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Strategies & Market Trends : Option Strategies
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To: Cliff0rd who wrote (1740)8/21/2016 7:24:03 PM
From: Jim P.   of 2591
 
Cliff0rd,

I have made money with options that did not have enough volatility priced in. My successes have been in out of favor sectors with companies selling below net asset value. The timing can be difficult so I have went out as far as I could with the options but a minimum of 6 months. It is difficult to find the right industry, companies within with options incorrectly priced for future volatility and options liquid enough to take advantage of the situation.
Currently the shipping industry has tanker stocks (clean and dirty), bulk shippers and containers ships in a cyclical bear market.
I am playing STNG conservatively but it is a good example of a company that will likely return to full book value over the time that I own it.
I am also selling shorter term covered calls, selling cash covered puts longer and shorter dated and long longer dated call options on STNG so net bullish.
Very complicated industry prone to over capacity and under capacity that will swing profit on the marginal capacity issues. Clean product tankers look like the better bet for the next 2 years.

I also have a terrible record of losing money when I cannot afford to "take risks". If I can afford to lose money and do not get greedy I have a very good track record of making above market returns with some very significant gains some years.

I do not need to have large gains to be successful in the game of life so my main goal is to not lose money while the market is what I consider over priced. If I have capital to deploy next time a sector or the general market becomes more attractively value then it is a better use of my capital then reaching for big wins.

I hope you get lucky and find a gem or 2 every couple of years that are worthy of meaningful bets on option appreciation or you find the style of investing you are describing is successful enough to specialize in.

jim

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