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Old 05-21-2021, 12:22 PM   #2161
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Your (both of you) posts are interesting. They are just buried in this thread.
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I agree with Audrey, it’s a shame to have the options discussion hidden in LOL’s thread. I’ve dabbled in selling covered calls this year and should do more, but I’ve been lazy.

Now I’m inspired. Once I’m home next week, it’s time to sell some contracts. It’ll pale in comparison to NW, but every dollar counts.

Thank you for the interest, but I do not think I have enough material to make a thread, even though I sell options nearly every trading day.

The method is simple, as I explained just a few posts earlier. It's all about execution, and I am still learning by doing it myself. Additionally, options on individual stocks or sector ETFs fetch a higher premium because they are more volatile than the entire market, and other posters do not have the same holdings that I do.

And the above is the main reason I do not own the total market even though I try to stay diversified. You don't see the internal turmoil and sector rotation when you own a broad index. I want to see the sector churning for my contrarian plays.

That's all.
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Old 05-23-2021, 05:26 PM   #2162
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Oops! I thought LOL would want some exchange of ideas, instead of his thread being a soliloquy.

OK, I will stop posting here now. Sorry for trying to revive the thread.
Posting in this thread is perfectly OK with me and welcome.

I made some profitable trades recently, but didn't post them. But I like to post things as they happen, so I feel I cannot say more than that. However, the portfolio did get reduced in value because I bought my wife a new car for Mother's Day.
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Old 06-02-2021, 05:56 PM   #2163
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My energy stocks have been doing well, and carry the portfolio. I have been tempted to sell some and book the gain, but decided against it. Crude price has gone back to 2018 level, but these stocks are nowhere near their level back then. I think these stocks may have some room to run, as summer travel season is just now starting, and oil consumption will go up more.

Meanwhile, my semiconductor shares are threading water, despite the continuing news about chip shortage, and the announcement by TSMC that it plans to spend $100 billion to build more fabs. That's a huge cap ex, compared to the few billions that Tesla spent to build car factories.

And so, I don't do much trading, other than looking to make a few $K here and there by selling OTM covered calls, but this is getting harder. I do not want to write calls on energy stocks, for fear of having to sell them too soon. I have loads of semiconductor shares, but people are not bidding them up to crazy levels as they did back in Feb for me to sell calls for juicy premiums. My semi stocks have quite decent P/E, not at all outrageous.

Oh well, I will not be able to beat my own record of gains made from option selling last year, but I am still making good money. Perhaps I should turn to a more conservative stance to convert these gains into cold cash, meaning to start selling stocks. Stock AA is up to near 80% now, and I have a lot of high-beta stocks. Something bad has always found a way to fall out of the blue.
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Old 06-02-2021, 08:45 PM   #2164
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My energy stocks have been doing well, and carry the portfolio. I have been tempted to sell some and book the gain, but decided against it. Crude price has gone back to 2018 level, but these stocks are nowhere near their level back then. I think these stocks may have some room to run, as summer travel season is just now starting, and oil consumption will go up more.

Meanwhile, my semiconductor shares are threading water, despite the continuing news about chip shortage, and the announcement by TSMC that it plans to spend $100 billion to build more fabs. That's a huge cap ex, compared to the few billions that Tesla spent to build car factories.

And so, I don't do much trading, other than looking to make a few $K here and there by selling OTM covered calls, but this is getting harder. I do not want to write calls on energy stocks, for fear of having to sell them too soon. I have loads of semiconductor shares, but people are not bidding them up to crazy levels as they did back in Feb for me to sell calls for juicy premiums. My semi stocks have quite decent P/E, not at all outrageous.

Oh well, I will not be able to beat my own record of gains made from option selling last year, but I am still making good money. Perhaps I should turn to a more conservative stance to convert these gains into cold cash, meaning to start selling stocks. Stock AA is up to near 80% now, and I have a lot of high-beta stocks. Something bad has always found a way to fall out of the blue.
Sell cash covered puts on the energy and commodity stocks. That's what I have been doing and it has been pretty good. If you have to take some on a drop, sell a covered call immediately. My feeling is energy stocks and other commodities have a way to go with things opening up.
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Old 06-02-2021, 08:47 PM   #2165
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I am already at my self-imposed upper limit of 80% stock AA. I am a bit leery now of having to buy more stocks.

Plus, I like to sell puts on a bad day, and there have not been too many bad days for these stocks.
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Old 06-02-2021, 08:53 PM   #2166
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I am already at my self-imposed upper limit of 80% stock AA. I am a bit leery now of having to buy more stocks.

Plus, I like to sell puts on a bad day, and there have not been too many bad days for these stocks.
I sell puts when stocks look like they won't pull back. That way, the odds are they will expire and I won't have to take the stock. I've done this many times with AT&T (T) since it trades in a pretty defined range. Just a way to make some easy cash. My objective with options is to not give or take the stocks.
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Old 06-02-2021, 09:01 PM   #2167
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I sell puts when stocks look like they won't pull back. That way, the odds are they will expire and I won't have to take the stock. I've done this many times with AT&T (T) since it trades in a pretty defined range. Just a way to make some easy cash. My objective with options is to not give or take the stocks.
Well, we have the same idea, but different styles of execution.

