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.

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

To: sm1th who wrote (2382)	10/1/2022 12:01:09 PM
From: robert b furman	Read Replies (2) \| Respond to of 2591

In this market the premium is in selling puts. People have been trained to buy insurance in down markets. If you want to buy a stock and you like the dividend, sell a put out in time at a lower strike price. You'll either get to keep the premium or get it assigned at that strike price less the premium received. Then divide the dividend by the net assigned price. If you like that yield you'll beK with either alternative. If price goes down you'll be out the opportunity of having received more premium. I never hold myself to a standard of should've made more. All I care about is the possible assignment of price that gived me a yield I can live with. Been doing this for 6 years. The combination of dividend PLUS premium has accelerated the accumulation of stock in my account. The worst that can happen is a suspension or reduction of the dividend. Once you are comfortable with a stock doing a rangebound fluctuation, you can sell a strike pricecomfortably lower than where it dips to and double down on the number of contracts. When they expire it helps you pay for the ones that get assigned. I'm doing that in large quantities with KMI. natural gas and LNG are utility like commodities and a good solid growth area. KMI pays $1.11 dividend and is well cover by free cash flow. I've been assigned some 17's and I've sold 13's, 14's, 15's and 16's. If any of those are assigned I'll yield 7.25 to 18.5% with the current dividend. KMI has increased the dividend after the Q1 EPS webcast. They signal their intent usually with their webcast tentatively scheduled for October 19th. I've been selling KMI puts in increments going out every 3 months. Renew selling puts usually 6 to 7 out. Once they are close to expiring, I'll add some more sells the week before the next months expiration. Once expiration occurs, the premium takes a dip the next week. Try it on a stock you'd like to get the current dividend on. Start out with 5 or 10 contracts and get a feel for how they inflate the bid ask. If you don't want the assignment , don't sell the put. They will work your mind if you want to buy back to close. I look forward to dips like now, as it coughs up the best buys, most often at a price below where the market offers. Hope that helps! Bob