LOL!'s Market Timing Newsletter

[NW-Bound]

My two younger brothers are now doing options in the conservative manner I described to them. They are approaching retirement age, hence afraid of a market pull-back, and have raised their cash AA. However, they sell out-of-the-money puts using the cash as collateral, in order to make their cash generate some "dividends".

They do not share what percentage gains they made, only that they are happy with what they make.

As for me, I counted only 10 contracts expiring today worthless, plus 3 contracts ending up in-the-money, causing me to sell some shares. The number is a lot less than last Friday, because the market was down the entire last week and I did not sell many contracts. I could have sold put contracts, but did not because my stock AA was already high and I did not want to risk raising it.

Next Friday, I will have a lot more contracts expiring, the ones I sold this week. Probably more will end up in-the-money, and my stock AA will get reduced.

 

[Sunset]

My two younger brothers are now doing options in the conservative manner I described to them. They are approaching retirement age, hence afraid of a market pull-back, and have raised their cash AA. However, they sell out-of-the-money puts using the cash as collateral, in order to make their cash generate some "dividends".

.....

The big issue for them will be holding a put, when the market does a sudden downward drop, and then continues to fall.

This is the thing that tempers me strongly to only sell puts on stocks I want to buy today but at a discount.

 

[NW-Bound]

The big issue for them will be holding a put, when the market does a sudden downward drop, and then continues to fall.

This is the thing that tempers me strongly to only sell puts on stocks I want to buy today but at a discount.

Exactly. I do not sell puts on stocks that I do not care to own.

 

[aja8888]

Exactly. I do not sell puts on stocks that I do not care to own.

Same here.

 

[NW-Bound]

I just answer my own pondering as to why I cannot make the same money as last year with option selling, despite having more stocks.

About 1/3 of the premium last year came from put writing. As I now refrain from writing puts lest my stock AA gets to 80% and above, I have lost that source of income.

Duh!

 

[RVplusDog]

My favorite one this week - earned almost $10/share for a $292 put on FDX with less than 2 week duration. It closed at 291.95, so I ended up with a nice deal on those shares, which I wanted anyway.

 

[NW-Bound]

Today, most of the market went down, except for the semiconductor sector. As I am overweighed in this sector, I have been wanting to reduce my exposure some, and today looked like the right time.

Although the prospect of the sector looks very good, it is hard for a sector to remain impervious to the rest of the market, which is showing sign of fear of global economy slowing down due to Covid Delta variant. For example, the price of crude went down, and the entire energy sector went down with it.

I was selling call contracts like mad on stocks I have in the semi sector, then decided to sell some shares outright. Sold off about 1.5% portfolio worth. I still have a lot to go, in order to drive stock AA from 79% down to 60%.

Will see if the sector continues to go up, and I will kick myself for leaving money on the table.