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re: Best place to invest today?
Posted on 5/17/16 at 5:58 pm to Iowa Golfer
Posted on 5/17/16 at 5:58 pm to Iowa Golfer
on apple what I did was I sold the $60s, why the $60s bc thats where I dont mind stealing apple, honestly $75 and lower I dont mind but for the sake of it all I went with $60. In order to purchase 100 shares at $60 my cost would be $6,000. I received $2.65 in premium so x 100 shares $265 per contract. So if god forbid apple was below $60 by this date in 2018, my purchase price would be $57.35. Would you buy apple at $57.35 today, you damn right you would mortgage your house and do so lol.
So in reality if jan 2018 rolls around and apple is $60.01 or greater I take my profit which is $265 per contract and move on to the next trade. Is that a big money trade, no not really I make 4.4% based on $265 made per $6000 risked, but in reality its higher bc the trade requires 10% margin so you make $265 per $600 risked. Thats actually a 50% cash on cash return. If apple hits $60 in 2018, theyre gonna have like $40/share in cash by then and the buyback on full tilt so by all means the SPY would have to be in full crash mode for that to occur, just my opinion but who knows maybe somehow this iphone 7 is a total flop, but I wouldnt mind bc Berkshire Hathaway just paid $109/share.
Anyways I currently typically take names i like, like apple at its levels and sell puts weekl/monthly at levels I want. Why would I pay full price for apple at $94 today when I can sell a contract and get it for $92 next week or profit. Ya get my drift? From there lets say I get apple shares at $92, I get my premium another say 50 cents a share and my basis is $91.50. I would turn around and sell say $92.50 calls for the following week and hope to get called away or profit and lower my basis.
Selling cash covered puts and covered calls every week is like getting 52 dividends a year and dictating a price you're willing to be a buyer at, its definitely a recipe for a great return on your portfolio annually. Currently im not a big fan of where the market is, there are too many macro events globally from chinese credit issues to venezuela to an election here that Im not really wanting to buy anything so im selling puts on names I like with a little more cushion to the downside.
Give me a few months out and my sold puts on googl at $600, Apple at $60, TSLA at $140, FB at $80 and Im a happy man if I can buy those there.
So in reality if jan 2018 rolls around and apple is $60.01 or greater I take my profit which is $265 per contract and move on to the next trade. Is that a big money trade, no not really I make 4.4% based on $265 made per $6000 risked, but in reality its higher bc the trade requires 10% margin so you make $265 per $600 risked. Thats actually a 50% cash on cash return. If apple hits $60 in 2018, theyre gonna have like $40/share in cash by then and the buyback on full tilt so by all means the SPY would have to be in full crash mode for that to occur, just my opinion but who knows maybe somehow this iphone 7 is a total flop, but I wouldnt mind bc Berkshire Hathaway just paid $109/share.
Anyways I currently typically take names i like, like apple at its levels and sell puts weekl/monthly at levels I want. Why would I pay full price for apple at $94 today when I can sell a contract and get it for $92 next week or profit. Ya get my drift? From there lets say I get apple shares at $92, I get my premium another say 50 cents a share and my basis is $91.50. I would turn around and sell say $92.50 calls for the following week and hope to get called away or profit and lower my basis.
Selling cash covered puts and covered calls every week is like getting 52 dividends a year and dictating a price you're willing to be a buyer at, its definitely a recipe for a great return on your portfolio annually. Currently im not a big fan of where the market is, there are too many macro events globally from chinese credit issues to venezuela to an election here that Im not really wanting to buy anything so im selling puts on names I like with a little more cushion to the downside.
Give me a few months out and my sold puts on googl at $600, Apple at $60, TSLA at $140, FB at $80 and Im a happy man if I can buy those there.
This post was edited on 5/17/16 at 6:00 pm
1
Posted on 5/17/16 at 6:18 pm to dabigfella
I get exactly what you're doing. And although cash on cash wouldn't necessarily be a measure many "experts" would use, I notice that you do use it, and I make some assumptions based on that. Good ones.
