Comments on: Naked Options versus Covered Options: Where Should We Take a Stand? https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/ Learn how to invest by selling stock options. Thu, 14 Sep 2017 10:23:05 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-126541 Thu, 14 Sep 2017 10:23:05 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-126541 In reply to Justin P..

Justin,

Nice going!

As the spreadsheet shows, without the dividend, your 1-month realized return in this trade is 3.4%. Adding in the $0.43 dividend as a credit, it becomes 3.9% (share credit + dividend -option debit divided by cost of shares).

Keep up the good work.

Alan

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By: Justin P. https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-126535 Thu, 14 Sep 2017 07:31:14 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-126535 Alan,

Thanks for your last response. Re EDU and it’s special dividend, I’d just like to confirm that I’m plugging the right numbers in 🙂 They paid a special div of 43c (after the 2c bank fee was taken out as you mentioned to Mario). Thus my strike price of $85 was altered to 84.57, and would I now change my stock purchase price from the original 8.50 to 8.07 and leave it at that? (I managed to close my position on Wednesday at 8.90 for the options and 93.59 for the stock – handy since I have to wait T + 2 before I can use the funds again.)

Best, Justin

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By: MarioG https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-125938 Sat, 09 Sep 2017 12:59:58 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-125938 Justin:

Advantages of Blog comments coming in your mail:
A1. It simplifies your life if you can get the Blog comments to come in your email. A2. You can delete the email after reading the text. Gmail throws them away automatically after 30 days. (You can also force deletion immediately, if you wish) B1. You can mark those comments important to keep B2. You can mark those comments you cant to revisit later. B3. You can mark those comments you do not have the time to read. B4. You can mark those comments you want to reply to later C. You do not miss any replies that are buried in earlier comments. D. You do not have to visit BCI site and search for replies links.

Gmail:
I finally figured out a simple system with Gmail to mark my emails. I have always had problems on how to mark my email with a system I could remember and use effectively. I use a green-check for completed emails. Yellow-Star for review later for less important items. Red-Star for Hot items to get to later (replies, reviews, important to keep. In Gmail settings you can just enable those flags and in what order then can appear.

For example I can search gmail for “BCI Has:Red-Star” and all the BCI emails I need to reply or review or important to keep are selected. Search for “has:red-Star” and I get all my important action items or important to keep.

Search for “has red-Star -put “bearish market” and I get all emails which are important for reply or review that does not mention the word “put”.but does mention the phrase “bearish market”. Result was a January 24, 2016 BCI email from Alan Ellman on Covered Call writing Inverse ETFs in extreme bear markets.

Mario

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By: Alan Ellman https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-124838 Sun, 03 Sep 2017 14:20:35 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-124838 In reply to Mario Guerrero.

Mario,

Check out these links for articles I have published in the past on this topic:

http://www.thebluecollarinvestor.com/when-strike-prices-disappear-contract-adjustments/

http://www.thebluecollarinvestor.com/special-1-time-cash-dividends-for-stocks-with-improving-technicals/

Alan

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By: Roni https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-124535 Sat, 02 Sep 2017 13:53:40 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-124535 In reply to Justin P..

Justin,

I confirm.

The broker will credit your account 75% of the dividend, and pay the tax of 25% automatically.
All non residents are treated the same by the US authorities.

Roni

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By: spindr0 https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-124523 Sat, 02 Sep 2017 12:17:23 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-124523 In reply to Mario Guerrero.

Mario,

30+ years ago, I spent a summer by the pool with the first edition of McMillan’s “Options as a Strategic Investment”. I read many chapters multiple times. For those on the learning curve, I recommend the 3rd edition which can be picked up used at ThriftBooks.com for under $4. There’s no need to fork over $60 or more for the 5th edition until one gets much higher up the options food chain and interested in more sophisticated newer products and strategies. I’ve seen it used for $35 – $40 but the best deal is always the library :->)

I’m also in the path of Irma. It’s been a good long stretch without that hassle. Well. fingers crossed but looking for my water wings, just in case…

Spin

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By: Mario Guerrero https://www.thebluecollarinvestor.com/naked-options-versus-covered-options-where-should-we-take-a-stand/#comment-124488 Sat, 02 Sep 2017 05:46:59 +0000 http://www.thebluecollarinvestor.com/?p=15871#comment-124488 In reply to spindr0.

Spindr, Justin – Thanks for the comments and for information on the impact of the special dividend.

I have 1200 shares in 4 positions, 300, 400, 200, 300. Will comment further in the next blog. They were all OTM last Friday 8/25 with Last Price 77.79 Stiike 80 and Gain of 3% and now they are ITM with a special dividend. Nice set of events.

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SpinDr – Will also comment later on my current reading of McMillan’s Book Options as a Strategic Investment and the Study Guide.

The Book came as an Inter-library loan from Nashville Public Library 1029 Pages!, Fifth Edition (2012) – Tremendous book. Clarifies a lot of questions I had.. Will have to check it back in and then checkout again from some other library for me to fully read the book. It is available from Barnes and Noble for $60.00 but that is for a later decision while I can check it out for free.

The Study guide is from the Broward County Library. 4th Edition – Still useful since it covers the basic chapters.

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Another thing on my plate… IRMA in the worst scenario may hit South Florida around Sept. 12… That is the I take off to NYCity for a 4 day vacation to see a few Broadway shows and sights.

That is also Expiration Week…

Things to ponder.

Mario

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