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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe)
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To: ---------- who wrote (361)9/23/1997 11:45:00 AM
From: Fred Weiss   of 2241
 
Doug - Well stated.

I think the most important thing for me was accepting the fact that I didn't have to trade everyday to meet my objectives. And secondarily that I had to stop trying to hit a home run on every trade.

The leveraging afforded by options and margin is more often an enticement to lose money than an amplifier of great stock selection.

Trying to follow too many issues and over-diversifying has not worked for me either.

These days my entire portfolio will be invested either in 2 or 3 stocks that I like and on which I sell covered calls, or I will sell naked puts on stocks that I would like to own. I use about 75% of my margin and shoot for premiums on options that I sell that will return 8 to 10% of the stock price by the next expiration at a strike price at or above what I have paid for the stock.

Using margin and with all associated costs, my monthly return in those months when I am able to meet the above objectives is about 15%. If I can't meet the objectives I don't trade, but most months I can. I never sell a stock at a loss unless the fundamentals have changed.

With compounding, each $1,000 in my portfolio becomes $4,000 in a year if I am able to execute my strategy 10 months out of the year.

If I had been executing this strategy for the 2 1/2 years that I've been trading, I would have the option of retiring comfortably at this point in time.

This morning I sold covered calls on COMS Oct 50's at 4 1/4. I bought the stock last week at $46. I am also in RDRT at $26 and have a sell to open order in for the Oct 25's at 3 5/8.

Good trading.

Fred Weiss
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