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Strategies & Market Trends : Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Thehammer who wrote (1955)	10/6/2018 10:21:48 PM
From: robert b furman	1 Recommendation Recommended By chris714 Read Replies (1) \| Respond to of 2591

Hi Hammer, I started selling puts on Cohu, Brks and Amat - all 10.00 strikes and Intc 20.00 strikes. They've moved up beyond where I sell puts. Then I learned about dividend Aristocrats. I sold a lot of T , KMI, HCP,and got nervous on some and bot to close. Then the price went up and I regretted not getting some shares. Over time, I sold puts early and as the price continued down I'd stagger in and a third traunche. Now all of this has been in a long bull - so caveat emptor. Now I try to look at a first selling of puts that hopefully get assigned , then I try to work down lower strike prices that help me pay for the assigned stock. I have a good account and no margin. The real test will be in a downturn - the stock must hold the dividend,and in a decline I'll reinvest in more shares and give myself a pay raise for the next year. That's easy to say and tough to hold. I like over 12 month puts, as the gain is treated as capital gains. I still have a position in a dealership interest and it flows through to my personal income - so tax consideration is key in what I really hold onto. When you buy a dividend payer and it yields around 4% and it trades at near 4 year lows , buy it and hope to sell calls as it hits 4 year highs. It can yield 6-8 %. If you sell a put and the premium to net price pays 12-15 percent - I'll take it either way. The worst is just a good situation. That being said the company must not suspend or reduce the dividend - so they must have a future that includes a stable dividend payout. Some fail and it does happen ! After years of study, you become familiar with some stocks and you swing the range that can be multi year. I think it is the dirty little secret that annuities never discuss. But you must watch it on your own. It so happens I enjoy that now. I'm hopeful of establishing a solid portfolio so it creates stable revenue plus some crazy money to buy the off sector stocks. This last energy crisis was my first buy of that idea - I bot KMI and ENSCO ( Esv). I'm already above water and surprised how quickly it reversed. I love selling puts - it puts time value on your side - an edge I need . LOL If this market goes down and the company gives the same dividend - it buys you more shares and gives you a raise the next year. I'm into growing my future income. <smile> At this time in my life, I own more properties that are hard for me to keep nice and am debt free. I live a country lifestyle and garden hunt and fish. All I need to do is pay real estate taxes and utilities. The rest of the portfolio grows either way. The account grows the fastest when the stocks go up. But when they go down - the dividends buy more and the future revenue goes up. In between I have gardens to take care of - it's not a bad way to retire. I do have reserve cash and if the market gets so bad that dividends get reduced - I'll not have to sell anything. gulp So in a down market, my reserve cash will be buying stock and my dividend stream will increase. I'm OK with that. At this stage of a long bull market - I'm mostly focussed on taking my high growth stocks and converting them into high dividend payers that will continue their payout rate during a decline in the overall market. Just keep reinvesting the dividends and growing your future revenue. Like Warren Buffet said when asked what he wanted to be in the future - he replied " The oldest man in the World!" I suspect he was aware of the power of compounding. LOL I had thought CY was getting to the top of its channel when they announced good earnings. KMI has recovered from the energy collapse. They've indicated they will increase the dividend to 1.00 in 2019 and 1.25 in 2020. So if that happens buying today at 18,makes it a great dividend growth story. About a year ago I sold KMI $18.00 puts which will bring my net purchase price to 15.50-ish and a sweet yield on cost. So I had 11.37 in CY and swapped it out for KMI at 17.90 ish as I sold CY for 18.38. That gave me an upgrade from a 44 cent dividend to an 80 cent dividend with the same number of shares. I call that a raise for next year! That allows me to buy more stock every 90 days - I like it. Good to post with you Hammer - I still remember your excellent advice on several questions I had on dividends in lieu. I've owned CY for about 3 years -originally sold 8 and 10 dollar puts and worked my way up to 12 puts. In 2020 they are 13's. Hope to hear your future thoughts. Best of Trades Bob

To: Thehammer who wrote (1955)	11/30/2018 1:41:40 PM
From: Thehammer	1 Recommendation Recommended By chris714 Read Replies (2) \| Respond to of 2591

Wanted to post an update to my message on 10/6 that covered my current cash covered put positions. We have been in a pretty negative market during that time frame although it has turned a little more positive in the last week. This was my posted positions from 10/6: Some of my current shorts: AGN JAN $200 BA DEC $330 CCI JAN $110 HD JAN $200 HON DEC $150 IONS JAN $50 LMT DEC $310 MCD DEC $170 PH JAN (20) $200 QCOM JAN $62.5 SJM $ OCT $105 WBA JAN $72.50 AGN was assigned early and I am underwater on the position. My Net purchase price (includes all put premiums is $179.00) I tried to roll but there was nothing there for a position this far in the money. If the premiums are less than the dividend....) BA = still open with a lot of time value. BA has been above and below exercise price. As I write it is almost $10 above exercise price with over $6 in time value and less than a month to go until expiration. CCI = this position has spent a lot of time ITM but is currently above exercise price $2 out of the money and $2 in time value remains. Waiting until time value gets closer to dividend. HD = Position was way in the money and Time Value was below dividend. Rolled position out a year. If assigned my net purchase price would be around $180.00 HON = HON has spun out two separate securities GTX and REZI. This option included both of the spinouts (10 GTX 16 REZI). I rolled the position out to JUN w/o the two little boogers and I lowered the exercise price to $145. I rolled while there was still considerable time value left but I wanted to only be short clean HON and I took advantage of the price action to lower the exercise price. Annualized return has been about 8% and net purchase price would be about $119 IONS = The price action has been positive and the stock is well out of the money although with Bio this can change in an instant. Will reevaluate position when time value is less than $.25 LMT = The position is now in the money by about $12 with over $2 in time value and less than a month to go before expiration. Note that it was ex today for a $2.20 dividend. I will wait until closer to expiration to make a decision. However, this is an interesting study. If the price goes up or the VIX declines, my "options" decline. Right now I could roll down to either March or June at a decent credit. At this point, I prefer that the stock stays ITM but not with a big sell off. MCD = MCD has been hitting all time highs after being ITM and underwater for quite some time. MCD is $17 over strike price and options are trading near my repo price $.25. I may spread it out to March but at the $170 strike it still gets me about 5%. MCD has been volatile and don't want to go over $170 strike in this market and this stock. MCD also shows some of the advantages about having a diversified portfolio. It has done well in a pretty bad market. EDIT: Just rolled to March with $170 strike. I have had 27 trades / roll in MCD since 2011. My net purchase price would be under $110 and have had an annual return of near 6% but this trade will lower that. PH = Sitting on position well in the monet buy over a year to expiration. Net purchase price would be $103 with 7% annualized return. QCOM = almost 2 months to go until expiration ITM and about a buck of time value. Will evaluate as time value erodes. QCOM has been above and below strike. Techs got hit hard in sell off especially semi. QCOM has been buying back stock and looking forward to end of legal issues with Apple. SJM = Had rolled down to 100 strike in October for expiration in January. Stock got hit recently but has bounced quite a bit. WBA = Stock was below strike for a long time mainly due to concerns with Amazon. Now about $12.00 above expiration with Time Value getting low. May roll soon or may look to something more lucrative. Have been in and out of WBA puts. Timing not always the best but have managed a 6.7% annual return. Feel free to comment or post questions. With the market volatility may need to look for different opportunities. Generally like to stick with dividend growers.