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Old 09-28-2021, 08:31 AM   #321
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I will make a prediction right here, within the next three weeks a put written at 355 will fill on KLAC, of course I also think a put written at 325 might fill.
As of right now KLAC is at 349. Would expect that 325 still in play, but if you are looking to get the stock back in the portfolio to write additional calls against at 355 now would be the time as you could probably get a nice premium with the recent uptick in VIX and you will not have to worry about seeing 355 again for a couple of years, so it won't be called away.
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Old 09-28-2021, 11:07 AM   #322
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I hold no shares of KLAC right now, and would buy it back right now, or sell a put. However, I still have shares of other companies in this sector (semiconductor equipment), such as AMAT, LRCX, ASML, TER, MKSI. They all got hammered today. There's no hurry.

If KLAC does not get back to 355 in a few years, the whole S&P will also top out and not set new highs. KLAC has better P/E ratio, and its immediate growth prospect is good. The drawback is that this industry is highly cyclical.

By the way, my stock AA is still at 74, despite recent option assignment and outright selling. I am down a 6-figure amount today, as I write this.
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Old 10-06-2021, 08:07 AM   #323
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I will make a prediction right here, within the next three weeks a put written at 355 will fill on KLAC, of course I also think a put written at 325 might fill.
Took 8 days but prediction fulfilled KLAC hit 325 this morning.
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Old 10-11-2021, 04:06 PM   #324
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I expect the S&P 500 to hit 3500 by the end of October so the selling of Covered Calls should result in no loss of stock for the next few weeks. Alternatively selling puts are not reccomended as I think you will be able to pick up any stock you like for a good deal cheaper, or sell naked puts at that point.

Point being if you are thinking of selling covered calls premium should be good in the coming days so even selling right by the money might be advantageous.
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Old 10-11-2021, 04:36 PM   #325
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I expect the S&P 500 to hit 3500 by the end of October so the selling of Covered Calls should result in no loss of stock for the next few weeks. Alternatively selling puts are not reccomended as I think you will be able to pick up any stock you like for a good deal cheaper, or sell naked puts at that point.

Point being if you are thinking of selling covered calls premium should be good in the coming days so even selling right by the money might be advantageous.
Sounds like you are politely saying the market is about to take a 20% dive by Halloween.
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Old 10-12-2021, 04:18 AM   #326
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I expect the S&P 500 to hit 3500 by the end of October so the selling of Covered Calls should result in no loss of stock for the next few weeks.
Just to give a frame of reference, the Nov 1, SPX 3500 puts have a delta of 0.01, which indicates that the options market is attaching only about a 1% probability of the market being 3500 or less at expiration.
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Old 10-12-2021, 05:53 AM   #327
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Just to give a frame of reference, the Nov 1, SPX 3500 puts have a delta of 0.01, which indicates that the options market is attaching only about a 1% probability of the market being 3500 or less at expiration.
Yes so that is why I think not selling those puts naked at this time would not be a good investment.
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Old 10-12-2021, 05:54 AM   #328
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Sounds like you are politely saying the market is about to take a 20% dive by Halloween.
Math is hard I'm trying to keep it simple.
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Old 10-15-2021, 01:06 AM   #329
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Check out QYLD. A covered call ETF. I use it, I've made 10% with a 12% yield. There are others, but this is the best.
I'm curious about your statements, not challenging you, jus have some questions.

The ETF you named is restricted to the Nasdaq 100. Why go with a fund with that kind of restriction? Why not RYLD which spans the Russell 2000?

I have writen covered calls in the past so I am familiar thought not deeply knowedgeable

The yield on these is very high. Covered calls are usually very low risk. Is there something about putting them in a fund that increases risk? Usually the risk is opportunity loss if a big gainer is called away. Are these returns high because of low interest rates and the funds may crash when rates go up?
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Old 10-15-2021, 07:20 AM   #330
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^^^ Another interesting options ETF is ACIO. They invest in individual stocks in the S&P 500... enough tickers that the individual stock portfolio would be reasonably expected to mirror the S&P 500. Then they write covered calls on the more high volatility individual stocks in the portfolio and use some of the proceeds from those calls to buy protective puts on the S&P 500. The proceeds from the covered calls on the high vol tickers exceed the cost of the protective puts... so they get a little juice in income and downside protection on the whole portfolio.

https://aptusetfs.com/acio/
https://aptusetfs.com/wp-content/upl...fferential.pdf

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... Let’s say you start with a basket of 50 individual stocks. Those 50 stocks are going to be highly correlated with the S&P 500. Meaning, if the S&P is up or down 10%, your basket of 50 stocks is up or down roughly the same. The basket of 50 stocks will have a high correlation with the S&P 500.

