Bill; RE>Your put selling stategy seems sound... and in a bull market it really doesn't matter if you have to take possession some times, I guess. <<
Over sight on my part maybe I didn't make it clear,
If you have to take possession, ( it gets put to you ) all it's
doing is closing your short possition at that point. You
predetermined were you would close the short, when you sold the put.
Takes some of that I wonder how long I should hold outa it,
you found the best option prices combined with the different
drops in in price, and let them tell you were the best close of
the short will be, adding the drop+prem aginst what the
calls cost ya. Many variations can be looked at, but the option
table shows you the puts aginst the calls..find the best bargan
there..and let the short close price fit that, don't make the
optins fit the amount you want the stock to drop..make the drop
fit the best option spread. Takes the greed outa it, you
can play it again, & again you don't need a big drop in price..as much
as you need the best premium for your put., vs what calls cost.
Your primary reason for being short, is that you don't really
wind up with the stock if it gets put to you, makin money on the
drop if any is the secondary reason to be short. The put prem,
vs call prem has to show some profit in the event the stock goes
up and not down..for the "lock" to work. You want the lock first
the rest is gravy "if" it comes. Now what you can get for say
FEB puts , might only be 3 were july calls cost more..but all
things being even, you will sell the next months puts several
times at 3 as these expire or get dirt cheap because of a rise
in price and you want to roll forward to get more prem, you buy
back the cheap ones. If shes down and but not enough to get
put to you thats nice..roll you calls down , ( cost a little but
keeps down side profit "locked" in ) it's keeping what you make
that counts in the long haul.
It seems kinda un-American to lock
in a profit, and not even own the stock, or to settel for say little "net gaines" every month and instead of cutting the fat hog on the
rear all at once, you just wittle him down each month. What kind
of chiseler would do a thing like that. <G>
Now if thoes little net gains can amount to just 5% a month on the
dough laid out that adds up nicely in a year, proble more than
the stock will drop.
I wonder what puts and calls on MSFT are a going for, I've always
wanted to short that sucker any way.
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Thing is with this system you gota be around to take care of
business in case she does come to ya. And I can generally make more
off shore than I can husseling my few coins around.
I love playing the market, but it takes a lot of money to make
a living at it that can match my wages when I work.
Jim
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