Author Topic: What are you buying today?  (Read 1737079 times)

boilermaker75

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Re: What are you buying today?
« Reply #3280 on: October 05, 2018, 02:31:52 PM »
Wrote Oct 5 expiration, 29.5 strike BAC puts for $0.30 per share.

Wrote Oct 19 expiration, 29.5 strike BAC puts for $0.42 per share.

Wrote Oct 12 expiration, 30 strike BAC puts for $0.36 per share.


John Hjorth

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Re: What are you buying today?
« Reply #3281 on: October 05, 2018, 02:58:22 PM »
Boilermaker,

I just hope that you - some day in the future - will share your experience over time with these kind of trades here on CoBF. I bet it'll be educational!
ĒIn the race of excellence Ö there is no finish line.Ē
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

boilermaker75

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Re: What are you buying today?
« Reply #3282 on: October 07, 2018, 02:15:32 PM »
Boilermaker,

I just hope that you - some day in the future - will share your experience over time with these kind of trades here on CoBF. I bet it'll be educational!

John,

Nothing profound about what I am doing.

I am a LTBH investor.

First, I use writing puts to enter positions. All my current positions were entered that way. It gives me the discipline to wait for my price. I donít have that patience with just limit orders. Besides I get paid while waiting to be exercised, probably why I am more patient, and it lowers my basis by the put premium. A criticism would be not acquiring a position because you donít get put to. This has only happened to me once. I wanted to acquire some MCD at $50 and was never put to. So, I missed out on a three-bagger so far.

Secondly, I use puts to do some trading. Usually stocks I already own and at prices I would not mind if I were put to. 80% of my positions are written when the expiration is a few days to about a month out. For the other 20% the expiration is 1-2 months out when I write the put. I am selling insurance and collecting very nice premiums, but unlike insurance, if I have to pay a claim I end up with a stock I donít mind owning at the price I am put to.

Third, it is also a way to be margined in the sense if I would be exercised on all my outstanding puts I would be on margin. From 2008-2016, if I were put to on all my outstanding puts, I would have been around 25% on margin. I only ended up slightly on margin a couple times and by writing covered calls (equivalent to writing a put) I was quickly off of margin. Since about January, I have been writing puts where I would be just slightly on margin if put to on everything. Currently I am short puts on BRKB with strike prices of 200, 205, 207.50, and 210; BK with strike prices of 50; WFC with strike prices of 54; BAC with strike prices of 29, 29.50, and 30; and GILD with strike prices of 70.

Fourth, I also like to write puts to play risk arbitrage. For instance, when BRK was acquiring BNI I was writing at-the-money puts on BNI. If I outright bought BNI, I would have to wait till the acquisition closed to know my return. By writing puts I was setting the date when my play would be completed and what my return would be. I then followed an expiration with writing more puts. I did this till BRK closed on BNI.

Mike

spartansaver

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Re: What are you buying today?
« Reply #3283 on: October 09, 2018, 03:07:06 PM »
Boilermaker,

I just hope that you - some day in the future - will share your experience over time with these kind of trades here on CoBF. I bet it'll be educational!

John,

Nothing profound about what I am doing.

I am a LTBH investor.

First, I use writing puts to enter positions. All my current positions were entered that way. It gives me the discipline to wait for my price. I donít have that patience with just limit orders. Besides I get paid while waiting to be exercised, probably why I am more patient, and it lowers my basis by the put premium. A criticism would be not acquiring a position because you donít get put to. This has only happened to me once. I wanted to acquire some MCD at $50 and was never put to. So, I missed out on a three-bagger so far.

Secondly, I use puts to do some trading. Usually stocks I already own and at prices I would not mind if I were put to. 80% of my positions are written when the expiration is a few days to about a month out. For the other 20% the expiration is 1-2 months out when I write the put. I am selling insurance and collecting very nice premiums, but unlike insurance, if I have to pay a claim I end up with a stock I donít mind owning at the price I am put to.

Third, it is also a way to be margined in the sense if I would be exercised on all my outstanding puts I would be on margin. From 2008-2016, if I were put to on all my outstanding puts, I would have been around 25% on margin. I only ended up slightly on margin a couple times and by writing covered calls (equivalent to writing a put) I was quickly off of margin. Since about January, I have been writing puts where I would be just slightly on margin if put to on everything. Currently I am short puts on BRKB with strike prices of 200, 205, 207.50, and 210; BK with strike prices of 50; WFC with strike prices of 54; BAC with strike prices of 29, 29.50, and 30; and GILD with strike prices of 70.

