Glen Bradford

My All-or-Nothing Strategy

Dad,

I'm not selling calls in the future. I'm buying them. For me, there are two viable ways to leverage up. The first is to use margin, which is less expensive than calls with the VIX at all time highs, but I just can't risk trading on margin because the risk is less limited than when I buy calls. Buying a call --- which is what I mentioned --- allows me to buy shares of a company at a later date at a specified price. I pay for this privilege. The downside risk of buying calls is losing 100%. I can't lose more than I put in. If I sell stock and buy long calls that expire a year or two from now, it's the "safest" way to leverage up.


On Nov 17 11:38 PM User 300271 wrote:

> I have not had a chance to go out to 2010 to see what you did, but
> I wish you hadn't sold you long for a position sometime in the future.
> I understand you are in college. Try keeping those positions in your
> portfolio and keep adding to them as you can and with this VIX when
> your underlying stock (whaterver it is) KCL goes up to 26 or 27 think
> of selling a covered Call whether in the monery around 25 or higher
> to say 30. If the stock drops or does not go over the strike price
> you just picked up a nice "dividend" so to speek for that month.
> Use that money for your monthly expenses. Say KCL goes down to 21
> like today. Go ahead and sell a 20 Put if it doesent go below 20
> in the month you picked up another "dividend" so to speek. There
> is no reason you should not own both positions in a month(a straddle)
> especially in this VIX enviornment. What is the worst that can happen.
> Someone could call you shares if you do not move the call options
> out at par or better before they expire and you just made what you
> sold the calls for + the strike price of the shares. Or someone may
> put the shares on you - again if you do not move the options out
> a month or 2 at par or better before they expire. In that case your
> on Margin, but you are selling calls and puts each month so you should
> be able to pay down that margin, still own the stock and have a little
> money left over for your college expenses. At best your stock trades
> between the straddle and you pull down a grand or two a month and
> cover those college expenses and you keep your positions in a time
> when YOU SHOULD NOT BE SELLING. Don't lose you nerve - A Dad.