...Pure annualized return appears to favor put selling and that it seems to me that it would be better use this to provide a consistent day in and day out cash flow..... appreciate any and all comments on which approach others prefer as well as a critique of this logic....
Duncan, everyone has to establish their own objectives to determine which strategy is correct for them. In my case, I want cash flow (30%/year on the base). I don't particularly care to own stocks, so I try to stay in cash and T-Bills. I generally sell PUTs looking for expiration. Been doing this regularly for a few years. I'm sometimes envious when I hear people talk about the 10 baggers, however, in the long run I recall that the tortoise won.
My approach has brought others to invest with me, so now I'm very conservative in my trades.
So to my point, the tight rules that I use for PUT selling has been working in a neutral to rising market, so why can't the same rules work when applied to selling CALLs (naked) in a neutral to falling market. I don't know why not as it seems to make sense, so I'm trying it cautiously. I've read all the stuff about how dangerous it can be, but I heard the same about naked PUTs before I began, and I did fine during this downturn. I prefer to march to my own drum, but with eyes wide open and cash to cover.
The point is, your personal objectives should help to drive the strategy (approach) that you choose.
Hope that's helpful.
Tom |
