SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Freedom Fighter who wrote (5793)1/19/1999 8:13:00 AM
From: Bob Rudd  Read Replies (2) of 78490
 
<Shorting overvalued stocks..selling calls> Glad to see ideas on how to capture widest spreads between intrinsic value and price. However, 90% of option players lose. The ones that win usually are selling rather than buying premium [like your suggested strategy] and are full-time professionals with real-time info - quotes and arbitrage model calculations & access to lowest bid-asked spreads. Occasional players dabbling in strategies are their lunch. Occasionally 5 sigma events blow the pro's out of the water when something that can't happen does [Crash of 87 produced lots of this, also collapse of Long term Capital Management]. Highfliers like net stocks can and do gap up beyond reason or estimation. Premium expansion in response to these moves can be unpredictable [A bad thing when you're short premium]. Any strategy involving selling puts or calls should IMO, be preceded by calculation of maximum adverse move impact..and adjustment of position size or use of spreads to limit risk.
I think the CBOE offers info on basic option strategies to provide overview..for more in depth treatment, Larry McMillan has authored some of the most highly regarded books on option strategies.
I don't do options for many of the reasons listed above..prior exploration lead to those observations.
BTW: Since many on this board consider the subject of shorting high-fliers..and the exploration of strategies for doing so, to be outside the realm of value investing, should we consider moving further discussion to John G's Shorting stocks: High fliers forum:
Subject 15251
Most of the folks that post there have primarily fundamental, research-driven orientation.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News