Comments on: Establishing Our Option-Selling Goals: Total Portfolio Versus Individual Stock Perspectives https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/ Learn how to invest by selling stock options. Thu, 27 Sep 2018 22:16:05 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180208 Thu, 27 Sep 2018 22:16:05 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180208 In reply to Sunny.

Sunny,

Like Jay, I’ve had substantial success with this ETF over the years, mainly in my mother’s portfolio although it has made its way into one of my option portfolios from time-to-time. I use mainly individual stocks. As far as ETFs for option-selling, it does stand out as one of the best a good deal of the time.

Let me offer 2 thoughts for your consideration.

1. Strike selection is based on initial time value return goals, personal risk-tolerance and chart technicals. Let’s say our goal is 26% per year and we are selling Weeklys. That computes to 0.5% per week for our time value returns. Then we determine “moneyness” of the strike where OTM is more aggressive. Use the multiple tab of the Ellman Calculator to calculate the appropriate strike to select based on these parameters and then move immediately to “position management” mode. The strike selection is based on the security price at the time the trade is initiated.

2. I believe we can make money and beat the market with both Weeklys and Monthlys. Make sure pros and cons of each are mastered before implementing the strategy. As an example, Weeklys may generate higher annualized returns (maybe), but cost us 4 – 5 times the number and amount of commissions.

Alan

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By: Jay https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180204 Thu, 27 Sep 2018 21:22:54 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180204 In reply to Sunny.

Hi Sunny,

I can’t speak for Alan but I can give you my two cents! I have held a pile of QQQ for years. Perhaps my best performer. I never dreamed of holding it back with a covered call. Until now. I covered half of it at $186 for about a percent and a half.

I hate to be bearish but these don’t seem the best of times, -Jay

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By: Sunny https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180189 Thu, 27 Sep 2018 14:27:57 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180189 Alan,

In one of your older articles on SeekingAlpha I found that you sell covered calls on QQQ, so you probably have lots of experience with this ETF. I’m thinking of selling weekly (1-2 weeks) covered calls on QQQ. Maybe you could share your thoughts how to act if the share price declines from purchase price. For example we buy QQQ at 185 and sell weekly call ATM and at expiration the stock price declines to 183. We keep the shares and are free to write new call. My question is what would be the better strategy, ‘hold the strike’ and sell 185 call sacrificing some premium or sell, let’s say, 183 ATM with higher premium but have a risk to get assigned with a loss. I understand that it depends on how we see the market, but I doubt it’s possible to time such short market moves correctly. The premise is the markets will reach new highs with time. I plan to paper trade both strategies, but it would be great to get your opinion on this.

Thanks,
Sunny

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By: MarioG https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180167 Thu, 27 Sep 2018 09:13:17 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180167 In reply to Glenn.

Glenn,

Welcome to BCI and good luck with your trading.

For a discussion of what indicators or other factors are used to assess the Market Tone, see Pages 254-255 of Chapter 10 (Exit Strategies) of the Vol 1 Classic Complete Encyclopedia. It includes a discussion of the CBOE Volatility Index and the S&P 500 index. It was good for me to review it. The weekly Premium Report includes the current values and trend for those indexes.

The Vol 2 Encyclopedia, which I purchased this year, also discusses in several places the VIX and Market Volatility and ways to manage it using Covered call writing.

I also did a custom search (top of the blog) using the following search string (include the quotes) or similar searches and found lots of good information dating back to 2012:

“market tone” volatility

Regards,

Mario
.

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By: Glenn https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180143 Wed, 26 Sep 2018 22:33:13 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180143 Alan:

I am enjoying being a CEO of my own retirement. So far I am a member for 2 months and am doing well. Averaging hi 2 percents (2.8 and above) with mitigation of some stocks that went a bit down.

My question for today: Market Direction is important and the Weekly sheet starts out w/ a summary of market news. But do you use particular indicators to determine if the market is bullish/bearish/neutral? I am trying to figure out a good way of “biasing” my stocks and the position of my call sales.

Thank you for an informative and very helpful site. It is helping me independent!

Glenn

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By: Alan Ellman https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180137 Wed, 26 Sep 2018 21:29:46 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180137 Premium members:

This week’s 8-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options as well as the implied volatility of all eligible candidates.

New members check out the video user guide located above the recent reports.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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By: Roni https://www.thebluecollarinvestor.com/establishing-our-option-selling-goals-total-portfolio-versus-individual-stock-perspectives/#comment-180122 Wed, 26 Sep 2018 18:35:08 +0000 https://www.thebluecollarinvestor.com/?p=17084#comment-180122 To all,

after several hectic days, I fimally had a moment to read carefully all the above posts.

I am very impressed of your expert handling of the options trading craft.

I wish to congratulate the success stories, and hope you will continue like this for several years.

Good luck to everybody – Roni

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