I think you are doing great. I am not sure what Step 2 is and I hope you are not thinking this is 12 step group. LOL
Everything you are thinking is spot on with my approach and I would be doing the exact same thing. My fundamentals say FAST is above a Short Term Buy level (which I have around 38) but below a Short Term Sell of 59 but if I had a large gain as you talk about I would be happy, happy, happy to be selling covered calls collect premiums or get called away all is good. This is very similar to what I have been doing in the COOL Club with Align Technology.
On Thu, Sep 13, 2012 at 10:47 AM, Malcolm Myles <malcolm@mmyles.com> wrote:
I'm trying to liquidate 400 shares of FAST that have a healthy capital gain due to my buy smart, hold long behavior (>400%). I thought to use CC to have the stock taken at my price and make some extra cash while learning a few things about options. I wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a trade. Turns out it was a "Seeing Eye Single" and netted me $752 and an APR of 26%.
I still need to liquidate the stock (before the end of the year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of $463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really don't care if my stock is taken at 41 because the difference between 44 & 41 is $1,200 which is less than my projected option income of $1,552. I believe the earnings call will cause the stock to drop (buy the rumor, sell the fact). If I don't get called away in October (or if I BTC the C 41.00), I still have time to write more calls or sell the position out right before the end of the year. If the stock drops below 40 and remains there, I'll continue to hold the position and continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Malcolm Myles on
Thanks Paul. Very happy with the Cool Club
resources and support! Really appreciate what you and your
supporting collaborators are accomplishing.
I hope to be able to "use the field" for more hits.
Go Giants!
Malcolm
On 9/13/2012 9:14 AM, Paul Madison
wrote:
Hi Malcolm,
I think you are doing great. I am not sure what Step 2 is
and I hope you are not thinking this is 12 step group. LOL
Everything you are thinking is spot on with my approach and I
would be doing the exact same thing. My fundamentals say FAST
is above a Short Term Buy level (which I have around 38) but
below a Short Term Sell of 59 but if I had a large gain as you
talk about I would be happy, happy, happy to be selling covered
calls collect premiums or get called away all is good. This is
very similar to what I have been doing in the COOL Club with
Align Technology.
On Thu, Sep 13, 2012 at 10:47 AM, Malcolm
Myles <malcolm@mmyles.com>
wrote:
I'm trying
to liquidate 400 shares of FAST that have a healthy capital
gain due to my buy smart, hold long behavior (>400%). I
thought to use CC to have the stock taken at my price and make
some extra cash while learning a few things about options. I
wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a
trade. Turns out it was a "Seeing Eye Single" and netted me
$752 and an APR of 26%.
I still need to liquidate the stock (before the end of the
year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of
$463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an
APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really
don't care if my stock is taken at 41 because the difference
between 44 & 41 is $1,200 which is less than my projected
option income of $1,552. I believe the earnings call will
cause the stock to drop (buy the rumor, sell the fact). If I
don't get called away in October (or if I BTC the C 41.00), I
still have time to write more calls or sell the position out
right before the end of the year. If the stock drops below 40
and remains there, I'll continue to hold the position and
continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Malcolm Myles on
Thanks Ron,
I'm still working through commissions - Schwab posts an $8.95/0.75
price but that isn't what I was charged on my initial trades. And
I'm working through multiple leg orders. I see the math and will
approach trades with more clarity. Thanks.
Malcolm
On 9/13/2012 9:13 AM, Elliott, Ron
wrote:
Malcolm:
I think you're well beyond Step 2.
Another way of looking at your two trades is to do the BTC and STO simultaneously (through a multi-leg order). Then, in deciding on the parameters for your order, you can just worry about the net difference between your sell premium and your buy premium. Depending on the broker, there also MIGHT possibly be a savings in commissions.
I just looked at the Oct 20 option chain for FAST, and the bid and ask prices at that time were:
$41 strike $2.30 $2.45
$44 strike $.80 $.90
So, for example, if you wanted to increase the chances of the trade happening right away, you could submit an order with a net credit of $1.40 ($2.30 - $.90). Or if you wanted to hold out for a little more money, you could try for a net credit of $1.65 ($2.45 - $.80). Of course you could set the order at whatever level you want and see what happens.
Using the current stock price, the APR for a net credit of $1.40 would be about 33%, and for a $1.65 credit it would be about 39%.
