Hi Berney; <G> The big caps have the edge in as much as indexers
have to buy more of them when things go up, and when things go
down they sell more, BUT the other FUNDs don't, they get worried in down turns and dump the smaller caps first as they have learned over time it's harder to get out of small caps. Big melt
downs can come if to many small caps get over bought.
Value line didn't exactly say it that way, but anyone that really
looks at value line will see that over the years all down turns
hurt the smaller caps the most.
-------------------------
I see you like trading INTC, I saw a video of an INTC option floor trader, it was all he did. If one has a longer window I can't
see how they can get hurt trading INTC, some people will say this
is nut's. But with the high premium on INTC puts, why can't you
buy the stock on any dip, then short it against the box, ( the
broker can't tell you he don't have the shares, and can't buy you
in ) at that point you write puts just out of the money.
Like right now I can get 5-1/2 for Jan 80 Puts, if they put it
that closes my short and me I'm in at 74-1/2. Takes over a 10%
drop to hurt me even a little bit. But at that point I can
short her again & write more puts to where crap I could follow
her right on down shorting and writing puts. The risk is not
much, but when she starts up, I get the put money, hey she could
go flat and I could likely make 24% a year or more writing puts.
The whole time I'm just about ( zero invested ).
I haven't tried this yet, but have been rolling it around in my
mind. Heck if she goes up so what my rear is covered she can
go to high heaven and not hurt me except for commission cost to
trade out of her, I still keep the premium and it's just about
free. Just thinking out loud, I know I've not covered all
the angles yet
-------------
Case 1 she goes up
Say I buy at 83..( a bit rich right now ) but I go for it anyway
and short her ASAP likely getting 82-3/4 anyway..I'm out a 1/4
point , sell the 80 puts for 5-1/2. she goes to 90 by Jan
I keep the put money, close my short , and sell the stock OR
ARB out so to speak, what the heck has it cost me yet my net
would likely be $5 or better, less the interest I didn't get
on that part of my Money Market funds were she was above 82-3/4
( that's maybe another 1/2 at most ) so cut the net to
4-1/2 or even $4..what's wrong with that for a 1/4 point down
payment ?
-------------------------
Case 2 she drops to 75.
I'm short at 82-3/4 ..she is put to me at 80, ( 2-3/4 ) then I
have the 5-1/2 premium = 8-1/4..I paid 83, minus the 8-1/4
I'm at 75 & about even. But at this point if the put closed
my short, why can't I short again and sell another set of puts,
if I do that chances are she would have to hit the 60s to hurt
me. With a little foot work and some reserve capital, I can
likely front run any down turn buying more, shorting
and selling puts , it takes a 10% drop in any one day to
block me from saying ahead of her on a down turn. How often is
INTC going to lose 10% in one day ? And if she does I can likely
count on a bounce, best time in the world to double up, even
then I have very little invested. As I'm always just as short as
I am long, all I'm fighting for is the put premiums. Which
in time I think I can wind up on the winning side. Heck I could
start it off without buying and shorting, and just sell puts
and then short and sell more puts if she comes to me.
So now I'm not out anything if she hits, 80 gets put to me, I still
have the 5-1/2..she really has to hit 74-1/2 to nip me, & why
can't I short my own stock & sell more puts from that point ?
Seems to me on any blue chip stock if you write puts you have
an edge, and always a fresh crop of get rich fast newbies who
think that buying put's they are going to get to you.
So what if they do once or twice, sooner or later they will give
it back.
----------------------------
Well so much for thinking out loud, don't anyone try this without
checking out more angles from someone smarter than me. I used
INTC as an example just for the sake of having one, there could
be others that have more premium built it. I also think you want to
find one that don't have any history of GAPPING down any 10% ,
on the open, but still has enough premium to give you that
much of a window to front run her on the down side.
All that aside I'm more tempted to play NB right now 4-1/8
premium at 50..have to drop to 44-7/8 to nip me. Now at
55, so that would take another 18% drop to cost me anything,
I think I could stay in front of her easy enough.
Jim
Ps
wxp.atms.purdue.edu
got one eye on George, date and time is in upper right,
subtract 5hrs for your location.
|
