Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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.

Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: mach who wrote (162171)	1/8/2012 10:14:26 PM
From: Jim P.	3 Recommendations Respond to of 206184

Wow, so many option strategies that I know are better thought out then how I play. I like long dated calls every now and then on stocks I think will appreciate significantly. I hold some and exercise and some are sold. I prefer in the money calls to limit time premium. I like to sell puts only on stocks I would like to buy and if selling for the premium have gradually switched from out of the money to in the money puts. I do not want to take the time to recycle options monthly even though I am sure there are people making very good money doing this. I have sold SD puts out as far as January of 2012. Time value worked out to a little over 2 percent a month. June puts we're closer to 3 percent. At the time I sold some of the 8s the stock was below 7. It lets me participate in some of the gains as a kicker if the stock does go up while taking very little additional risk of selling out of the money puts. The reason I like to go out so far is that you never know when a stock like SD will run beyond where I am willing to sell puts. Last year I stopped selling when the stock was over 8 and it spent a lot of time there. This year I am willing to keep playing as long as the stock is under 10ish. I do own some SD but the option premiums are too tempting to just buy and hold. I do the occasional out of the money call and consider it mad money and a drag on my account. I have made a lot of money doing it but it is very inconsistent. I find buying the more expensive in the money calls forces more discipline on when I make the trade since even though there is less time value, paying sometimes close to $10 per share for an option makes me more careful about then entire picture instead of just throwing a couple of quarters down per share even if it is the same amount. For a while the only way I would play options was by taking a loan from my 401K. It may seem crazy but when you have to make payments to make a trade you simply do not trade unless the odds are stacked in your favor. I did this for 3 or 4 years and used the profits to pay off the loan and upgrade house car ect to improve my day to day living. Sometimes it would be one or a few trades a year and sometimes none. Since then I simply ran out of home improvements to spend the profits on and have been compounding the money faster then I expected. I still try to maintain the discipline that the loans forced on me but it is not quite the same and I have to stay on guard against my greedy side getting the better of my fearful side. Jim