--Ron
-----Original Message-----
From: cool_club@bivio.com [mailto:cool_club@bivio.com] On Behalf Of Malcolm Myles
Sent: Thursday, September 13, 2012 10:47 AM
To: cool_club@bivio.com
Subject: [cool_club] FAST
I'm trying to liquidate 400 shares of FAST that have a healthy capital gain due to my buy smart, hold long behavior (>400%). I thought to use CC to have the stock taken at my price and make some extra cash while learning a few things about options. I wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a trade.
Turns out it was a "Seeing Eye Single" and netted me $752 and an APR of 26%.
I still need to liquidate the stock (before the end of the year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of $463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really don't care if my stock is taken at 41 because the difference between 44 & 41 is
$1,200 which is less than my projected option income of $1,552. I believe the earnings call will cause the stock to drop (buy the rumor, sell the fact). If I don't get called away in October (or if I BTC the C 41.00), I still have time to write more calls or sell the position out right before the end of the year. If the stock drops below 40 and remains there, I'll continue to hold the position and continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Virginia K on
I saw the "net credit" on my broker's site, what does it mean? Virginia
Another way of looking at your two trades is to do the BTC and STO simultaneously (through a multi-leg order). Then, in deciding on the parameters for your order, you can just worry about the net difference between your sell premium and your buy premium. Depending on the broker, there also MIGHT possibly be a savings in commissions.
I just looked at the Oct 20 option chain for FAST, and the bid and ask prices at that time were:
$41 strike $2.30 $2.45
$44 strike $.80 $.90
So, for example, if you wanted to increase the chances of the trade happening right away, you could submit an order with a net credit of $1.40 ($2.30 - $.90). Or if you wanted to hold out for a little more money, you could try for a net credit of $1.65 ($2.45 - $.80). Of course you could set the order at whatever level you want and see what happens.
Using the current stock price, the APR for a net credit of $1.40 would be about 33%, and for a $1.65 credit it would be about 39%.
I'm trying to liquidate 400 shares of FAST that have a healthy capital gain due to my buy smart, hold long behavior (>400%). I thought to use CC to have the stock taken at my price and make some extra cash while learning a few things about options. I wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a trade.
Turns out it was a "Seeing Eye Single" and netted me $752 and an APR of 26%.
I still need to liquidate the stock (before the end of the year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of $463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really don't care if my stock is taken at 41 because the difference between 44 & 41 is
$1,200 which is less than my projected option income of $1,552. I believe the earnings call will cause the stock to drop (buy the rumor, sell the fact). If I don't get called away in October (or if I BTC the C 41.00), I still have time to write more calls or sell the position out right before the end of the year. If the stock drops below 40 and remains there, I'll continue to hold the position and continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Paul Madison on
All this discussion is great!
But I do want to say that at times we are going to move from simple to more complex trades. This is one of those times. If you are new to selling covered options it would probably be best to skip these more advanced trades until you get the basics down. You will not need to know these in the beginning but you invariably will want to learn them down the road. I would recommend if you are a newbie that you stop reading now, maybe print this note out or save it somewhere. Someday you will say I remember Paul had a note on "Rolling" and I think I am ready to read that.
So Ron is talking about Rolling which for us Covered Option sellers is when we do a Buy-To-Close at the same time that you do a Sell-To Open. So you are closing one position and opening a second. Ron is right that at most brokers you will save on commissions by doing a "roll" which means you do both of the actions as one trade. To do this at most brokers you actually use a different trade screen and we will take a look at this at some future COOL Club meeting.
So here are some of my rules for rolling:
So when a stock has moved to being in the money versus my strike but by less than the amount I sold the option for then rolling is a consideration. Because I should be able to buy back the option for less than I sold it for and so make some small amount of money on my original trade and go ahead and re-position a second Covered Option Sale. So as an example I sold for $1.50 but the current price is $1 in the money versus my strike. Then as you get close to expiration (the last few days) you should be able to buy it back for right around the $1 level maybe $1.10 or $1.20 or 1.30 (you get the picture).
You will want to wait as close to the expiration as possible so that you are minimizing the amount of "time premium" you are buying. Because remember time premium is something that goes to zero at the point of expiration. Why buy anything that is going to be worthless or if do buy it be sure we spend as little as possible.
