get a discount on the stock. Selling out of the money in 4-6 weeks, maybe 1-2% higher than my purchase.

It's a great way to get some extra cash, but also a way to lose larger gains. You want to sell covered calls during market weakness, to capture premiums when the market gains are minimal.

When the market went up and my stock was being called away, I usually rolled over the option and got slightly more premium.

Overall, it was too much in terms of work and stress.

[myself]

Quote:

Originally Posted by Senator I used to sell covered calls a lot. Even buying index ETF stocks and selling the call as soon as I purchased to get a discount on the stock. Selling out of the money in 4-6 weeks, maybe 1-2% higher than my purchase. It's a great way to get some extra cash, but also a way to lose larger gains. You want to sell covered calls during market weakness, to capture premiums when the market gains are minimal. When the market went up and my stock was being called away, I usually rolled over the option and got slightly more premium. Overall, it was too much in terms of work and stress.

That's kind of what I'd been doing but 2-6 weeks out in the normal case and 1%-3% increase than purchase price. My CBRL was a 3 month, but paid the equivalent of the divvy for each of those 3 months for the option fee, in addition to receiving the divvy. It's still up very well for me overall, and I'm just letting the options expire - doubt they'll be assigned since it hit a peak of $11+ for the option fee at one point (I only sold the option for $4).

I've even bought calls back and resold them at a lower strike if it seemed to made sense, but that's where the price of the stock kept dropping a bit, ergo it was assigned below the price I bought it at and even dropped further after that. The only saving grace was keeping about even with those ones due to the option fees I was paid.

[pixelville]

I used to do options trades (covered calls, spreads, puts) but like Senator I decided it was not worth my time. Tracking the market, complicating taxes, impacting TLH opportunities was taking up too much time for the small return (on overall portfolio). 1 big loss wipes out numerous small gains.
I still do rare plays in very volatile markets, but then get out within a short time.

[myself]

Quote:

Originally Posted by pixelville I used to do options trades (covered calls, spreads, puts) but like Senator I decided it was not worth my time. Tracking the market, complicating taxes, impacting TLH opportunities was taking up too much time for the small return (on overall portfolio). 1 big loss wipes out numerous small gains. I still do rare plays in very volatile markets, but then get out within a short time.

In my case, it doesn't complicate taxes as it's in an RIRA (Rollover IRA - not Roth, but I'm moving it slowly but surely to there). I don't track the market much when I'm doing it, simply because I treat it like I do "timing" the market ... I don't. I simply set buy/sell in at a limit and if it hits, then it does.
I haven't done spreads or puts yet, but I could see that taking more time.
What are TLH opportunities?

[Coolius]

My option plays are usually to identify a stock which I would like to own, and at what price as a reasonable buy price.

I then sell cash-secured puts on that stock with a strike close to the above mentioned desired buy point. If assigned, I accept the stock, and write covered calls at a price i am comfortable letting it go.

If not assigned, I continue to sell puts for future expiry dates.

[myself]

Quote:

Originally Posted by Coolius My option plays are usually to identify a stock which I would like to own, and at what price as a reasonable buy price. I then sell cash-secured puts on that stock with a strike close to the above mentioned desired buy point. If assigned, I accept the stock, and write covered calls at a price i am comfortable letting it go. If not assigned, I continue to sell puts for future expiry dates.

I'm still trying to get Fidelity to open covered puts on my account. I want to try that next.

[TallTim]

Quote:

Originally Posted by utrecht There are a few option traders here, including me, but not many. Most people here are buy and hold investors, not traders.

+1 to this. Like Utrecht, I trade consistently/regularly, and I've seen a handful of us here (less than 10 IMO) I like it b/c it was a great income supplement before FIRE and now allows us to have living expenses w/o tapping principal, plus it is good mental exercise. But most/many here are buy/hold index investors as opposed to so-called 'active traders'

There was a thread in this same section on Put selling education with some longer posts on how to get started in options, and if you're dipping your toe into the options pool, IMO there is some good info and links there.

[Coolius]

Quote:

Originally Posted by myself I'm still trying to get Fidelity to open covered puts on my account. I want to try that next.

You need to have approval for options trading, at Level 3 ( I think ).

You would have to make an application, but if you have been a Fido client for a while, and account balance meets their minimum ( I think its $25K ) there should be no problem securing that approval.

[pixelville]

Quote:

Originally Posted by myself In my case, it doesn't complicate taxes as it's in an RIRA (Rollover IRA - not Roth, but I'm moving it slowly but surely to there). I don't track the market much when I'm doing it, simply because I treat it like I do "timing" the market ... I don't. I simply set buy/sell in at a limit and if it hits, then it does. I haven't done spreads or puts yet, but I could see that taking more time. What are TLH opportunities?

TLH (tax loss harvesting) might be impacted if I have traded options for the Index ETF (say SPY). i would have to watch the options trades more carefully to make sure I don't end up in wash sale situations when trying to sell SPY at a loss (& buy say VTI). Even if you are using an IRA, wash sale rules would apply.

[Fermion]

Raises hand.

I do love me some option trading.

It has been especially good these past few weeks with the market volatility. Options can magnify the swings by 2x to 10x, so when the market goes down 500 then up 500 then down 400 then up 400, you can make (and lose) money like there is no tomorrow.

I have made $15,000 so far on just Gilead call options, Jan 2016 expiration, and I never had more than $10,000 at risk! I have paid about $300 in commissions though (and i get $5 trades!)

My account is now higher than it was when the DOW was 18,000, which is pretty cool. I sold my last Gilead calls Friday when it spiked to 109.60 but maybe I can reload if we get another crash this week. Come on crash!