CecilTexas

Four Reasons We're Headed Even Higher

If you think the market is going down, you are clearly a racist.

History Favors the Bulls

History has never seen a marxist president backed by an unbalanced, unchecked leftist congress running completely amok.

Jon Stewart on CNBC's 'Worthlessness'

Obama's goal is to destroy this economy and the fabric of the country so he can rebuild it in his own image.

Apple and Google: Changing My Mind

Here's my thinking regarding selling naked puts: determine a price that you feel is fair for the stock and you would be willing to buy and hold. Look at the current price and what the puts are selling for at the closest strike to determine the time value you can expect when the underlying gets down to your strike. If the time value is below 10% of the strike price, move out in time to a further strike until you get at least 10% return, maybe even 15% for goog. You can use this time value for setting your limit price on the strike you chose in step one, and you will also have determined which month's puts you need to sell.

Now, if you are bullish, I would seriously consider selling an in-the-money put rather than the out-out-of-the money. If the stock is between strikes, you will get about the same time value, but you will also pick up the intrinsic value as well, assuming the stock rallies to above your strike price. However, I would stick to selling the next strike up (ITM) as you don't want to get too aggressive and you don't want to give up too much time value, the reason you're selling the put in the first place; two strikes up is too aggressive for my tastes.

So, when setting your limit order, take the time value you determined in step 1 above and add about 25% of the width of strikes (ie $2.50 for a $10 strike width). This will require the stock to drop 1/2 a strike width below your desired strike (ie $5 for a $10 strike width) before your limit price is matched (delta of the put will be approx 0.5 around the strike, so 0.5 of 1/2 strike is 25%). Use this as the limit put-price for the strike/month just above the stock-price that you feel is a bottom.

Now, this is an approach that says "wait for the stock to hit your bottom" rather than "take action now." Bear in mind that may not happen, of course. As one commenter mentioned, implied volatility is important, but what you're looking for is a way to buy the stock cheaper, not be an option trader. However, if the stock drops somewhat quickly to your price point, you will be rewarded with higher implied volatility and you may get your trade even before its an ITM strike.

Questioning Cramer on Taking Profits

One way to take gains on a stock which has moved up is to sell calls against the stock. If you sell at or slightly in the money, you get some downside protection and a bit of time value in case the stock continues up. If it goes down, you have a bit more cushion before you decide to sell. If it goes up, you can roll the short calls up and out several months for a small credit. I like to keep my short calls about 1 strike ITM for better downside protection. Sometimes I sacrifice a bit of upside, but at least I'm still in the game as compared to simply liquidating my stocks.

Research in Motion: Unlike Apple, No Slowdown in Subscriber Growth

Funny how Todd wants to play bear on Apple but then he sells $280 calls! Real brave bear move there. Why not sell the $150 calls? Delta would probably have been 5x and then you could really show how certain you are of your bearish call.