Comments?
It seems like a reasonable and "pretty" safe style. Of course if we get a '01 type correction, nothing will be safe.
I'm generally trying to get much bigger returns, with the much larger risks that go along with the potential gains. I too hope to have about a 7-8%+ margin of safety, but I'm doing it with very volatile stocks and close to ATM puts.
Most of the stocks that I have found are in the same general industry (biotech), which has an absolutely terrible historic fundamental outlook, ie most of the companies have never made any money. All that said, I have followed the industry (and most of the companies in which I take positions) for quite a while, and think that I have at least a partial handle on why they are valued as they are.
Plus, many of them have events occurring - that it is at least one reason for the volatility. I prefer those with no news, but those are not very common. Case in point, today I wrote some BWNG 7.50 March puts for .35. It has its quarterly announcement before the March expiration. Although I am looking for only 4.6%, the stock is at ~9.30, so there is almost 20% downside in addition to my 4.6%. It seems like a reasonable bet, even with a hugely volatile stock (it is up from 6 this year). Others that I plan on doing more this week or on Monday include VPHM, MDCO, and maybe TRLG. I also have to buy back the call on CHS and extend it - the stock is just taking off today. |