If the stock is in the money by more than what I sold the option for, I say just let the stock go (or be put to you in the case of PUTS). You should have made that assessment when you sold the option that you were happy to do the business at the strike. So this is your opportunity prove that you did not lie to yourself and you just need to stick to the PLAN>
So that is the BTC piece, now the STO side of the Roll.
First on CALLS, I think it is wise to only ROLL OUT (later expiration date) or ROLL UP (higher strikes) or ROLL UP and OUT. I do not think ROLLING DOWN on calls makes sense.
Likewise on PUTS I think it is wise to only ROLL OUT or ROLL DOWN. I do not think it makes sense to ROLL UP for PUTS.
My philosophy on the ROLL is I want a 20% or greater APR on the net premium we are collecting.
So if we are doing a BTC @ $1 and we can STO for $1.80 then we are picking up $.80. If we are looking at a $42 stock and we are rolling out say a month, then our APR would be $.80 (the net credit we are receiving) / $42 x 365 / 30 days (difference in expiration dates) = 23%.
That is a lot to take in and we will do a COOL Club on Rolls at some point in the future.
Keep hitting those singles, Malcolm, as that is where the real money is made!
Another way of looking at your two trades is to do the BTC and STO simultaneously (through a multi-leg order). Then, in deciding on the parameters for your order, you can just worry about the net difference between your sell premium and your buy premium. Depending on the broker, there also MIGHT possibly be a savings in commissions.
I just looked at the Oct 20 option chain for FAST, and the bid and ask prices at that time were:
$41 strike $2.30 $2.45
$44 strike $.80 $.90
So, for example, if you wanted to increase the chances of the trade happening right away, you could submit an order with a net credit of $1.40 ($2.30 - $.90). Or if you wanted to hold out for a little more money, you could try for a net credit of $1.65 ($2.45 - $.80). Of course you could set the order at whatever level you want and see what happens.
Using the current stock price, the APR for a net credit of $1.40 would be about 33%, and for a $1.65 credit it would be about 39%.
--Ron
I'm trying to liquidate 400 shares of FAST that have a healthy capital gain due to my buy smart, hold long behavior (>400%). I thought to use CC to have the stock taken at my price and make some extra cash while learning a few things about options. I wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a trade.
Turns out it was a "Seeing Eye Single" and netted me $752 and an APR of 26%.
I still need to liquidate the stock (before the end of the year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of $463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really don't care if my stock is taken at 41 because the difference between 44 & 41 is
$1,200 which is less than my projected option income of $1,552. I believe the earnings call will cause the stock to drop (buy the rumor, sell the fact). If I don't get called away in October (or if I BTC the C 41.00), I still have time to write more calls or sell the position out right before the end of the year. If the stock drops below 40 and remains there, I'll continue to hold the position and continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Paul Madison on
Virginia,
Maybe you got your answer from my last lengthy post but if not. The Net Credit is the amount that you want to collect when do the BTC and STO at the same time. So if you were trying to BTC at $1 and you were trying to STO at $1.80 then the net credit that you would be trying to collect would be $.80.
If instead it says there is a Net Debit then that means it is costing you money to do the two actions and I would not recommend doing that!
Another way of looking at your two trades is to do the BTC and STO simultaneously (through a multi-leg order). Then, in deciding on the parameters for your order, you can just worry about the net difference between your sell premium and your buy premium. Depending on the broker, there also MIGHT possibly be a savings in commissions.
I just looked at the Oct 20 option chain for FAST, and the bid and ask prices at that time were:
$41 strike $2.30 $2.45
$44 strike $.80 $.90
So, for example, if you wanted to increase the chances of the trade happening right away, you could submit an order with a net credit of $1.40 ($2.30 - $.90). Or if you wanted to hold out for a little more money, you could try for a net credit of $1.65 ($2.45 - $.80). Of course you could set the order at whatever level you want and see what happens.
Using the current stock price, the APR for a net credit of $1.40 would be about 33%, and for a $1.65 credit it would be about 39%.
I'm trying to liquidate 400 shares of FAST that have a healthy capital gain due to my buy smart, hold long behavior (>400%). I thought to use CC to have the stock taken at my price and make some extra cash while learning a few things about options. I wrote the following trade August 22
STO FAST 4x C 44.00 Oct 20 @ 1.91
I didn't know about COOL Club or how to use APR to evaluate a trade.