I'm just not really a tech investor. I don't understand it, and I own little of it due to this. I look at it. I see people make money. I get frustrated by that. All the time.
But one rule I've never broken in major fashion, and it could possibly be a very large error on my part, is never buy anything you don't understand.
Now from that you could draw a conclusion that for whatever reason I don't have the ability or desire to learn about it. And this is something I've thought about a lot lately. Stubborn. Contempt prior to investigation. It has cost me at a minimum opportunity. I posted about it on here once.
But back to one of your main points. Covered calls, and cash secured puts are about as conservative as one could possibly get. So is buying VIX insurance on one's portfolio.
I also like synthetic longs a lot. Someone on here once tried to explain to me my cost to carry equaled exactly that of taking a long position.
Another guy on here knows his options very good as well. He was making a killing during the Chinese "crisis". I think on AAPL. That dude is brilliant. He's just not as outspoken as you and I.
Something you might find interesting is that Buffett has come out and said LEAPS (widely thought to have (possibly too much) time premium built in), are highly susceptible to market inefficiencies, and an extremely inexpensive way to take long term long positions. In his case I think selling puts is a long position. But you and I already consider this long as well for selected stocks we wouldn't mind owning.
I've been watching AAPL and also AMZN. Trying to learn a bit more. Now isn't the time for me. Pre election. No meaningful correction in a long while. No clear trend on industrial or base metals. Earnings has been the largest financial engineering I can recall in my lifetime. AKA, borderline fraud.
There is going to be consequences to the easy monetary policy. I don't know exactly what it will be.. And I'll state the "experts" haven't even imagined in what form these consequences will come.
But consequences bring opportunity if one has cash at the right time. So I'm mostly waiting, and have been for some time now. Miss out on upside? Yes. But also scraped profits off of the equity run up and reallocated some of this already as well. Realized gains. Not gains on some website. For the most part the equity that remains is mostly "house money." I just think it would be ignorant to not take some profit after the largest run up in stocks I've ever seen.
I'm just not really a tech investor. I don't understand it, and I own little of it due to this. I look at it. I see people make money. I get frustrated by that. All the time.
But one rule I've never broken in major fashion, and it could possibly be a very large error on my part, is never buy anything you don't understand.
Now from that you could draw a conclusion that for whatever reason I don't have the ability or desire to learn about it. And this is something I've thought about a lot lately. Stubborn. Contempt prior to investigation. It has cost me at a minimum opportunity. I posted about it on here once.
But back to one of your main points. Covered calls, and cash secured puts are about as conservative as one could possibly get. So is buying VIX insurance on one's portfolio.
I also like synthetic longs a lot. Someone on here once tried to explain to me my cost to carry equaled exactly that of taking a long position.
Another guy on here knows his options very good as well. He was making a killing during the Chinese "crisis". I think on AAPL. That dude is brilliant. He's just not as outspoken as you and I.
Something you might find interesting is that Buffett has come out and said LEAPS (widely thought to have (possibly too much) time premium built in), are highly susceptible to market inefficiencies, and an extremely inexpensive way to take long term long positions. In his case I think selling puts is a long position. But you and I already consider this long as well for selected stocks we wouldn't mind owning.
I've been watching AAPL and also AMZN. Trying to learn a bit more. Now isn't the time for me. Pre election. No meaningful correction in a long while. No clear trend on industrial or base metals. Earnings has been the largest financial engineering I can recall in my lifetime. AKA, borderline fraud.
There is going to be consequences to the easy monetary policy. I don't know exactly what it will be.. And I'll state the "experts" haven't even imagined in what form these consequences will come.
But consequences bring opportunity if one has cash at the right time. So I'm mostly waiting, and have been for some time now. Miss out on upside? Yes. But also scraped profits off of the equity run up and reallocated some of this already as well. Realized gains. Not gains on some website. For the most part the equity that remains is mostly "house money." I just think it would be ignorant to not take some profit after the largest run up in stocks I've ever seen.
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