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
Sent: Monday, November 30, 2009 3:54 AM
To: ConservativeOptionS
Subject: [ConservativeOption
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
>
> 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:ConservativeOptionS
> leigh
> Sent: Sunday, November 29, 2009 2:20 PM
> To: ConservativeOptionS
> Subject: [ConservativeOption
> !!
>
>
>
>
>
> jd....my strategy only uses leaps with at least 0.8 delta and even
> higher...drjoe
>
> --- In ConservativeOptionS
> <mailto:Conservativ
> trategies@yahoogrou
> >
> > 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
> > 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 and 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
> 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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