Hi all, like some of you, I have been looking for a decent trade to finish off the month. This morning I sold NFLX jan/160. I received .28 for a return of around 1.7% This has 26+ points of cushion and 8.5 days left in the month. So a decent return on what should be a 'safe' play. Nflx earnings are 1/24
Still letting the time value leak out of my CMG's.
Do be careful with this earnings season. The mkt has come along ways and some profit taking is due. I'm not negative on the mkt, just careful.
18 comments:
Thanks Jerry. I jumped in at .26 bid. My only concern is that NFLX seems to be way overpriced, so I immediately set a protective stop. With only 8 trading days, seems like a great move, though. I don't expect to be stopped out, but it'll help me to sleep better.
howdy,
I sold the 165 jan puts last week for a premium of $1800. NFLX was trading at its support level of 176 and i was hoping for it to rebound after all the negative news it had received prior to that. Seems like we will be ok thru options expiration in Jan.
g'day - my trigger finger is getting itchy to sell some FEB puts; discipline, discipline :)
lol @ newportnews... i understand totally. im stuck in some good trades but im so far ahead in the trade im ready to jump. i will stay in my posistion and wait until the time is right.
I have the 145s that I sold at 1.03 a couple weeks ago......where I'm in a little trouble is a bear call spread I sold (190-195) last week.....that said, NFLX has a lot of technical resistance at 190 right now....expiration Friday is the Monday before NFLX earnings.....i think NFLX will stay right around where it is now by next Friday or go a bit lower....just a gut of course, but I think more people will take a little profits before earnings than those who buy into it, knowing that it's come such a long way and is overpriced. Then again, others could make the correct argument that it's gone into earnings in this spot before and skyrocketed.
Fish,
I'll bet you're getting a lot of profile views :-)
Wire, the NFLX 145's look great but if you can do naked puts, why do you have the bear spread? The good is that it can not go any lower. The bad of course is it is already 'in the money'
So I guess the idea is hold on through earnings. The position can not deteriorate any lower.
As I have said in the past, a problem with these spreads is it get traders to use strikes to near the current price. It gives the feeling of a safety net as it will limit your loss. But who wants a loss?
I avoid them and go for deeper cushion. But like you said, NFLX might make a run towards the earnings day.
However. my advice for traders is to avoid situations where you have a lot of guesses. When traders start saying, they might make a run towards the earnings. Or If they just go up a little, I will be ok etc. This is not a position you want to be in to become a winner. Turn all odds into your favor, double check the numbers and then pull the trigger. Never enter a trade with the idea that if they just go up maybe 5 points, I will make good money. Make my type of safe trades and sit back with boring profits. That is the winner position.
Do you ever sell cash secured puts in an IRA for lower returns? Do you ever take assignments and sell covered calls until you can exit at a profit?
Hatch, not really to all your questions.
I have never been assigned in 14 years of doing this. That is because I bail before it gets to that point.
I have sold some covered calls many times but not because I owned the stock when I didn't want it.
Many traders sell options with the idea that they will own it at a discount and sell covered calls as needed. That is not all bad but in my way of thinking the last thing I want to do is own a stock that has dropped 20-30 point during a one month period. I leave so much cushion that if a stock falls this far, it is a dog!!
Hope that helps
Jerry
I sell Puts in my IRA but since you can't use margin (since 100% of the cash value of the strike is secured), my strategy is different in IRA's. In my IRA, I make sure that I select stocks that I would not mind owning (REPEAT I make sure that I select stocks that I would not mind owning), and I do select strikes that are much closer to the stock price. I use JOSB a lot in my IRA since the price tends to fluctuate between 35 - 48. Recently, I like to use the 40 strike with JOSB in my IRA, and if the stock price is at or below the strike during expiration week, I'll just roll it to the next month (i.e. buy back the current month and sell the next month at the same strike - as a calendar spread), and just keep doing this month after month. If I do get the stock put to me, then I'll sell the 40 call, but I prefer rolling the put. NOTE, THIS IS NOT THE CRUMBS METHOD -- RATHER, IT's AN IRA STRATEGY SINCE IRA's REQUIRE 100% OF THE CASH TO BE SECURED.
John,
May I ask do you have Roth or traditional IRA? My ex-military husband has a small but growing amount of 401K since he got out of Navy after 22 years of service. Well as expected, the investment is very much in negative territory since he has it with Morgan Stanley. So I want to take over ...
Just sold 30 LVS 0.15 fill Feb 35.....this is about a 4.3% return....LVS trading at 49.31 this is a 30 percent cushion.....I like this one.
One more quick note.....there's also a decent chance LVS breaks through the 50 resistance and I can close these at a nickel within a week or two.
Hannah,
I have both Roth and Rollover -- both with ThinkOrSwim. One other thing I should mention, too, is that I can also trade vertical spreads in my IRA's, too. I have used Bull Put Spreads for leverage, but I'm very cautious with this kind of leverage in my IRA. In using cash secured puts, I feel that the worst thing is a stock getting put to me (and again, one that I would be comfortable getting stuck with) -- but with a Bull Put Spread, there's no future recovery if the price drops below the spread. One should be VERY comfortable and knowledgeable of the risks associated with spreads before using them --- paper trade, paper trade, paper trade --- and then paper trade some more.
John -
I use a similar strategy sometimes called "the wheel of fortune". Works particularly well with range-bound stocks. Sell puts at the lower end of the range until the stock gets put to you, then sell covered calls until the stock gets called away...rinse, repeat. Using weeklies will yield more return than monthlies on high volatility stocks like LVS, SLV, FAS, etc.
Thanks John. I didn't like Spread - unless one is correct in the directional move,it's a lose-lose situation. Many argue that it helps with margin - it actually worsens the losing positions. But all gains for brokers with more contracts.
Like you said it's ok to be assigned with good stocks we don't mind having for a while and sell calls to get rid off them.Of course, be very conservative and cautious.Thanks again.
Sold some more WLT this morning:
Current price is 136.70
Sold WLT JAN 120 for .25 (ROI Margin is 2% for 8 trading days)
16+ pts cushion (12%)
Probability of Expiration is 93%
Uptrending Chart
Hey Jerry,
I ordered your kindle book, but having a tough time reading it on the computer. It gives me headaches for whatever reason. Do you have a PDF that I could have to print & read? I obviously will not re-distribute it and a ethical business man. Let me know so I don't have to copy it page per page. Thanks! dmow15@gmail.com
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