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Jason Lewis

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  • Writing Put Options On Microsoft [View article]
    I sell the put with the highest extrinsic value. Whether that's ITM or OTM it doesn't really matter to me.
    May 16 10:30 AM | Likes Like |Link to Comment
  • Writing Put Options On Microsoft [View article]
    At the time of this article MSFT was trading at $29.10. If somebody bought 100 shares outright, yes, they would be down $4.10, however if the sold the put they would only be down $3.34 because of the $.76 credit. There is a difference between selling naked puts and selling puts on stocks you want to own. See my post below.
    Oct 26 10:37 AM | Likes Like |Link to Comment
  • Writing Put Options On Microsoft [View article]
    Selling covered puts and calls the day before earnings is one of my favorite strategies. The IV rising provides more extrinsic value in the options and then denigrates after the earnings announcement. I usually sell some options outside of the straddle price which is what the market thinks the stock could pin to afterwards. I also sell ATM options with stocks I want to own or that I need to sell as part of the allocation adjustments I need to make in my portfolio. Why not get paid to buy and sell stock?
    Oct 17 03:37 PM | Likes Like |Link to Comment
  • Duke Energy: 5-1 Leverage For Almost Free Or A Lower Entry Cost [View article]
    HAHA 3 to 1 split and merger complete. Not a bad day for DUK investors.

    Now what, as far as this strategy?
    Jul 3 10:33 AM | Likes Like |Link to Comment
  • My Rookie Season Writing Options: Second Inning - June Expiry And July Contracts [View article]
    Check out SA Author SteadyOptions, he trades earnings cycles which means he is trading volatility. He uses delta neutral trading strategies (which is not important to this conversation) that are directionally neutral but long IV (implied volatility).

    You know if IV is high based on what the underlyings HV (historical volatility). So if the IV of the options is higher than the HV then the option is ripe for selling. If the IV is lower than the HV then buying might be a better option.

    Another thing that I like to do is sell covered puts and calls right before earnings because this is when IV is at it's highest. However, everybody knows stocks move a lot after earnings so you REALLY better be ready to own it. I usually do this when I am buying the stocks in the core of my portfolio, the ones I want to own for 5+ years.

    Also after or as a stock is tanking the IV of the options will rise so selling puts on a pullback is usually a good idea.
    Jun 20 01:06 PM | Likes Like |Link to Comment
  • Pre-Earnings Straddle Backtesting For High Flying Stocks, Part II [View article]
    Yes you want the straddle that you buy to have a delta of .50 and the option needs to have at least 7 days till expiry. I usually like at least 15 days or I will go out to the next month. You don't get quite as much action with the IV but you also don't loose time decay as well. But many other traders will argue that gamma really becomes your friend when using weekly options. It's all about risk vs. reward.
    May 21 11:00 AM | Likes Like |Link to Comment
  • Pre-Earnings Straddle Backtesting For High Flying Stocks, Part II [View article]
    There are some stocks that work great for RICs or taking long positions through earnings. FSLR is in that group. But I would still never buy options right before an earnings announcement. Also I usually don't buy options in a directional trade unless there is about 6 months till expiration.

    When I trade IC and double diagonals to hold through earnings I like to find company's that don't more around a lot but at still really liquid. So I don't do an IC on Apple or Google etc.
    May 21 10:58 AM | Likes Like |Link to Comment
  • Back-Testing: Trading Google Options Pre-Earnings [View article]
    bobjdan is correct about not using them on Apple or Google.

    I do trade IC through earnings as a portion of my portfolio and I am actually in the process of gathering some data to write articles on doing just that. I have the data for Apple and Google (which is of course a losing strategy with those stocks) and I will get some more data on some other stocks that I think are better to use.

