Comments on: Market Volatility and VIX-Based Exchange-Traded Notes https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/ Learn how to invest by selling stock options. Fri, 23 Feb 2018 12:09:03 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-156977 Fri, 23 Feb 2018 12:09:03 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-156977 In reply to Ben.

Ben,

You’re managing this issue perfectly…start small and work your way up until you find your comfort level. For me, it’s 15 – 25 positions and 50 – 100 contracts per month (plus a few positions in my mother’s account).

In my book, “Stock Investing for Students” on page 137, I offer a series of guidelines. A screenshot of that page is shown below.

CLICK ON IMAGE TO ENLARGE & USE THE BACK ARROW TO RETURN TO BLOG

Alan

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By: Ben https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-156971 Fri, 23 Feb 2018 07:22:37 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-156971 I just subscribed the other day and love all of your material and the two books of yours I’ve read. I’ve been trading covered calls for about 6 months and am familiar with your system and the exit strategies which are my favorite.

The topic is what do with larger accounts.

Do you have any recommendations or information on how to manage larger accounts using your techniques and strategies? I know the usual answer it that “it depends on many factors”. So we could talk generally or from your own experience, or other blue collar investor’s experience that you may have heard about.

More specifically – If I trade with $100,000… would I take 5 or 10 positions per month? If I trade with $1,00,000 would it be handled any differently? I’m curious about how many positions to take each month and if it matters about the share price of the underlying stock. For example, with larger accounts would I buy stocks above $80 or doesn’t it make much difference. Assume risk, taxes and time are not an issue.

I trade in one of my IRA’s and have been practicing your strategies with 50k with 3-5 positions per month on some dividend stocks that I own. I’m planning on moving that up now that I have access to your report.

Thanks.

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By: Alan Ellman https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-155238 Wed, 21 Feb 2018 22:20:27 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-155238 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: Alan Ellman https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-155080 Wed, 21 Feb 2018 19:04:06 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-155080 In reply to Tim.

Tim,

Nice seeing you in Orlando, thanks for stopping by.

At the time you sold the 2nd option, you were deciding between selling an option on that same security or selling the stock for $68.25 and using the cash to buy a different stock. Therefore, we use $68.25 as our cost basis so that we are comparing apples-to-apples.

When calculating overall returns, you can use the Schedule D in the Elite Calculator (free to premium members in the resource/download section) or simply take your portfolio gains (losses) and divide by initial portfolio value.

Alan

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By: Tim https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-155072 Wed, 21 Feb 2018 16:57:02 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-155072 Alan,

I hope all is well. It was nice meeting you in Orlando at the Money Show. I have a question on how to track the cost of a stock that I had a covered call position on but the call expired out of the money. The following is an example:

I bought LGIH at $71.75 and sold an in the money $70 call for $3.90. At expiration the stock was below $70 so the call expired and I decided to keep the stock. This month I sold another out of the money $70 call for $2.80. What should I track as the cost of the stock for this month- the original cost of $71.75 or the current price of $68.25? This is not for tax purposes. This is only for tracking my monthly ROO and other monthly calculations.

Your insight would be greatly appreciated.

Thank you,
Tim

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By: spindr0 https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-153888 Tue, 20 Feb 2018 19:03:25 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-153888 In reply to Mark.

Option assignments require the delivery of shares so you cannot buy a LEAP and use it as a surrogate for share delivery. Even if you could, doing so makes no sense.

Many brokers allow you to designate which shares of your holdings you buy (or sell) but the IRS requires that you be able to prove that designation, either via a broker’s electronic or paper trail. I doubt if that can be done with an OCC assignment but your broker would be the one to verify that.

As for the LEAP idea, they tend to have wide spreads and some amount of time premium. Why expend that extra money (B/A and TP) to buy the LEAP (resulting in a higher cost basis) and exercise it in order to deliver the newly acquired shares (assuming your broker allows designation)? If anything, you would buy the nearest expiry with the lowest time premium to acquire shares at the lowest price possible.

If you don’t want to sell your current shares, perhaps due to tax issues, buy enough new shares at current price to satisfy the pending assignment (assuming that your broker allows designation os shares for assignment). Always try to keep it as simple as possible.

Spin

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By: spindr0 https://www.thebluecollarinvestor.com/market-volatility-and-vix-based-exchange-traded-notes/#comment-153872 Tue, 20 Feb 2018 18:47:02 +0000 https://www.thebluecollarinvestor.com/?p=16937#comment-153872 In reply to roni.

Roni –

You executed your OLED Repair superbly. You came within 43 cents of the ideal result and that margin of error was Mr. Market’s fault. OK, so you were ‘almost’ perfect ;->)

The higher implied volatility due to the recent market correction facilitated getting more bang for the buck and being able to succeed with such a short term Repair. Congrats. I hope tha you have similar success with LOW, TOL, and CRM.

Terry,

If you have any questions about the stock Repair Strategy, feel free to hit me up with them.

Spin

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