Tef, no legs and only one good eye? What has become of thee?
Well, I've been getting the most fascinating insight from Voltaire on writing cc. Some of it is completely contrarian and when you just let go of your preconceptions it makes sense. For instance, normally you write cc on stock you own that you don't want called away, so you write when the stock is overbought, hoping to generate a bit of income on the premium. However if you take a portion of your portfolio and it is only dedicated to generated enough premium by cc to get a fat monthly income, you actually buy the stock at a low and then write ATM or slightly OTM cc. On Elon for instance it closed at 87 today and if you write April 95s you get $13.50. This is about 14%. let's say you do it on 125K, then you get about $19,000 for the month. If the stock gets called away at 95, then you get another $8 you made. So in 6 weeks you make $27,000 to live off. Or if the stock does not go above 95, you still have your stock. And you write May calls, etc. You have no attachment to keeping the stock at all: you are looking to put part of your portfolio into a stock that has rich premiums. This part of your portfolio is NOT about the psychological or fiduciary security of being long a stock over years and years. It just occurs to me now that that security may be somewhat illusory, like people who think that owning land is more secure than anything because they can walk on it.
I think I get it now. He tried to drum it into my head for about 45 minutes. I am mostly long QCOM and that's not the greatest stock to do this on right now as the premiums are not as rich as others. AFFX has really good premiums too but they are REALLY volatile.
More tomorrow...got to sleep on this. I'm sure there will be all kinds of contrary opinions--as people used to fight ed about selling puts. All I can say is being the writer (seeing as I am a writer anyway), i.e. the seller, seems to be the way to go. Especially in this market.
Think I'll sleep on it and dream on it. |