Fourth, I also like to write puts to play risk arbitrage. For instance, when BRK was acquiring BNI I was writing at-the-money puts on BNI. If I outright bought BNI, I would have to wait till the acquisition closed to know my return. By writing puts I was setting the date when my play would be completed and what my return would be. I then followed an expiration with writing more puts. I did this till BRK closed on BNI.

Mike

How long have you been following this approach?

Are there any other circumstances where it was detrimental?

RichardGibbons

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Re: What are you buying today?
« Reply #3284 on: October 09, 2018, 08:21:07 PM »
Are there any other circumstances where it was detrimental?

Not boiler, but in early 2009, I tried to get into FDX when it was at $39 for a long term buy and hold, but I decided to get into it by selling a weekly put to try to pick up $1 extra or something. The stock ended up bouncing to $45 before the put expired, so I didn't get assigned the shares.

I never actually purchased any of it, so that decision turned out poorly.

boilermaker75

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Re: What are you buying today?
« Reply #3285 on: October 10, 2018, 06:35:29 AM »
Boilermaker,

I just hope that you - some day in the future - will share your experience over time with these kind of trades here on CoBF. I bet it'll be educational!

John,

Nothing profound about what I am doing.

I am a LTBH investor.

First, I use writing puts to enter positions. All my current positions were entered that way. It gives me the discipline to wait for my price. I donít have that patience with just limit orders. Besides I get paid while waiting to be exercised, probably why I am more patient, and it lowers my basis by the put premium. A criticism would be not acquiring a position because you donít get put to. This has only happened to me once. I wanted to acquire some MCD at $50 and was never put to. So, I missed out on a three-bagger so far.

Secondly, I use puts to do some trading. Usually stocks I already own and at prices I would not mind if I were put to. 80% of my positions are written when the expiration is a few days to about a month out. For the other 20% the expiration is 1-2 months out when I write the put. I am selling insurance and collecting very nice premiums, but unlike insurance, if I have to pay a claim I end up with a stock I donít mind owning at the price I am put to.

Third, it is also a way to be margined in the sense if I would be exercised on all my outstanding puts I would be on margin. From 2008-2016, if I were put to on all my outstanding puts, I would have been around 25% on margin. I only ended up slightly on margin a couple times and by writing covered calls (equivalent to writing a put) I was quickly off of margin. Since about January, I have been writing puts where I would be just slightly on margin if put to on everything. Currently I am short puts on BRKB with strike prices of 200, 205, 207.50, and 210; BK with strike prices of 50; WFC with strike prices of 54; BAC with strike prices of 29, 29.50, and 30; and GILD with strike prices of 70.

Fourth, I also like to write puts to play risk arbitrage. For instance, when BRK was acquiring BNI I was writing at-the-money puts on BNI. If I outright bought BNI, I would have to wait till the acquisition closed to know my return. By writing puts I was setting the date when my play would be completed and what my return would be. I then followed an expiration with writing more puts. I did this till BRK closed on BNI.

Mike

How long have you been following this approach?

Are there any other circumstances where it was detrimental?

I have been doing this for 20 years.

The only other thing detrimental is making a mistake in valuing a stock, no different than if you were valuing the stock to outright purchase. Actually, writing a put is a little more conservative than outright purchase at the strike price because your basis is lowered by the option premium.

boilermaker75

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Re: What are you buying today?
« Reply #3286 on: October 10, 2018, 06:40:05 AM »
Are there any other circumstances where it was detrimental?

Not boiler, but in early 2009, I tried to get into FDX when it was at $39 for a long term buy and hold, but I decided to get into it by selling a weekly put to try to pick up $1 extra or something. The stock ended up bouncing to $45 before the put expired, so I didn't get assigned the shares.

I never actually purchased any of it, so that decision turned out poorly.

Yes that will happen. But for me I more than make up for that occasional miss, which for me so far has only been once in 20 years, by the put premiums I collect from expired positions and the lower basis on stock purchases from the decipline writing puts gives me to wait for a better price.

John Hjorth

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Re: What are you buying today?
« Reply #3287 on: October 10, 2018, 06:41:43 AM »
Great explanation of your use of writing puts and the way you think about it, Mike. Thank you for sharing.
ĒIn the race of excellence Ö there is no finish line.Ē
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

boilermaker75

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Re: What are you buying today?
« Reply #3288 on: October 10, 2018, 07:08:56 AM »
Great explanation of your use of writing puts and the way you think about it, Mike. Thank you for sharing.

You are welcome John!

nkp007

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Re: What are you buying today?
« Reply #3289 on: October 10, 2018, 08:01:20 AM »
Valium.