Turns out it was a "Seeing Eye Single" and netted me $752 and an APR of 26%.
I still need to liquidate the stock (before the end of the year) and still need to learn.
So... Today I put in an order
BTC FAST 4x C 44.00 Oct 20 @ 0.70
This will close out my position at a cost of $289 for a net of $463 and an APR of 42% in 23 days if/when it fills.
Then I'll write the following
STO FAST 4x C 41.00 Oct 20 @ 2.70 for a net $1,071 and an APR of 62% or whatever is available in that range and ITM.
I know that there is an earnings due on Oct 21, but I really don't care if my stock is taken at 41 because the difference between 44 & 41 is
$1,200 which is less than my projected option income of $1,552. I believe the earnings call will cause the stock to drop (buy the rumor, sell the fact). If I don't get called away in October (or if I BTC the C 41.00), I still have time to write more calls or sell the position out right before the end of the year. If the stock drops below 40 and remains there, I'll continue to hold the position and continue to write up calls.
Comments welcome as I believe I'm only on step 2.
Malcolm
Malcolm Myles on
Follow up on my FAST trades.
I should pay more attention to the clatter. With the Fed
announcement of QE3, the market as a whole spiked. I was entering
my trades at the same time. I missed my BTC trade because the
market ran away from my $0.70 offer.
However, I made another CC on FAST in another account. STO 41.00
10/20/2012 at 2.70. Today the same contract is trading at 3.30 an
increase of 0.60 for one twenty-four hour period. Again - I'm
looking to liquidate the position, that is why I sold contracts so
far ITM.
It took me a long time to learn that "If you made money, you beat
the market... period." There is always a better deal one phone
call, one click of the mouse away from the deal you just made. No
regrets, but I learned a lesson - check the markets pulse
before initiating a trade.
Trading options is obviously a more attention demanding activity
than investing in a company.
Malcolm
(message thread thinned)
Paul Madison on
Options have a lot of noise just like stock prices. You have to be disciplined and focused on the plan.
If you are happy to sell at $41 +$2.70 then don't worry about the premium going up. Your net price of $43.70 is still above the actual market of $43.58 and so the fact that the premium has gone up another .60 is really irrelevant.
If this were expiration day you could either let it go at $43.70 or if the market were let's say only $43 (still $2 in the money) then you could buy to close at $2 (maybe plus a small amount like .10 or .15). You would have made roughly .50 and you could go sell November $44s.
The key is to not let the noise drive you crazy.
Make a plan, stick to the plan, smile and be happy.
On Fri, Sep 14, 2012 at 9:45 AM, Malcolm Myles <malcolm@mmyles.com> wrote:
Follow up on my FAST trades.
I should pay more attention to the clatter. With the Fed
announcement of QE3, the market as a whole spiked. I was entering
my trades at the same time. I missed my BTC trade because the
market ran away from my $0.70 offer.
However, I made another CC on FAST in another account. STO 41.00
10/20/2012 at 2.70. Today the same contract is trading at 3.30 an
increase of 0.60 for one twenty-four hour period. Again - I'm
looking to liquidate the position, that is why I sold contracts so
far ITM.
It took me a long time to learn that "If you made money, you beat
the market... period." There is always a better deal one phone
call, one click of the mouse away from the deal you just made. No
regrets, but I learned a lesson - check the markets pulse
before initiating a trade.
Trading options is obviously a more attention demanding activity
than investing in a company.
Malcolm
(message thread thinned)
Etana Finkler on
We are talking about Bollinger Bands and waiting when the SPY is in the top of the Bollinger Band (BB).
But ALGN is in the top of the BB, so to me it is not in position to write a Put.
To me, the fact that the premium on ALGN is high, with it being on the upper edge of the BB, is confusing.
Would you comment on writing puts on a stock when it is pushing the wrong side of the BB?
Perhaps the high ($.70) premium today for 33 Oct 20 strike on ALGN, is just because it is more likely to trend back down to its range in the BB?
thanks, Etana
On Sep 13, 2012, at 12:14 PM, Etana Finkler wrote:
> When I look at the ALGN chart, it does NOT seem to be in Put position,
> and yet the premium is relatively high for such an inexpensive stock.
> Too good to be true? What am I missing?
>
> thanks, Etana
>
> Paul wrote:
>> I like the ALGN 33's at anything .65 and higher as it gives you 20%+ APR
>> ...33 also happens to be at my buy level.
