Lou,
Firstly, thank-you very much for visiting my site. I appreciate your kind words.
On to your specific questions. A)Front-month means the month in which the next set of options are expiring. For example, it is March 2010 now. The front-month is April 2010 because the next set of options will expire on the third Friday of April. B) Clarification on the profit: Thanks for bringing this up; I now realize that the way I wrote it was ambiguous. What I was attemting to convey is that when I sell a csp, if the value of the sold put drops into the range of .05 to .15, I'll probably close the trade for a profit. Reasoning? If that happens I have already extracted much of the potential maximum value out of the trade.
Hope this helps and good trading!
Michael
www.safe-options-
--- In ConservativeOptionS
>
> Michael,
> I'm new to the group and just beginning to get serious about understanding options. First I'd like to thank you for the great work you've put in on your site which you recommended on one of the other yahoo groups.. It's full of new ideas for me to follow up on.
> My question at the moment is what you mean by 'front month' (I'm assuming current month) and also a clarification of taking a .05-.15 profit if present.
> Are you saying that if you sell a csp for $1.00 and the value decreases to .85 you'll close the position and take the .15 rather than let it expire and keep the whole $1.00? I don't think that's what you mean, so I guess I've missed something and I hope you'll excuse the newbie question.
> Lou
>
> --- In ConservativeOptionS
> >
> > Dr Joe,
> > I'll start it off. I like writing front-month cash-secured puts. I like to do them on somewhat high-beta stocks (e.g. TSL, IPI) and well as more stable stocks such as PFE, MRK, XOM. I tend to avoid samll drug and biotech stocks becase of past dissapointment. I try to enter these csp's on down days. I will take a profit at .05 to .15, if reached, before expiration. I write only enough puts (3 to 10 depending on the strike price) that if assigned I'm equally happy and then will write calls on these. I will consider putting a protective collar on some of these if they advance far enough although I prefer to be called out. I do this in a tax-deferred account. In my taxable account I like to do front-month credit spreads on ETF's.
> >
> > Michael
> > www.safe-options-
> >
> > --- In ConservativeOptionS
> > >
> > > i really would love to hear from people who are doing dls (calls) and short puts selling cc's if assigned,,,,
> > >
> >
>
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