Met a friend at an Option seminar organised by TDAmeritade, he was sharing of his naked put and covered-call strategy (P-C-P strategy).
Personally, I think the US market is overvalue and there is a need to protect one’s capital by using defined risk option strategies.
Realize that not many like to do the adjustment as it is tricky and the probability of successful adjustment can be 50-50. So use defined-risk option strategies is good enough in my opinion.
For friends still doing selling naked put option, do consider using defined risk or/and adjustment to protect your capital.
Selling Cash-secured put is fine – collect premium.
Selling Covered Call is good – collect premium, capital gain and dividend.
If capital is limited, can do PMCC – collect premium and capital gain.
For those who want the slides. 20161214-option-sharing
If you’ve never failed, you’ve never tried anything new – Albert Einstein
On hearing of GOLD price dropping like drastically, I went in on the tested side to ready to catch a falling knife and intent to pick some assignment with bull put spread.
News of GOLD drop further, I enter with with less contracts thinking it will rebound. There was various window of opportunity to do adjustment but my instinct tell me it will recover.
The next few days it dropped even lower and I enter less and less contract. Overal, I am still positive in wk40 to be profitable, however I could have done better if I were to :-
- Enter smaller to bigger contracts progressively
- Perform adjustment of closure to take loss or profit when market present window of opportunities
- Stick to the PITM and not chase after premium
BREXIT and the danger of listening to the news.
Was on holiday oversea when the monthly option expires that week and I brought only my 4 inch screen handphone to perform transaction. Some of the issues I encontered:-
- Unable to connect to the hotel intermittent wifi
- Hard to use handphone to perform the transaction, instead of close positions, I ended open more position as not familiar with hadnphone version
- A rollover can be done on the desktop easily but when using the handphone it is complex (ended I didn’t manage to rollover)
- Chart on handphone is hard read or analyse
In summary, better close the postions early or rollover during holiday. Don’t waste the holiday.
Why do we need rules?
Not to retrict us but protect us.
What happen if we don’t follow rules?
Mr Market will “fine” you
If still don’t follow rule?
Even heavier judgement
What is the worse outcome if continue to break the rules?
Account wipe out, emotion distress, affect health and family relationshp and to a point of no return.
So it best to follow rules