>>
>> I don't know anything about TSCO, DVA, ROST, or CSTR from a Fundamental
>> standpoint so strictly from an APR standpoint:
>>
>> TSCO .80/85 x 365/36 = 10% nope
>> DVA 1.10/90 x 365/36 = 12% nope
>> ROST .60/62.5 x 365/36 = 10% nope
>> CSTR .70/45 x 365/36 = 16% nope
Malcolm Myles on
Yep...
Love the wife,
Love the family,
Love the friends,
Love the dogs,
Like the stuff
Made money, won.
And I'm really, really, having fun right now... ha! I enjoy
learning and getting paid to do it makes it all the better!
Malcolm
PS - Paul, you aren't charging for you services. And my
upbringing finds that to be an issue. Proceeds from my first
trade based on your information (four figures) is being donated to
three Dog Rescues in the Reno Area - Boxers & Buddies (source
of three of my dogs), WARF (one dog) and Northern Nevada Bulldog
Rescue (we foster for the snorty, smelly loves).
Thank you.
On 9/14/2012 7:58 AM, Paul Madison wrote:
Options have a lot of noise just like stock prices. You have
to be disciplined and focused on the plan.
If you are happy to sell at $41 +$2.70 then don't worry about
the premium going up. Your net price of $43.70 is still above
the actual market of $43.58 and so the fact that the premium has
gone up another .60 is really irrelevant.
If this were expiration day you could either let it go at
$43.70 or if the market were let's say only $43 (still $2 in the
money) then you could buy to close at $2 (maybe plus a small
amount like .10 or .15). You would have made roughly .50 and
you could go sell November $44s.
The key is to not let the noise drive you crazy.
Make a plan, stick to the plan, smile and be happy.
On Fri, Sep 14, 2012 at 9:45 AM, Malcolm
Myles <malcolm@mmyles.com>
wrote:
Follow up on my FAST
trades.
I should pay more attention to the clatter. With the Fed
announcement of QE3, the market as a whole spiked. I was
entering my trades at the same time. I missed my BTC trade
because the market ran away from my $0.70 offer.
However, I made another CC on FAST in another account. STO
41.00 10/20/2012 at 2.70. Today the same contract is
trading at 3.30 an increase of 0.60 for one twenty-four hour
period. Again - I'm looking to liquidate the position, that
is why I sold contracts so far ITM.
It took me a long time to learn that "If you made money, you
beat the market... period." There is always a better deal
one phone call, one click of the mouse away from the deal
you just made. No regrets, but I learned a lesson - check
the markets pulse before initiating a trade.
Trading options is obviously a more attention demanding
activity than investing in a company.
Malcolm
(message thread thinned)
Sharon McAllister on
That is an awesome idea, Malcolm!
On Fri, Sep 14, 2012 at 10:08 AM, Malcolm Myles <malcolm@mmyles.com> wrote:
Yep...
Love the wife,
Love the family,
Love the friends,
Love the dogs,
Like the stuff
Made money, won.
And I'm really, really, having fun right now... ha! I enjoy
learning and getting paid to do it makes it all the better!
Malcolm
PS - Paul, you aren't charging for you services. And my
upbringing finds that to be an issue. Proceeds from my first
trade based on your information (four figures) is being donated to
three Dog Rescues in the Reno Area - Boxers & Buddies (source
of three of my dogs), WARF (one dog) and Northern Nevada Bulldog
Rescue (we foster for the snorty, smelly loves).
Thank you.
On 9/14/2012 7:58 AM, Paul Madison wrote:
Options have a lot of noise just like stock prices. You have
to be disciplined and focused on the plan.
If you are happy to sell at $41 +$2.70 then don't worry about
the premium going up. Your net price of $43.70 is still above
the actual market of $43.58 and so the fact that the premium has
gone up another .60 is really irrelevant.
If this were expiration day you could either let it go at
$43.70 or if the market were let's say only $43 (still $2 in the
money) then you could buy to close at $2 (maybe plus a small
amount like .10 or .15). You would have made roughly .50 and
you could go sell November $44s.
The key is to not let the noise drive you crazy.
Make a plan, stick to the plan, smile and be happy.
On Fri, Sep 14, 2012 at 9:45 AM, Malcolm
Myles <malcolm@mmyles.com>
wrote:
Follow up on my FAST
trades.
