Comments on: Selling Cash-Secured Puts Instead Of Placing Limit Orders https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/ Learn how to invest by selling stock options. Sun, 26 May 2019 11:13:14 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-210417 Sun, 26 May 2019 11:13:14 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-210417 In reply to Hervé.

Hervé,

If your goal is to own the stock for the long-term and you have a target price you are willing to pay, it’s okay to sell the put anytime as this scenario assumes that we will be going through multiple earnings reports in the long run.

When selling calls or puts for cash generation, we must always avoid earnings reports.

Alan

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By: Hervé https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-210205 Sat, 25 May 2019 16:02:11 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-210205 In the case of a Put used as a limit order, do you advice to avoid earnings too ?

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By: Alan Ellman https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-22579 Sun, 12 Apr 2015 15:50:55 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-22579 In reply to Brian McMorris.

Brian,

An excellent point for option sellers to realize is the impact that market volatility has on our positions. 2008 – 2009 is an outstanding example but also an aberration. When our market assessment is bearish or potentially volatile, I always lean to more defensive investing and will tend to favor ITM calls and deeper OTM puts. I publish my strike balance at the end of all my blog articles.

Overall market assessment is critical in our investment decisions and I appreciate your re-iterating this point with our members.

Alan

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By: Brian McMorris https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-22565 Fri, 10 Apr 2015 18:31:33 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-22565 Alan… there is a word of caution for selling puts here with volatility very low. Option prices are primarily determined by Implied Volatility. With vol low, prices for options, especially puts, is low. If the market is hit with a sudden “event” that causes prices to drop quickly, vol will spike. When vol spikes, premiums will also spike meaning an investor can be trapped in a sold put that falls below the strike price, but has higher premiums than when first executed. So one can potentially experience a double loss.

It probably will not happen, but it did in the 2008-09 period.

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By: Brian McMorris https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-22564 Fri, 10 Apr 2015 18:22:35 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-22564 In reply to Rick.

Rick….I would like to offer my insights on inverse index ETFs. Remember that the underlying for any inverse product, whether “unlevered”, double or triple levered are, derivatives, either futures or options on the referenced ETF. All derivative products experience “time decay” due to the inherent trading costs of creating the derivative. The underlying futures and options are traded monthly (typically). Every trade has a built-in “buy-ask” spread plus commissions. Even institutional investors that create the derivative ETFs will pay these costs, though less than us retail investors.

So, holding an inverse ETF will always lose more than the index gains, when the underlying is going up, and will make less than the index when the underlying is declining. As you note, they are best for day traders.

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By: Alan Ellman https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-22560 Thu, 09 Apr 2015 22:33:53 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-22560 SBUX:

Starbucks split 2-for-1 today…the shares did not go down in value by 50%. Those with positions in SBUX now own twice as many shares at half the price. Those who sold options should adjust strike prices and the number of contracts accordingly.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/selling-cash-secured-puts-instead-of-placing-limit-orders/#comment-22556 Wed, 08 Apr 2015 13:28:44 +0000 http://www.thebluecollarinvestor.com/?p=11594#comment-22556 Running List stocks in the news: TOL:

Toll Brothers is the largest luxury home builder in the US with a presence in 19 states. On February 24th, its 1st quarter earnings report came in @ $0.44 compared to a market consensus expectation of $0.30. Revenues were up 33%. Home deliveries were also up 18% year-over-year. With an improving employment picture and mortgage interest rates at all-time lows, the average price per delivered home rose from $693,000 to $782,000.

The picture looks favorable moving forward as well as net signed contracts were up 16% from a year ago. Both the company and analysts have raised guidance expecting earnings growth of 15.9% in 2015 and 27.3% in 2016.

Our Premium Running List shows TOL in the Building Industry currently ranked “B” with a Scouter rating of 10, a beta of 0.96, weeklys available and adequate open interest for near-the-money strikes..

Check out the chart below to see the beautiful price chart since mid-January (CLICK ON IMAGE TO ENLARGE & USE BACK ARROW TO RETURN TO BLOG).

Alan

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