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George Acs

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  • Margin Accounts For The Conservative Investor [View article]
    The only real difference in our approaches is not based on the amount of capital, it is based on expectations for a particular ROI threshold. Regardless of your available capital, volatility is an equal opportunity factor in the premium equation.

    The ability to get a satisfactory ROI on a rollover trade while still being able to roll down to a lower strike price is clearly a factor related to volatility, which itself may have micro and macro influences. Those premiums are agnostic with regard to the amount of capital you have or to your own particular ROI thresholds.
    GOing out to longer time frames, as you do, is helpful. I prefer a week at a time and will only look toward longer time periods when I can't achieve a satisfactory premium, in absolute terms and am willing to take a lower time adjusted ROI while waiting out recovery in price.
    Mar 26 01:02 PM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    If you look at the "My Trades" page on the OTP site, almost all of the personal trades that aren't part of the Trading Alerts are the sale of puts. It does require a different mindset though and somewhat different temperament.

    Personally, I prefer using those companies that have some volatility or have just faced an acute event to have driven the price lower. That offers an opportunity to select an out of the money strike, perhaps a few levels lower, and still achieve that 1% ROI objective.
    Mar 26 12:06 PM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Ideally, when rolling over a put I would love to also lower the strike price, but as volatility is low that's not quite as simple as I'd like it to be if I also want a net credit after the rollover, which is pretty important as far as priorities go.
    Mar 26 11:27 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    I completely agree with the primary objective behind selling puts. While it is generally referred to as a means to get into a stock at a more attractive price that includes being taken for a ride if the rug is pulled out from underneath.

    In such cases a rollover may not give a spectacular ROI for that specific trade, but it keeps you in the game and without taking on the same level of liability as outright ownership.

    The key is the perseverance that may be necessary, because as you say, "I eventually win the battle"
    Mar 26 10:17 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thanks. It is a nice way to make a little extra money off a decaying product, although that model may have been first identified by the funeral industry.

    It would, as you say, be a lot better in a higher volatility environment, but that environment itself brings lots of stress and uncertainty. All in all, though, I much prefer navigating through that kind of environment.
    Mar 26 08:28 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thanks.

    I too have this love affair with silver, although every now and then when I want to be reminded of where it can lead I go and dig out a bar from about 1979 or 1980 that still hasn't gotten back to its $50/oz or so price tag.

    I used to roll futures contracts years ago and it was far to anxiety provoking for me, although the late 70s could do that to you, especially in precious metals.

    While I think that the upward trend can ultimately be nothing but higher, it's all of that in-between stuff that makes the day to day, or contract to contract stuff a little disconcerting.

    These days I love the AGQ/ZSL trades. Lately it has been more on the AGQ side and I simply rollover call options week after week or leapfrog weeks by splitting up my holdings and selling the call options for different time frames. Every now and then I think that I could run an entire portfolio of nothing else, regardless of which direction the metals goes. It's just that those occasional large and sustained moves can cause some damage.
    Mar 25 01:17 PM | 1 Like Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    I wrote an article a few years ago about Riverbed Technology ( http://seekingalpha.co... ) that was part of an homage to Jim Cramer.

    To this day, I have no idea what the company does, but am now sad to see it likely to leave the public stage as it was one of my most profitable recurring positions, almost exclusively from call sales.

    Ultimately, there are a million people digging deeply into every aspect about every major company. Why do I need to know any of that stuff? It's not as if I'm going to discover something and put myself at an advantage. All I care about is how can a company's stock be used as a vehicle to make money.
    Mar 25 10:03 AM | 3 Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    From an ROI perspective, that's not necessarily accurate, especially if referring to the use of margin in the sale of puts, as I have in this article.

    Even if you continue to stick to the same strike level when rolling over a put to avoid assignment it generates a net credit on the rollover. If you can't get a net credit, then you should take assignment, but time value alone, even in an extremely low volatility environment provides a net credit. Even a tiny one is found money as it is funded purely by your brokerage, at no cost to you other than trading costs.
    Mar 25 09:58 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thanks, margin has lots of deserved bad press, but like with many things, there can be a good side, as well, at least in the universe of investing strategies that I like to use.
    Mar 25 09:42 AM | 1 Like Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thanks.

    In essence it is no different from what happens in a cash account when you sell puts. The money isn't really taken from your cash balance, it's just placed into escrow, in the event that it's needed and also prevents you from trying to spend the same money twice.

    In the case of margin they just reduce the amount that is otherwise available to you for borrowing, but you have never really "borrowed" the amount placed into escrow on your behalf.

    By the way, my publicist would be upset with me if I didn't cite the correct name: OptionToProfit - none of that chintzy use of numbers in place of words.
    Mar 25 09:35 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    While it's true that a large drop in shares can lead to assignment, you don't have to accept that as if it's an unavoidable fate.

    Rolling over those contracts not only generates more income from premiums, it also eliminates the need to draw on the line of credit and it buys you time for the share price to recover.
    Mar 25 09:32 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    All good strategies.

    The sale of puts, however, whether they end up expired or assigned, are recognized as short term capital gains. So if using put sales with some frequency you would require sufficient short term loss offsets.

    I prefer paying the taxes and am happier when the volume of such profit generating trades is on the rise.
    Mar 25 08:23 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Both hedge funds and mutual funds can leverage through the use of borrowed money. Even the smart money is capable of doing stupid things.
    Mar 25 08:18 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thank you.

    When it's all said and done, margin is more likely to be a stress creator, but it can also be used creatively and with very little liability. I find that if I use it for the reasons cited in this article and not as a substitute for my own cash, it relieves certain stresses and opens some opportunities.
    Mar 25 08:14 AM | Likes Like |Link to Comment
  • Margin Accounts For The Conservative Investor [View article]
    Thanks, although margin could double that 50% deficit.
    Mar 25 08:12 AM | 3 Likes Like |Link to Comment
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