I wait for a few bad days in a row, and sell puts when it looks like the stock has reached bottom, and is turning around. The put premium is higher when the mood is bearish, and if I have to buy, I get to buy it cheap.

One may say, "Wait! If you think the stock will turn around, then why not buy it outright?"

Yes, I do that sometimes, when I have a strong conviction. But usually, I already have some shares held for long term, and do not want to be too highly concentrated in the stock.

On the other hand, if a stock has been climbing several days in a row, it often pulls back when short-term traders decide to take profit and sell. In this case, I will want to sell covered calls instead, because it is more likely I will not have to sell my shares which I hold for long term.


PS. Last year, I made around $200K on covered calls, and about $100K on cash-covered puts. About 1 in 10 options I sold got assigned, meaning the other 90% expired worthless.
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Old 06-02-2021, 09:09 PM   #2168
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Well, we have the same idea, but different styles of execution.

I wait for a few bad days in a row, and sell puts when it looks like the stock has reached bottom, and is turning around. The put premium is higher when the mood is bearish, and if I have to buy, I get to buy it cheap.

One may say, "Wait! If you think the stock will turn around, then why not buy it outright?"

Yes, I do that sometimes, when I have a strong conviction. But usually, I already have some shares held for long term, and do not want to be too highly concentrated in the stock.

On the other hand, if a stock has been climbing several days in a row, it often pulls back when short-term traders decide to take profit and sell. In this case, I will want to sell covered calls instead.
I see, a lot of ways to skin this animal. I'm keeping an eye on the auto stocks as GM and Ford have had big runs on their EV marketing (and cars!). I bought some GM and have sold covered calls a few times and got taken once, then bought it back on a pull back. My goal with the options is to try to make as much as I have to pull out to cover RMD's each year. I trade options only in the IRA.
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Old 06-02-2021, 10:18 PM   #2169
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... I trade options only in the IRA.
The above, I do.

I sell a few thousand contracts a year. It's about 5 to 10 contracts each trading day. If done in a taxable account, I don't know how I would do the tax reporting.

It would be nicer to do this active trading in Roth accounts, but at this point our Roths are just 1/10 the size of our IRAs, which are rollover from 401k.
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Old 06-02-2021, 10:42 PM   #2170
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I got an email from the brokerage saying I had a naked put option in my account and needed to fix it right away as that was not permitted.

Talk about a shocking email, as I'm opposed to naked puts, it's indecent

Of course I was nervous, did I make an error last week, or did someone hack my account
So I logged in and all looked ok.
Then I phoned the brokerage and talked to a trader, who confirmed my puts were covered (in a Roth), and that they wouldn't allow a naked put in that account anyhow.

He said he would send a note, as I'm not the only person it has happened to, their system cannot seem to count the cash against the put sometimes.
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Old 06-04-2021, 06:24 PM   #2171
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I made a transaction today. Since the Total US Bond Index was up 0.4% today, I sold a bunch of shares because this fund doesn't usually go up that much without falling back down in days after. 0.4% is more than many savings accounts will earn for the entire year. But I didn't want to have the money from the sale sit in cash earning nothing, so I bought shares of short-term corporate bond index fund which also rose today about 0.11%. Those shares went up another penny after I bought them.

My plan is for Total US Bond Index to drop about 0.4% next week and buy it back. 747 I also expect the shares of the STCorp bond index to fall back, but not as much.

If I look at the total return of my fixed income assets so far YTD, they are doing overall about 0.5% better than the total return of the Total US Bond Index fund. That's about all I can expect from these kinds of in-and-out trades. At least I am not losing more money than not market timing.
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Old 06-08-2021, 07:57 AM   #2172
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So far those previous bond ETF trades have not turned out like I predicted. Total US Bond Index has continued to go up more than Short-term corporate bond index has gone up. There goes my lunch money for today. 006
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Old 06-14-2021, 02:43 PM   #2173
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I am slowly getting my mojo back on option selling.

Last year, I made a bit more than $300k with collecting option premium on the contracts that I sold. I only realized it being that much when looking at the year end summary. The year before, it was only $100K.

Last year, that's on the average $1500 for each trading day. Perhaps market volatility was high last year, and the option premiums were higher, but this year I have not collected as much.

Still, today I managed to sell 8 contracts on stocks I own, pocketing $1250 in option premium. It takes some effort to do this day in/day out, even though it takes only a couple of hours each day. It's almost like work, but not as tiring.
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Old 06-17-2021, 01:49 PM   #2174
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With Total US Stock Market Index slightly up for the day and AVUV (small-cap value) down more than 3% today, I think it makes sense to buy AVUV and sella little VTI, so I did. 862

I expect AVUV to go back up in a few days and I will try to sell it if it goes up. If it goes down, then I will just hold it forever.

An update on my last trade of bond ETFs: short-term corporate bond index ETF have dropped slightly from where I bought them and total US Bond Index has gone up slightly, so I would have been better off not making that trade. Oh, well.
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Old 06-17-2021, 01:57 PM   #2175
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I am slowly getting my mojo back on option selling.