I should pay more attention to the clatter. With the Fed
announcement of QE3, the market as a whole spiked. I was
entering my trades at the same time. I missed my BTC trade
because the market ran away from my $0.70 offer.
However, I made another CC on FAST in another account. STO
41.00 10/20/2012 at 2.70. Today the same contract is
trading at 3.30 an increase of 0.60 for one twenty-four hour
period. Again - I'm looking to liquidate the position, that
is why I sold contracts so far ITM.
It took me a long time to learn that "If you made money, you
beat the market... period." There is always a better deal
one phone call, one click of the mouse away from the deal
you just made. No regrets, but I learned a lesson - check
the markets pulse before initiating a trade.
Trading options is obviously a more attention demanding
activity than investing in a company.
Malcolm
(message thread thinned)
Paul Madison on
I just want to clarify your first statement so that there is no confusion. What I have been saying is that we are waiting to sell PUTs on SPY for when the SPY is closer to the bottom of the Bollinger Bands. It is currently at the top of the bands.
I think it is dangerous to be buying stocks without an understanding of the fundamentals and thus I think it as dangerous or more so to be playing options without knowing those same fundamentals. I do not use Bollinger Bands or trading ranges on stock. That is a technique I introduced for talking about broad market indices.
In my opinion, it is not an optimum time to sell PUTs on AlGN. I believe that we saw that the other night on the Sep 5th Cool Club.
You can over-think this stuff and expect to find a perfect, simple recipe (which doesn't exist). The real key is focusing on your fundamentals around a stock. Knowing it well enough that you know when it is undervalued (a good time to buy) and when it is overvalued (a good time to sell). That is the overriding decision process in my investing and my covered options around stocks!
We are talking about Bollinger Bands and waiting when the SPY is in the top of the Bollinger Band (BB).
But ALGN is in the top of the BB, so to me it is not in position to write a Put.
To me, the fact that the premium on ALGN is high, with it being on the upper edge of the BB, is confusing.
Would you comment on writing puts on a stock when it is pushing the wrong side of the BB?
Perhaps the high ($.70) premium today for 33 Oct 20 strike on ALGN, is just because it is more likely to trend back down to its range in the BB?
thanks, Etana
On Sep 13, 2012, at 12:14 PM, Etana Finkler wrote:
> When I look at the ALGN chart, it does NOT seem to be in Put position,
> and yet the premium is relatively high for such an inexpensive stock.
> Too good to be true? What am I missing?
>
> thanks, Etana
>
> Paul wrote:
>> I like the ALGN 33's at anything .65 and higher as it gives you 20%+ APR
>> ...33 also happens to be at my buy level.
>>
>> I don't know anything about TSCO, DVA, ROST, or CSTR from a Fundamental
>> standpoint so strictly from an APR standpoint:
>>
>> TSCO .80/85 x 365/36 = 10% nope
>> DVA 1.10/90 x 365/36 = 12% nope
>> ROST .60/62.5 x 365/36 = 10% nope
>> CSTR .70/45 x 365/36 = 16% nope
Paul Madison on
Malcolm, I am really touched that you are donating some of your gains from learning these techniques.
I am giving my time and energy because others before me gave their time and energy to help me. The world is truly a better place if we all try to give as much or more than we take.
Thank you for sharing and I am sure your dogs are great!
On Fri, Sep 14, 2012 at 10:08 AM, Malcolm Myles <malcolm@mmyles.com> wrote:
Yep...
Love the wife,
Love the family,
Love the friends,
Love the dogs,
Like the stuff
Made money, won.
And I'm really, really, having fun right now... ha! I enjoy
learning and getting paid to do it makes it all the better!
Malcolm
PS - Paul, you aren't charging for you services. And my
upbringing finds that to be an issue. Proceeds from my first
trade based on your information (four figures) is being donated to
three Dog Rescues in the Reno Area - Boxers & Buddies (source
of three of my dogs), WARF (one dog) and Northern Nevada Bulldog
Rescue (we foster for the snorty, smelly loves).
Thank you.
On 9/14/2012 7:58 AM, Paul Madison wrote:
Options have a lot of noise just like stock prices. You have
to be disciplined and focused on the plan.
If you are happy to sell at $41 +$2.70 then don't worry about
the premium going up. Your net price of $43.70 is still above
the actual market of $43.58 and so the fact that the premium has
gone up another .60 is really irrelevant.
