My covered call strategy is no doubt a lot simpler than most. many a "mantra" I take from IBD like: "The safest place to be during a market downtrend is in cash."
My stop methods got me cashed out before the big 21-day drop (http://tinyurl.
G
--- In ConservativeOptionS
>
> That's an approximately 15% annual return with no losing month in a
> three-year period. I'm impressed. It was the worst of all markets during
> that time, too.
>
>
>
> M
>
>
>
> _____
>
> From: ConservativeOptionS
> [mailto:ConservativeOptionS
> leigh
> Sent: Monday, November 30, 2009 10:37 AM
> To: ConservativeOptionS
> Subject: [ConservativeOption
> !!
>
>
>
>
>
> $299,000
>
> --- In ConservativeOptionS
> <mailto:Conservativ
> trategies@yahoogrou
> >
> > Can you estimate what the $xxx cost was for the leaps? If it was $100,000,
> > you did tremendously well. If it was $1 million, it was not profitable –
> > although still much better than "the market."
> >
> >
> >
> > M
> >
> > _____
> >
> > From: ConservativeOptionS
> <mailto:Conservativ
> trategies@yahoogrou
> > [mailto:Conservativ
> <mailto:Conservativ
> trategies@yahoogrou
> > leigh
> > Sent: Monday, November 30, 2009 3:54 AM
> > To: ConservativeOptionS
> <mailto:Conservativ
> trategies@yahoogrou
> > Subject: [ConservativeOption
> Again
> > !!
> >
> >
> >
> >
> >
> > M. just like the rental analogy. if you own a home that you rent out how
> > often do you get it appraised? i bought $xxx of leaps (my home to rent)
> and
> > it generated for me during the 39 months of these particular leaps a
> maximum
> > of 12,000 one month and during the worst of the market collapse i was able
> > to always generate at least $1000 a month. average over the 39 months
> ended
> > up as of last month $3000 a month. my leaps are down about 25% which is
> less
> > than the market. drjoe
> >
> > --- In ConservativeOptionS
> > <mailto:Conservativ
> > trategies@yahoogrou <mailto:trategies%
> at DCM" <research@> wrote:
> > >
> > > Dr. Joe,
> > >
> > >
> > >
> > > Can you share what your results have been? i.e. X% average annual return
> > > for last Y years with the worst monthly loss being Z%?
> > >
> > >
> > >
> > > I'd just like to understand what is possible and what expectations are
> > > reasonable.
> > >
> > >
> > >
> > > Thanks,
> > >
> > >
> > >
> > > M
> > >
> > >
> > >
> > >
> > >
> > > _____
> > >
> > > From: ConservativeOptionS
> > <mailto:Conservativ
> > trategies@yahoogrou <mailto:trategies%
> > > [mailto:Conservativ
> > <mailto:Conservativ
> > trategies@yahoogrou <mailto:trategies%
> Of joe &
> > > leigh
> > > Sent: Sunday, November 29, 2009 2:20 PM
> > > To: ConservativeOptionS
> > <mailto:Conservativ
> > trategies@yahoogrou <mailto:trategies%
> > > Subject: [ConservativeOption
> > Again
> > > !!
> > >
> > >
> > >
> > >
> > >
> > > jd....my strategy only uses leaps with at least 0.8 delta and even
> > > higher...drjoe
> > >
> > > --- In ConservativeOptionS
> > > <mailto:Conservativ
> > > trategies@yahoogrou <mailto:trategies%
> > Hudgens <jdhudgens2000@
> > > >
> > > > personally, I have completely revised my leaps straegy. I now use a
> > > stock replacement leap. To wit: I only buy leaps which have a delta
> > > greater than .75. If the stock goes up, my leap grows faster than the
> > > short term option and I can afford to buy it back if I have to by either
> > > using cash or rolling the leap up to get cash. If I don't sell a short
> > > term option and the stock goes up, I can harvest cash by rolling the
> > > option. Â
> > > > Â
> > > > You can buy a $40 stock's stock replacement for less than a third and
> > then
> > > make your rent on that. 50 cent on $10 is acceptable while 50 cent on
> $40
> > > isn't.
> > > > Â
> > > > Also, a stock replacement leap tends to be rollable out and up much
> > > easier than the less expensive ones.Â
> > > >
> > > > --- On Sun, 11/29/09, bgupta92@ <bgupta92@> wrote:
> > > >
> > > >
> > > > From: bgupta92@ <bgupta92@>
> > > > Subject: Re: [ConservativeOption
> > > Again !!
> > > > To: ConservativeOptionS
> > > <mailto:Conservativ
> > > trategies@yahoogrou <mailto:trategies%
> > > > Date: Sunday, November 29, 2009, 10:09 AM
> > > >
> > > >
> > > > Â
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > Mark,
> > > > Â
> > > > I'm sure Dr. Joe will give you the same advice (at least I hope so).
> You
> > > want to sell calls at the strike that has the maximum extrinsic value.
