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Investing with Options

Discussion in 'Trading/Investing Resources' started by valuex, Feb 10, 2019.

  1. valuex

    valuex

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    Exxon Mobil - XOM - Cash Secured Puts
    Feb 7, 2019 Sold 1 Weekly CSP strike 71,5@0.25 . Expiry Feb 15. Weekly return 0.34%. Annual return on Investment 15.9%
    Strategy: Buying stock at discount price from their intrinsic value. Selling Cash Secured Put to lower my entry price. If assigned I sell Covered Call to further down my cost basis and increase my income
    This kind of operation is ideal for investors and not for traders.
    Risk: Cash Secured Put is not like a selling naked put. In case of assignation ,your maximum risk is to own the stock.
    https://www.notonlyequity.com/596-2/
     
  2. valuex

    valuex

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  3. valuex

    valuex

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    Sold 1 Weekly GD Cash Secured Put , strike 167.5@48 Expiry Feb 22, Weekly return 0.28% AROI 13% (notonlyequity.com)

    Strategy: Buying stock at discount price from their intrinsic value. Selling Cash Secured Put to lower my entry price. If assigned I sell Covered Call to further down my cost basis and increase my income
    This kind of operation is ideal for investors and not for traders.
    Risk: Cash Secured Put is not like a selling naked put. In case of assignation ,your maximum risk is to own the stock.
     
  4. fiftyeight

    fiftyeight

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    Risk: Stock goes to the moon and you are left collecting a bit of premium you collected.
    Risk: You analysis is wrong and you are left holding a company that remains underwater for years.

    I like this this strategy and a few here use it effectively but a bit more to it.

    Have you run any back tests?
     
  5. valuex

    valuex

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    Pepsi, sold cash
    https://www.notonlyequity.com/pepsico-inc-cash-secured-puts/
    First risk :Example , if you buy stock at 100 and place your CC (always for example) at 110 and market go up over your 110 is true you have 10+premium like gain and you miss the rise.
    In this case you have to choose : 1) keep my limited gain 2)roll my position higher.
    Second risk : Cash secured put in my opinion is good only for blue chip just because as you said , market could plunge and you keep your stock. Blue Chips usually are stock with the biggest competitive advantage and their probability to recover is higher. It's true you have to wait until they recover their value. But you are talking about a big companies. Different for a small medium company . Your risk is bigger.
    No I didn't run backtest for a simple reason: Not always I think CSP and CC are the right strategy . I do when market condition permit it. For a backtest you have to use this tool with continuity. Example when market drop under your break even point I stop to sell CC. I keep my stock , usually a blue chip and wait to recover my value. Perfect solution in my experience and opinion doesn't exist.
     
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