    The article is currently being proof read by one of my friends and when she is done I will post it when I get a chance. So stay tuned and you will see an article series similar to this article on that subject.
    Mar 23 06:17 PM | Likes Like |Link to Comment
  • Back-Testing: Trading Google Options Pre-Earnings [View article]
    Buying the less than or equal to delta of 30 is for the strangle and RIC not the straddle. A straddle is always ATM. I don't like to use the weekly options for this trade because I like to hold it for 7 days and this is because Google moves around a lot. So because I hold it for so long it takes me right up to the expiration of the weekly options which means I give up a lot of time decay. If I only held the options for say 4 or 5 days and I could buy them when they are released I would consider it.

    Now if I trade a Iron Condor into earnings (which I would usually not do with Google) I will use weekly options if they have 4 or more days till expiration. You start to have gamma risk if you hold the short position past that point.
    Mar 23 10:33 AM | Likes Like |Link to Comment
  • Back-Testing: Trading Google Options Pre-Earnings [View article]
    Thank you very much. I will be publishing some more on some different stocks. Also I have started some backtesting on selling options right before earnings to take advantage of the IV crush. I hope this gives your guys some good data.
    Mar 22 02:52 PM | Likes Like |Link to Comment
  • Back-Testing: Trading Google Options Pre-Earnings [View article]
    These options were generally the front month options. So most of the time they had around 30 days till expiration. If you use back months IV won't move as much which means there is a possibility that it won't offset the time decay. The back month IV will increase but you won't get the spike. Another Greek that lends itself to using a shorter term is gamma. As the underlying moves the gamma is increased in the front month options faster than the back month options. The reason I like using 7 days is to give the underlying room to move around and let delta give me some profit as well as vega.
    Mar 22 02:10 PM | Likes Like |Link to Comment
  • Back-Testing: Trading Google Options Pre-Earnings [View article]
    The deltas were always .30 or under. So whatever strikes had equal or less than a delta of .30 were chosen. This was for both the strangle and the reverse iron condor.
    Mar 22 01:33 PM | Likes Like |Link to Comment
  • Why You Should Be A Buy-And-Hold Investor [View article]
    I love these stories. I remember sitting on my dads lap hitting buy and sell when he told me to. I grew up in Houston so naturally I owned Enron and I remember it crossed below its 10 day MA and I ran into my dads office and said I need to short Enron.

    Today I am completely focused on investing, not just in the stock market but also real estate as well. Also I am the person that all my friends come to when they have a personal finance question. I can't tell you how awesome it is to be able to help them out with the knowledge that I have gained.

    This is honestly the primary reason why I write for SA and for another start up website that two of my high schools friends started. Being able to help people understand finances without having their eyes glaze over is a wonderful thing.
    Mar 13 03:28 PM | 1 Like Like |Link to Comment
  • Why You Should Be A Buy-And-Hold Investor [View article]
    Because you have academia that have a certain way of thinking that is completely engrained in them. They are unwilling to change and adapt with the times. Even though finance has been around forever.

    Also it's not like you need to make it complicated by talking about options and futures. Just teach about a budget, retirement accounts, how to diversify, and dividend paying stocks. At the core and bare minimum that's all anybody needs.

    I have spoken to many professors and asked them how often they use money in their lives and they say everyday. But when you ask about a class they say good idea but it's not going to happen.

    Why not replace economics with personal finance? Very few people actually use economics in their day to day life but everybody uses personal finance.
    Mar 13 02:49 PM | 2 Likes Like |Link to Comment
  • Why You Should Be A Buy-And-Hold Investor [View article]
    Maybe its because I am relatively active in my investments, but what is the point of a Drip Account? You can't sell cash secured puts in order to get paid to enter the positions and you can't sell covered calls as stated above. Is it really so hard to log in once a quarter and reinvest your dividends?

    Also, on the education topic, don't even get me started. I can't even tell you know how many of my friends have no clue when it comes to managing their money. I approached my college about teaching a personal finance class and they said it wasn't important enough. REALLY?
    Mar 13 11:32 AM | 4 Likes Like |Link to Comment
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