If this were expiration day you could either let it go at
$43.70 or if the market were let's say only $43 (still $2 in the
money) then you could buy to close at $2 (maybe plus a small
amount like .10 or .15). You would have made roughly .50 and
you could go sell November $44s.
The key is to not let the noise drive you crazy.
Make a plan, stick to the plan, smile and be happy.
On Fri, Sep 14, 2012 at 9:45 AM, Malcolm
Myles <malcolm@mmyles.com>
wrote:
Follow up on my FAST
trades.
I should pay more attention to the clatter. With the Fed
announcement of QE3, the market as a whole spiked. I was
entering my trades at the same time. I missed my BTC trade
because the market ran away from my $0.70 offer.
However, I made another CC on FAST in another account. STO
41.00 10/20/2012 at 2.70. Today the same contract is
trading at 3.30 an increase of 0.60 for one twenty-four hour
period. Again - I'm looking to liquidate the position, that
is why I sold contracts so far ITM.
It took me a long time to learn that "If you made money, you
beat the market... period." There is always a better deal
one phone call, one click of the mouse away from the deal
you just made. No regrets, but I learned a lesson - check
the markets pulse before initiating a trade.
Trading options is obviously a more attention demanding
activity than investing in a company.
Paul - "I do not use Bollinger Bands or trading ranges on stock. That is a technique I introduced for talking about broad market indices."
Thank you so very much for clarifying. I also thought that maybe Bollinger Bands was another tool/method that we should use on regular stocks, not just with broad market indexes. I'm planning to replay Wednesday's meeting when available and I'm sure it would have become clear. Some times I need to listen to the Cool Club classes 2 or more times before things sink in. Thanks for being so patient with all of us. Your help, knowledge & time is GREATLY appreciated!
And thank you Malcolm for your awesome generosity to the animal charities (I am also a huge animal lover)! As a past animal shelter volunteer & with friends of mine currently running animal shelters, I know your gifts will be greatly needed & appreciated.
Theresa H
On Sep 14, 2012, at 11:54 AM, Paul Madison wrote:
I just want to clarify your first statement so that there is no confusion. What I have been saying is that we are waiting to sell PUTs on SPY for when the SPY is closer to the bottom of the Bollinger Bands. It is currently at the top of the bands.
I think it is dangerous to be buying stocks without an understanding of the fundamentals and thus I think it as dangerous or more so to be playing options without knowing those same fundamentals. I do not use Bollinger Bands or trading ranges on stock. That is a technique I introduced for talking about broad market indices.
In my opinion, it is not an optimum time to sell PUTs on AlGN. I believe that we saw that the other night on the Sep 5th Cool Club.
You can over-think this stuff and expect to find a perfect, simple recipe (which doesn't exist). The real key is focusing on your fundamentals around a stock. Knowing it well enough that you know when it is undervalued (a good time to buy) and when it is overvalued (a good time to sell). That is the overriding decision process in my investing and my covered options around stocks!
We are talking about Bollinger Bands and waiting when the SPY is in the top of the Bollinger Band (BB).
But ALGN is in the top of the BB, so to me it is not in position to write a Put. To me, the fact that the premium on ALGN is high, with it being on the upper edge of the BB, is confusing.
Would you comment on writing puts on a stock when it is pushing the wrong side of the BB? Perhaps the high ($.70) premium today for 33 Oct 20 strike on ALGN, is just because it is more likely to trend back down to its range in the BB?
thanks, Etana
On Sep 13, 2012, at 12:14 PM, Etana Finkler wrote:
> When I look at the ALGN chart, it does NOT seem to be in Put position, > and yet the premium is relatively high for such an inexpensive stock. > Too good to be true? What am I missing? > > thanks, Etana > > Paul wrote: >> I like the ALGN 33's at anything .65 and higher as it gives you 20%+ APR >> ...33 also happens to be at my buy level. >> >> I don't know anything about TSCO, DVA, ROST, or CSTR from a Fundamental >> standpoint so strictly from an APR standpoint: >> >> TSCO .80/85 x 365/36 = 10% nope >> DVA 1.10/90 x 365/36 = 12% nope >> ROST .60/62.5 x 365/36 = 10% nope >> CSTR .70/45 x 365/36 = 16% nope