<<I never was able to sell them: guess no one wanted to buy them: they were SSTI puts for Jan '01 30: I was asking 5 7/8 which is what one went for but probably should have tried for less.
I think buying more of the stock will make more money than selling the puts: but it's so nice to collect the premiums.
Freeus
SSUMF>>
Well, I mainly do simple buying of calls and writing of covered calls. I have looked at buying puts, instead of writing CC's, but I always come back to the point that CC's are giving me money, while puts, you are spending money for the protection. I consider it too much like insurance, and I hate paying for insurance, so I always end up going the CC route. In hindsight, I sure wish when cmgi and qcom were at 200, I had bought puts, instead of CC's. The meteoric drop in a matter of weeks really screwed any chance of cc's being of help. Sure, made a tad bit of premium on 1 or 2 writes, but c'mon, we are talking about stocks that went from 200 - 60 and 200 - 30, so again, puts in the $180 range sure woulda been nice<ggg>
Lately, I have been reading up more on the selling of puts, and must admitt it intrigues me. For instance, right now, I know I would be willing to buy a few hundred more shares of ssti if it were to hit the $25 range on a dip. So why not sell maybe 5 - 7 puts and see what happens. First, I gain the premium immediately, correct?! If ssti keeps going northward, well then I simply made some free money on a stock I was willing to buy. If it does drop, then, alas, I get the stock at $25, plus the premium already collected, which lowers my cost basis. I would imagine the donside in this is that I would be committing to buying the stock at $25 at expiration.....what if it is at $10? Well, bottom line is I had no idea it was gonna hit $10 right? I mean, sitting at $30, my crystal ball did not say we would hit $10.....I was committed to buying more ssti at $25 regardless and would have done so anyway........so, why not take the premium????
So, in looking at it like this, and I must be missing something so hopefully one of the Call/put guru's will read this.....Lets say I want to buy a stock...any stock....hell, lets say I have 5 stocks, and with each one, I am looking to buy at a dip. make believe I am looking for more rmbs at $70 and will buy if it hits that price. Instead of putting in a buy order and seeing if it hits, would I not be better off taking the premium for selling that month, or the next months $70 put? I guess the differance is that a buy order will get you the stock as soon as it hits $70, whereas, you have to wait til expiry on the puts to see if you get the stock.....Ok, that makes sense......But, lets say, I dont want the stock, I only want to generate income, the same way we do with the CC/stock as a vehicle thing. Could I not pick out a stock that a felt pretty damned good about it being considerable higher in a few months...for instance, RMBS. I think we will be much higher in januaray....I could be risky and get more premium by say...selling the jan 80, 90, or 100 puts, or I could be safer and sell the jan 60's or 70's.
Am I missing something here ? I see alot of stocks out there that I would be willing to buy if they go lower.....why not sell puts ????? I also see many stocks I think will be much higher months down the road. Stocks like rmbs, ssti, sndk, qcom and etc....I would hope will be considerably higher in january, then in sept/oct. Would now not be an ideal time to sell puts on some of these stocks we think are going much higher...just to collect the easy premium. And if so, I assume the safest way is to sell atm puts instead of going with higher strikes, except, if your a high roller, and can afford to take the gamble. For instance, some on this thread think the RMBS could be at $200, maybe $150 by January. Right now at $80, you could make a nice, nice premium by selling jan 120 puts...and then if you were real smart, you take the premium you just collected and make it work for you as well....
anyway...sorry for the long post. I've been trying to study up on put selling a little more and would love to get some views from the porch.
great weekend to all
keith@callsputsbuyssellscoverednaked.....sheeeez!.com |