The objective - Income. Growth comes secondary.

What if you sold options on each individual piece (higher IVs) in the form of covered calls, and bought put options on a highly correlated security, say something representing the S&P 500 (lower IVs)? You’d then truly be selling higher IV and buying lower IV. The difference, you guessed it, more greenbacks, higher income.

Because of the differential in IV between individual stocks and a market index - you can sell call options on each individual name x% up, and use those proceeds to buy protection with an option on a basket of securities highly correlated with the 50 stocks at roughly the same x% down, and have cash left over.

More importantly, you can increase the amount of cash left over by adjusting the % up of your calls relative to the % down of your puts. For example, if you sold calls 3% up on individual names and bought puts 5% below a correlated basket, you’d significantly increase the amount of cash left over. As a result, you generate meaningful income, keep potential for drawdown minimal, and still offer potential for some upside participation.
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Old 10-15-2021, 11:50 AM   #331
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I'm curious about your statements, not challenging you, jus have some questions.

The ETF you named is restricted to the Nasdaq 100. Why go with a fund with that kind of restriction? Why not RYLD which spans the Russell 2000?

I have writen covered calls in the past so I am familiar thought not deeply knowedgeable

The yield on these is very high. Covered calls are usually very low risk. Is there something about putting them in a fund that increases risk? Usually the risk is opportunity loss if a big gainer is called away. Are these returns high because of low interest rates and the funds may crash when rates go up?
RYLD is writing calls on the Russsel 2000 index
QYLD writes calls on individual stocks in the Nasdaq 100

The option premium on individual shares is going to be higher than a basket ETF as volatility is greater.

QYLD is also writing calls on 100% of portfolio while RYLD write calls on 85% of portfolio. Also RYLD is a far more diverse industry sector with only 15% information and technology while QYLD is 50%.

QYLD is designed to pay out 50% of the premiums received capped at 1% per month maximum while RYLD only specifies they will pay less than 1/2 capped at 1%.

QYLD is a 4 billion dollar fund while RYLD is a 300 million dollar fund. You are basically converting the upside potential for an income stream, and if the market would hit a long period of sideways action you will do better, if it jumps dramatically you will do not nearly as well and if it falls you will have some protection and less at risk as your investment is returned via option premiums monthly.

But they are both very interesting.
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Old 10-16-2021, 12:28 AM   #332
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RYLD is writing calls on the Russsel 2000 index
QYLD writes calls on individual stocks in the Nasdaq 100

The option premium on individual shares is going to be higher than a basket ETF as volatility is greater.

QYLD is also writing calls on 100% of portfolio while RYLD write calls on 85% of portfolio. Also RYLD is a far more diverse industry sector with only 15% information and technology while QYLD is 50%.

QYLD is designed to pay out 50% of the premiums received capped at 1% per month maximum while RYLD only specifies they will pay less than 1/2 capped at 1%.

QYLD is a 4 billion dollar fund while RYLD is a 300 million dollar fund. You are basically converting the upside potential for an income stream, and if the market would hit a long period of sideways action you will do better, if it jumps dramatically you will do not nearly as well and if it falls you will have some protection and less at risk as your investment is returned via option premiums monthly.

But they are both very interesting.
Thanks. I understand the difference between the index and individual shares. I will have to read more closely. This looks intriguing especially given my market expectations.

I also need to review how interest rates may impact. As I have mentioned in another thread, I did some in-depth option analysis about 20 years ago. Interest rates play a factor in valuation because they determine the risk-free return against which the risk is valued. I just don't recall off hand how to do the math. We've had quite an unsual period of low rates going back even before covid. I just don't want to be caught with my pants down if interest rates go up and the market panics. The Fed has said there will be no surprises. But that only makes a surprise more dangerous.
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