MKB--
I have been in the options trading racket for two months now, and I did not realize how I was doing until I sat down this afternoon and did a careful accounting of my portfolio.
The whole thing is up 58% (including the cost of all commissions) over the total amount of fresh cash that has gone into it, and as far as I can see the real crash hasn't started except for the highest of the Internet stocks.
I find now that holding the longest LEAPS makes it somewhat easier to decide when to sell. That is, if you subtract the current value of the LEAP from the current stock quote, you see what the stock HAS to drop to before the put is really worth anything, and if that looks unrealistic you sell. If you can make 40% after commissions on each roundtrip, it's not as exceiting as, say, making 1000% on one trade on a very cheap, near-term put, but it's steadier and there are fewer commissions.
Of course, all this presupposes a declining market on the whole for stocks priced at P/Es ranging from 80 to 1000 to infinity, for AMZN and others. Should our market be merely in remission before doing a 1988 Tokyo-type climb, I might be in big trouble. I guess we have to allow for that. |
