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George Acs  

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  • I Could Do With Less Transparency [View article]
    That would mean I'd actually have to read the article.

    But you ask the question that should be on the minds of anyone with cash available to invest. At these levels it's not easy finding something that may be worthy or at least not over valued.

    I don't short stocks, but looking at your collection of charts, there may be no more compelling short than the SPX, but logic has a way of being ridiculed by reality.
    Mar 1, 2015. 01:38 PM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    A thoughtful and thought provoking article, as usual.
    Mar 1, 2015. 01:19 PM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    Thanks.

    The safety issue with tax deferred accounts is pretty important not only for the use of options but in stock selection, as well. Without the possibility of having some tax benefits from taking a loss, I prefer to stay away from the MOMENTUM kind of stocks in those accounts.

    On the other hand, I think the sale of stock options in a tax deferred account is great, as you don't have to deal with the issue of the short term capital gains, which are the case even if selling LEAPS.
    Mar 1, 2015. 01:17 PM | 1 Like Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    Thank you.

    I don't short stocks, only their options, most frequently calls.

    The strategy that you are referring to, the use of covered puts, is generally practiced in a high interest rate environment where you sell very deep in the money puts and short the shares, investing the proceeds from the put sales into an interest bearing instrument and hope that shares don't move higher before expiration.

    I simply like selling cash covered puts, as long as a stock is not about to go ex-dividend and I think that shares have either finished their short term decline or will be staying flat or going higher.

    I've thought about documenting a case study on my 1 year experience with Twitter, which included starting with the sale of cash covered puts on numerous occasions that included their expiration, their rollover to avoid assignment and their assignment with the eventual need to sell calls.

    The blow by blow of about 50 trades (the various lots are color coded) that demonstrates how such a position(s) can be managed through stock price variations is at http://bit.ly/1E6xWzq

    I think that cash covered put sales are a great addition to the arsenal and have had a hard time understanding why some brokerages, such as ScottTrade have not offered them to customers.
    Mar 1, 2015. 01:12 PM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    You're right, in global terms, but this time around it was all about the timing of that volatility.

    When the week is coming to its end and I've made the mistake of counting my chickens before they're hatched, I could do without that volatility.
    Mar 1, 2015. 11:19 AM | 1 Like Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    It's all in the definition and perspective.

    Physical laws confirm that information travels faster when the opaqueness of the interface is decreased and there's no doubt that the information is traveling faster and faster, to the point that we look at nano-seconds these days.

    As all of that information piles up waiting to be intelligently processed it does become noise and we generally push out those bits of information that seem to be dated or don't fit into some developing thesis that could change with the very next bit of information to come our way.

    I don't worry too much about holding the bag on some positions, as long as all of those other positions keep piling up those small weekly increments. At the very least it buys time for what is, for most stocks, a return to earlier levels, as some variation of a sine wave is the norm for most
    Mar 1, 2015. 11:16 AM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    Rose, for someone who doesn't currently use a covered option strategy and tends to be more of a buy and hold investor you might consider looking at incorporating the sale of LEAPS.

    If you have a price target in mind for your shares you can supplement it by the sale of longer term calls. It is a very low maintenance kind of trade. You basically make the sale and forget about it, just being mindful that you have them at a specified strike at which you wouldn't mind being assigned.

    In the case of BAX, currently at $69.15 a $77.50 Jan 2016 call option would add another $0.70 to the return. If assigned the net result would be $8.35 from share appreciation, $2.08 from dividends and $0.70 from options producing a 16% ROI for about 10 months.

    The use of LEAPS is especially good with stocks that pay a nice dividend and as time rolls on and if a stock approaches the strike price, which is generally set a distance from the current price and you change your mind about the price target, you simply roll the contract over to the next LEAP, such as the Jan 2017, which, for example offers $0.89 for an $85 strike.

    This article is a little dated, it's more than 2 years old, but looks at the use of LEAPS in a diversified portfolio of blue chips http://seekingalpha.co...

    I use it for some accounts where the primary goal is peace of mind and income
    Mar 1, 2015. 10:25 AM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    That's exactly right.

    I like to know about the big picture story, the melodrama and the dysfunction, but the real focus is on sticking to a game plan and trying to identify patterns of the past that could pay off in the present.
    Mar 1, 2015. 10:03 AM | 2 Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    Thanks.

    I share that sentiment, but with almost every stock, BAX included.
    Mar 1, 2015. 10:01 AM | Likes Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    I do agree, but I think it's too late. Every aspect of life is on information overload and unless the information is all aligned it becomes even more difficult to make a rational decision. Sometimes I think it may be easier to fill in the missing pieces than to put together a jigsaw puzzle.
    Mar 1, 2015. 10:01 AM | 1 Like Like |Link to Comment
  • I Could Do With Less Transparency [View article]
    If you practice a covered call strategy a stock that does nothing is perfect, especially if it also pays a dividend. Those "small" premiums do add up.

    For years Microsoft was like that and until recently eBay was like that. Those kind of stocks can deliver returns that are superior to what the market is offering even when going nowhere.
    Mar 1, 2015. 09:57 AM | Likes Like |Link to Comment
  • A Sleeping Bull Is Best Left Undisturbed [View article]
    Thanks, but there's no sense in not acknowledging blind luck. The run higher this week really had no basis, but I wouldn't turn it down.
    Feb 27, 2015. 11:00 AM | Likes Like |Link to Comment
  • A Sleeping Bull Is Best Left Undisturbed [View article]
    Thanks.

    Whether selling calls or not, the reduction in share price occurs at the time that shares go ex-dividend. For example, if you own shares of SBGI, which goes ex-dividend on 2/25, when you wake up that morning the price of shares will be $0.16 less than the previous night's close, but the stock will show as being unchanged in price, because that reduction was all due to the adjustment for the dividend.

    Similarly, if shares go down $0.25, including the dividend amount, the actual change would only be $0.09.

    I calculate ROI daily, based on purchase price, closing price each day (up to the strike price), and any premiums and dividends received.

    The idea behind the double dipping is that some of the reduction in share price due to the dividend is not reflected in the option premium. That is to say that for a number of stocks the option premium during an ex-dividend period at a strike level near the current price is higher than it should be, such that some of the reduction in share price from going ex-dividend is subsidized by the premium. That's the essence of the double dip.

    AS expected, it works the other way with the sale of puts. As a put seller very often the premium isn't as large as it should be in reflection of the further drop in share price that will occur when the shares go ex-dividend.
    Feb 23, 2015. 06:45 PM | 2 Likes Like |Link to Comment
  • A Sleeping Bull Is Best Left Undisturbed [View article]
    I had been waiting for about a year to re-purchase BAX and missed that chance, but think that there's still opportunity to get in and get capital gains in addition to option premiums in advance of the dividend in a couple of weeks.
    Feb 23, 2015. 05:09 PM | Likes Like |Link to Comment
  • A Sleeping Bull Is Best Left Undisturbed [View article]
    Right now I wouldn't do anything that might jeopardize next week's dividend, but I expect COH to keep going higher. It's doing so in a really healthy way.

    Once the dividend is secured and if it continues slowly moving higher, I would consider trying to sell at strikes that may be below original purchase price, if able to monitor position and rollover as warranted to avoid assignment.

    It reports its next earnings on 4/28 and if its price is within the purchase ballpark at that time, I'd try to then sell OTM calls, trying to take advantage of the enhanced premium, even with OTM strikes.
    Feb 23, 2015. 04:45 PM | Likes Like |Link to Comment
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