*** fyi: One market strategy might be writing covered calls, that is, selling a call option on a stock you own, which gives you some protection on the downside and allows some upside gains while using the decay of the time premium on the call option to your advantage. It does not work if the market crashes, that is, it does not keep you from losses when that occurs although you would a lot less than just owning the stock and not selling(writing) a call option on it.
One of the best times to do so is a day or two, or hours before expiration on the 3rd Friday of the month, which is today, because the current month option will expire, thereby making the next month, November, start to be worth less when it becomes the front month on Monday.
Of course, it is not a sure thing, does not insure you against losses when the market crashes, and it limits your gains when the price goes way up, although you can buy the stock back and write another call on it if you want, or just buy the stock back. One is always better off in cash or going short when the market crashes.
Usually you sell the strike price that is at the money or as close as you can get to the money in this kind of mkt environment
You sell one contract for every 100 shares you buy, and both trades should be done at the same time.
The premiums are huge right now due to the high VIX and volatility of the market, which makes it more inviting to write covered calls.
The front month is usually preferred, so it would be November right now.
regards,
drbob |