> > > Usually that is the first strike ITM or OTM. Also you want to sell fewer
> > > calls than you have long calls. His thumb rule is about 8:10 - so about
> 8
> > > short calls for 10 long calls. Look at that on a P/L graph and you will
> > see
> > > what he means by uncovered longs. The graph will typically increase at a
> > > steep (relative) rate up to the short strike and then flatter but still
> > > increase at a shallower rate above the short strike.
> > > > Â
> > > > Once both the short and the long are ITM your profit comes from 2
> areas.
> >
> > > > Â
> > > > First it comes from the decay in the extrinsic value of the short
> being
> > > greater than the decay in the extrinsic value of the long - which is why
> > you
> > > want to sell the short that has the maximum extrinsic value.
> > > > Â
> > > > Second it comes from having more intrinsic value in the longs but only
> > > because you have more longs than shorts. If for example you had the same
> > > number of shorts as you have longs, the gain on the intrinsic of the
> long
> > > will be exactly offset by the loss on the intrinsic of the short. If
> > instead
> > > you have 10 longs and 8 shorts and the underlying moved by $1, the longs
> > > would gain $10 on the intrisic portion but the short position would lose
> > $8
> > > for a net gain of $2 on the intrinsic.
> > > > Â
> > > > If the underlying was below the short strike (i.e. the short strike
> was
> > > OTM), for every $1 movement of the underlying, the longs would gain $10
> on
> > > the intrinsic (same example as above) and a little bit on the extrinsic.
> > > since the short strike is OTM there is no gain/loss on the intrinsic but
> > of
> > > course there is a gain on the extrinsic. Overall, it is the gain on the
> > > intrinsic of the long that is the significant contribution to your
> overall
> > > P/L which is why the P/L is steeper below the short strike andÂ
> shallower
> > > above the short strike.Â
> > > > Â
> > > > Hope this helps....
> > > > Â
> > > >
> > > > ----- Original Message -----
> > > > From: "mark bluhm" <mbluhm2001@
> > > > To: ConservativeOptionS trategies@ yahoogroups. com
> > > > Sent: Sunday, November 29, 2009 11:56:54 AM GMT -05:00 US/Canada
> Eastern
> > > > Subject: Re: [ConservativeOption Strategies] Let's Get the Site Active
> > > Again !!
> > > >
> > > > Â
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > Dr. Joe,
> > > >
> > > >
> > > > I'm sure we are all in the same boat with the LEAPs underwater, i know
> > am.
> > > Â I guess that i've messed up in that i've been too afraid to sell
> options
> > > uncovered and therefore have not been getting the income you have been.
> Â
> > > Would it be possible to share how you pick the strike price to sell your
> > > options and when you decide each month to do so? That would be very
> > helpful.
> > > Â
> > > >
> > > >
> > > > I have purchased new 2011 Leaps when the market was low but still own
> > the
> > > OTM 2010 Leaps. I'm thinking of sell these for a big loss instead of
> > holding
> > > on to them to expire while the market is up. Â Any thoughts on what to
> do
> > > with the 2010 OTM leaps?
> > > >
> > > >
> > > > Glad you are back. I'm still liking this system even though the market
> > has
> > > crashed. Â It still has a lot of merit.
> > > >
> > > >
> > > > Thanks,
> > > > Mark
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > From: joe & leigh <gass20@>
> > > > To: ConservativeOptionS trategies@ yahoogroups. com
> > > > Sent: Sun, November 29, 2009 7:27:26 AM
> > > > Subject: [ConservativeOption Strategies] Let's Get the Site Active
> Again
> > > !!
> > > >
> > > > Â
> > > >
> > > > Would love for members to post their strategies and post questions for
> > > other members.
> > > >
> > > > I am still trading the DLS and am satisfied considering the worst
> market
> > > correction in decades. I am trading a lot of naked puts and covered
> calls.
> > > >
> > > > Someone who bought a second home (condo) in a place like Florida at
> the
> > > high of the real estate market to rent and generate income....his
> condo's
> > > market value is probably 40% below his purchase price. I know, I live
> > there.
> > > However, he is still able to generate monthly rent comparable to when
> the
> > > real estate market was high while he waits for his condo's value to
> return
> > > to purchase price.
> > > >
> > > > Well my leaps (condo) are well below cost basis. However, my current
> > leap
> > > positions opened 39 months ago has generated about $3000/mo.(rent i
> > > generated). Initially, leaps were generating 8-10k per month and during
> > the
> > > correction I was able to generate at least 1-1.5k per month...averaging
> > over
> > > the time period the $3000/mo. My leaps are about the same % below
> purchase
> > > price than if I had bought a portfolio of buy and hold. The difference
> is
> > I
> > > have generated $118,000 in premiums over the 39 months. Where the buy
> and
> > > hold owner generated no rent/income.
> > > >
> > > > I am finding that selling puts if managed well is easier and less time
> > > consuming than the DLS strategy.
> > > >
> > > > dr joe
> > > >
> > >
> >
>
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