Last year, I made a bit more than $300k with collecting option premium on the contracts that I sold. I only realized it being that much when looking at the year end summary. The year before, it was only $100K.

Last year, that's on the average $1500 for each trading day. Perhaps market volatility was high last year, and the option premiums were higher, but this year I have not collected as much.

Still, today I managed to sell 8 contracts on stocks I own, pocketing $1250 in option premium. It takes some effort to do this day in/day out, even though it takes only a couple of hours each day. It's almost like work, but not as tiring.
Very interesting NW. You have done well!!
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Old 06-17-2021, 05:17 PM   #2176
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^^^ What I get for selling options on my stocks will not help me to have a positive return, if the stocks drop in value and the drop is more than what I get for the option premium. I would still lose money, but lose less than if I did not sell options.

Last year, my stocks go up in value, but less than the strike prices that I set. I pocketed the option premium, and still had my stocks which went up in value. Very, very nice!

This year, it remains to be seen if it is going to play out the same. So far, so good, but it looks like option buyers are not as gunho. They don't pay as much for options, and I think it is because they don't think the stocks will go up further. Indeed, some stocks that were hot now struggle to go higher.

Oh well, these stocks are what I want to hold long-term. What I make on the options are icing on the cake (but of course I am greedy and want lots of icing ).
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Old 06-18-2021, 12:00 PM   #2177
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With the market turning further south today, I counted 49 option contracts expiring worthless at market close today. There are 4 put contracts that are in the money, requiring me to buy some stocks.

Overall, the option selling makes me money, and reduces my losses when the market drops. However, I could have done more. I could have sold 5X more out-of-the-money call options. What kept me from doing it was FOMO. I did not like the idea of my stocks going up and up and my strike prices were too low, and the other side of the trade was going to buy all of my stocks, leaving me holding cash while the market went to the moon.

Yeah right! I was too greedy.

Now, it looks like the market is turning fearful. However, it's not easy for me to be more greedy. My stock AA is still around 75% (had some call options exercised last Friday), and I have been wanting to go down to 60%. If I had set the option prices lower, than would have sold off some shares, and can buy back to drive the stock AA back up.

At this point, I will sit tight, and wait to sell call contracts again when the market turns.
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Old 06-18-2021, 12:08 PM   #2178
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With the market turning further south today, I counted 49 option contracts expiring worthless at market close today. There are 4 put contracts that are in the money, requiring me to buy some stocks.

Overall, the option selling makes me money, and reduces my losses when the market drops. However, I could have done more. I could have sold 5X more out-of-the-money call options. What kept me from doing it was FOMO. I did not like the idea of my stocks going up and up and my strike prices were too low, and the other side of the trade was going to buy all of my stocks, leaving me holding cash while the market went to the moon.

Yeah right! I was too greedy.

Now, it looks like the market is turning fearful. However, it's not easy for me to be more greedy. My stock AA is still around 75% (had some call options exercised last Friday), and I have been wanting to go down to 60%. If I had set the option prices lower, than would have sold off some shares, and can buy back to drive the stock AA back up.

At this point, I will sit tight, and wait to sell call contracts again when the market turns.

Wow. I'm impressed that you write that many contracts. Don't know that I would want to keep track of that many but I suppose it is pretty much automated when they expire worthless. Just keep the other guys money
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Old 06-18-2021, 01:10 PM   #2179
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^^^ Last year, I wrote more than 2000 option contracts.

Yes, I prefer short 1-week contracts if available. They expire quickly.

And I'd like to set the price high enough so that they expire worthless, but not too high that the option premium is minuscule and not worthwhile. And that's why it takes time to monitor the market condition, and each of the stocks that I own.

The shares that are $100/share or less are easier to deal with. However, I have a few that are high-priced at $600+/share, such as LRCX ($640), ASML ($700), and each contract of 100 shares involves an amount money that I take seriously. Even Humana at $430/share, and Home Depot at $300 takes some consideration. The ones that are $50/share are easy; each contract involves only $5K.

I wish these companies would be splitting their shares, and not doing it like Berkshire Hathaway with the A-share.

Has anyone here written contracts for 100 BRK-A shares at $412,000/share? That's a cool $42 million per contract. That's many times my net worth.

The B-shares at $280 are more manageable.


PS. Just found out there's no option for BRK-A shares. I have done a few BRK-B options, because I do own the B-shares.
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Old 06-18-2021, 03:55 PM   #2180
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The market dropped some more near the close. I just woke up from a nap to find this out.

Counted my positions. There are 55 options, mostly calls, expiring worthless today. On the put side, there are now 7 options that will be exercised (I am forced to buy more stocks).

The options expiring made me about $6500. The 7 puts that end up in-the-money make me buy stocks that are $500 above market close (after accounting for the option premium). Overall, the option selling made me $6K.

The gain of $6K of cash this week eases the pain of losing many times that this week. Just today alone, I lost more than 15x that $6K.

Hopefully, the 700 new shares of various stocks that I have to buy due to put options will make me money next week. Of course they could decline further, and cause me to lose more money.

Overall, this week has not been a good week for the market. We have not had one like this for a while.
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