jill.....re: options strategies"
find your level of risk tolerance and risk aversion, do what is comfortable for you, and has proven profitable. it is all dependent on your psychology. if you thought a stock was the proverbial "falling knife", you would neither sell puts or buy calls. please examine the following:
you state taxman buys calls to exercise at a later date, i sell puts with no objection to assignment. taxman uses qcom as an example. he can buy an itm,atm,otm call and his cost is higher then today's market price. i can sell a put and my cost if assigned is always lower then current market. stock moves down, i have a cushion, the seller can partially win, the buyer can't. seller wins at or above strike minus prem, buyer wins at or above strike plus prem. if you are bullish either way works, but in a volatile issue "backing in" at a strategic moment is not so bad....sold earlier in the year aol 200(now100 split adjust) for 84 prem...adj cost 116(58post split)...i had it "put" to me when the common was in the 80's pre split...blew out part position kept a bit...net gain...if i had bought calls.....net loss
all depends on one's vantage point... |
