<p>I like aig lower which is why I like to sell puts in it…</p>
<p>I am going to keep some stock and sell some calls against the position.</p>
<p>I think housing prices are going up so I think that helps the balance sheet of the banks.</p>
<p>I don’t know the tech companies that well. That is your job.</p>
<p>I usually like to buy a little of the beaten down losers at the end of dec because of tax loss selling, but this year, because of possible tax rate increases, people probably won’t be aggressive in selling their losers.</p>
<p>This year, maybe we should be buying the winners that are selling off, like aapl?</p>
<p>orcl reported good earnings and is down today. The sense is that the financials get hit harder as the fiscal cliff continues. They are down more today than the rest of the market. Maybe I should look at defense plays</p>
<p>Do you ever sell calls on stocks you don’t own or call spreads. I hear people make money doing that but I don’t like the idea of being assigned at a price higher than the current price.</p>
<p>Yes. If I do that I don’t want to be assigned
I want the calls to close out of the money.</p>
<p>I am not doing it that much lately. It is riskier.</p>
<p>Just because somebody is making money doing something doesn’t mean we should do it. Everybody has his own risk tolerance. </p>
<p>I worked in an office with 2 guys with a total of 55 years of option experience. We did not trade the same way because we are different people with different ideas of risk and reward. We had different time frames. I actually don’t want to know what they are doing. I did not like
to tell them what I am doing. I don’t want to hear their opinions. I want my mind to decide. </p>
<p>So, just because somebody is making money, if the style makes you
uncomfortable, don’t do it.</p>
<p>I don’t watch CNBC. I haven’t seen 5 minutes of CNBC since my gig was up. I know you like CNBC. That’s fine. I don’t want opinions from CNBC.</p>
<p>This is not ego. It is because I was an option market maker and I traded many different ways. I have never heard of an option strategy involving equity options on cnbc or any other network that I didn’t already do at some point or that I didn’t understand. </p>
<p>Option trading was kind of my career. Not that I always made money. I lost hundreds of thousands of times. I traded a lot. :)</p>
<p>Where are you hearing about people shorting call options?</p>
<p>I’ve read about it in the past amongst other option strategies - nobody that I can remember has mentioned it on CNBC. It in particular doesn’t appeal to me. When I sell puts, its always in something I would want to own. I’d rather be assigned a stock at a lower price in the future than at a higher price. CNBC options folks who I usually don’t watch anyways, like buying call spreads otm - another thing I don’t like to do.</p>
<p>I threw CNBC in the posts I wrote. My own personal bias. :)</p>
<p>Selling calls that are out of the money is a strategy very few public customers partake in because it is risky, and capital intensive. You make a little, make a little, as the calls expire worthless, and then 1 day, the stock goes thru your strike and you end up selling the stock short at prices that are prices below market.</p>
<p>Buying a call spread that is out of the money is ok if you think there is some catalyst for a big move in the stock like a drug approval, or a
takeover, and you know the time frame when this is going to happen. You are gambling. If a trader can get a bigger payoff by buying a call spread than by owning the stock, and the trader is willing to lose the cost of the call spread, then this strategy can work for that trader. Risky. I don’t do this strategy much anymore. </p>
<p>Bestbuy is a possible takeover. I don’t know how possible. I am sure some traders are buying otm call spreads trying to profit if the deal goes thru. Some traders are probably selling otm call spreads believing there is no deal, but want to protect themselves a little in case there is a deal.</p>
<p>I sometimes sell covered calls on stocks I own when I think the market is about to go down. I sometimes sell puts on stocks I want to buy. The only time I buy options is on futures contracts that are very volatile and I am concerned about a position going against me and I am afraid of panicking and taking a big loss too quickly. The options limit my loss exposure and I don’t panic and can ride the trade through big swings.</p>
<p>Yes, razorsharp. You are using options to decrease your risk. Trading futures and options against futures, you do like to gamble. :)</p>
<p>Selling call options short increases risk.</p>
<p>Buying otm call spreads can decrease a person’s risk. It sounds counter intuitive, but if I
am short a stock, and I buy an otm call spread, my risk on the upside is less.</p>
<p>I hadn’t thought of that one. I have shorted a stock and written a put below the short sale price. It’s short of like a reverse covered call. I might have to try buying a call spread if I have a short lasting longer than a day or two.</p>
<p>One of my favorite option books when I started out was a book of graphs that showed various strategies and the profit and loss potential that came from each strategy. </p>
<p>It hss been over 30 years, wow, since I read it. There has to be similar books out there today.</p>
<p>Graphs really help. We have all heard it said that a picture is worth a thousand words. When you can just see it, things start making sense. </p>
<p>I would graph this post, but I don’t have the capability. :)</p>
<p>I have one acct where all I do is sell puts, usually weekly iwm or utx and asml puts. Its up 9% this year. Its for income and used instead of cd’s etc. My other accts are up much much more than this. Typically I buy itm calls and spreads as opposed to the stock if they are have low or no dividends. Right now the only stocks as opposed to calls or puts that I own are VZ and UTX.</p>
<p>“if I am short a stock, and I buy an otm call spread”</p>
<p>You could also just buy a put and sell the otm call…assuming no div and you have the cash in your account so you aren’t paying margin interest…And you aren’t getting interest on the short sale of stock. </p>
<p>For example…</p>
<p>You short the stock at 100 and buy the 110- 120 call spread…
You could instead by the 110 put and sell the 120 call…</p>
<p>You might save money in commission costs…</p>
<p>If you trying to decide to do this…trade the more liquid option with tighter bid/ask spreads…</p>
<p>It probably will be the call…just showing you another alternative…</p>