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TranceAddict Investors Club @ Marketocracy (pg. 179)
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| Comrade Stalin |
So, you may be surprised at how much I have learned about options in the last few months. I'm now trying a call writing strategy. I am writing at-the-money calls of the following securities, for about a $1000 cash credit on each one. If any of these positions goes against me, I buy back the option, and roll it over to the newest at-the-money call option. In the end, I will always make a profit, even though I may suffer losses during the roll-over periods. I am bearish on all of these, meaning, I think they are likely to decline in value. The Japanese Yen (FXY) may be overvalued, deflationary, over there. These positions should get me about $12,000 if they all go my way and I stick to my strategy with iron discipline.
Currency ETFs
FXM
FXY
BZF
Country ETFs
EWD
ECH
GXC
EPI
EWS
EWM
EZA
Sector ETFs
IYR
IYZ
Shakka, what do you think? |
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| Capitalizt |
| quote: | Originally posted by Comrade Stalin
If any of these positions goes against me, I buy back the option, and roll it over to the newest at-the-money call option. In the end, I will always make a profit |
No offense..but do you really think you've discovered something that people who have been in the business 10...20..30 years never thought of? There are no sure things on Wall Street. I hope you don't get burned krypt. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
So, you may be surprised at how much I have learned about options in the last few months. I'm now trying a call writing strategy. I am writing at-the-money calls of the following securities, for about a $1000 cash credit on each one. If any of these positions goes against me, I buy back the option, and roll it over to the newest at-the-money call option. In the end, I will always make a profit, even though I may suffer losses during the roll-over periods. I am bearish on all of these, meaning, I think they are likely to decline in value. The Japanese Yen (FXY) may be overvalued, deflationary, over there. These positions should get me about $12,000 if they all go my way and I stick to my strategy with iron discipline.
Currency ETFs
FXM
FXY
BZF
Country ETFs
EWD
ECH
GXC
EPI
EWS
EWM
EZA
Sector ETFs
IYR
IYZ
Shakka, what do you think? |
I don't know, but Cap is right. Two things you should never say in this business are "always" and "never." Also, you should never (oops, I said it) predict time and price, rather only one of the two or you will almost always be wrong about something.;) |
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| Comrade Stalin |
| quote: | Originally posted by Capitalizt
No offense..but do you really think you've discovered something that people who have been in the business 10...20..30 years never thought of? There are no sure things on Wall Street. I hope you don't get burned krypt.
I don't know, but Cap is right. Two things you should never say in this business are "always" and "never." Also, you should never (oops, I said it) predict time and price, rather only one of the two or you will almost always be wrong about something. |
Of course someone thought of it. I got this strategy out of the book, "Stock Options As A Strategic Investment". Losses are possible as is the strategy completely breaking down if there isn't enough margin to cover the positions. But if the strategy is followed with discipline and only a minority of assets used to do it, then I am far more likely to simply, collect premiums, and make profits.
Everyone is telling me writing stock options is where the money is at, Shakka included. So, we'll see about that!
P.S. My EWS short call bid just went to zero temporarily which meant my position was at its maximum profit for a few seconds. I could have sold and taken $700 off the table and was thinking about doing so but as I was staring at the bid and ask, the price discrepancy fixed itself. Damn it! Shouldn't have had a bid of 0, now it's at $.40 |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Everyone is telling me writing stock options is where the money is at, Shakka included. So, we'll see about that!
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I didn't say that's where the money's at, I said it's easier to make money with options by writing them than buy buying them! You can still lose your shirt if you're not careful. Every time I hear the jokers on Fast Money they're trying to teach retail-Joe some complicated options writing strategy. I'm afraid it will end in tears for many of their listeners. |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
I didn't say that's where the money's at, I said it's easier to make money with options by writing them than buy buying them! You can still lose your shirt if you're not careful. Every time I hear the jokers on Fast Money they're trying to teach retail-Joe some complicated options writing strategy. I'm afraid it will end in tears for many of their listeners. |
Ah, I see. Well, I took your advice, and started writing call options. I like Fast Money, but there is no way to teach those options strategies in a 2 minute segment. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Ah, I see. Well, I took your advice, and started writing call options. I like Fast Money, but there is no way to teach those options strategies in a 2 minute segment. |
Are you writing covered calls or naked calls? |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
Are you writing covered calls or naked calls? |
Naked. And bought 400 shares of TNDM along with 4 Sept 2010 $10 put options. This portfolio made about 1% on Friday. I'm certainly happy about that. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Naked. And bought 400 shares of TNDM along with 4 Sept 2010 $10 put options. This portfolio made about 1% on Friday. I'm certainly happy about that. |
If you're writing naked calls, there's your risk. I hope you've thought through them thoroughly. |
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| Comrade Stalin |
Yes I have. Here is my strategy. Using made-up numbers though for simplicity.
Stock XYZ @ $50
SELL 10 Jan 2012 $50 call options for $2.00 ($2000)
XYZ rises to $55
BUY 10 Jan 2012 $50 call options for $2.50 ($2500): loss $500
SELL 10 Jan 2012 $55 call options for $2.60 ($2600)
XYZ rises to $60
BUY 10 Jan 2012 $55 call options for $3.25 ($3250): loss $650
SELL 10 Jan 2012 $60 call options for $3.30 ($3300)
XYZ declines back to $55 and the 10 Jan 2012 $60 call options expire worthless, leaving me $3300. So I rollover when I am at a loss, and eventually I make profits. The key is to have enough margin and the discipline to carry it through to the end. Eventually the stock will decline. |
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| Comrade Stalin |
| Shakka, what licenses or credentials do you have? What type of degree did you get if any? Do you have a Series 7? I am trying to get into a hedge fund in Los Angeles so knowing what credentials I need would help. Thanks. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Shakka, what licenses or credentials do you have? What type of degree did you get if any? Do you have a Series 7? I am trying to get into a hedge fund in Los Angeles so knowing what credentials I need would help. Thanks. |
I graduated with a B.S. in economics (though I don't know how important that is in the big scheme of things.) I have Series 7 and 63 licenses. I do not have an MBA or a CFA designation as the manager I work for doesn't believe they add much value (in spite of him having both). That is not to say a CFA or an MBA are worthless, just depends on a number of factors I suppose. You can't get the 7 until you're in the industry--you can't just go out and take that test, you have to be sponsored by someone who holds your license. It is generally something you do AFTER you've already been hired. |
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