ken, thank you for the post. i will try over the next few days to write down some of what i do with short puts. it's in my head just hasn't been put to paper....again it will only be a general outline....drjoe, thanks again.
--- In ConservativeOptionS
>
> Dr Joe:
>
>
>
> First off I would like to say how pleased I am that this group is once again
> seeing activity, and especially happy to see how active you seem to be once
> again.
>
>
>
> That being said, I would just like to say that most all of the comments I
> see since your return focus on how much money you (and in peoples' minds it
> seems) and everyone else that has followed your DLS strategy has lost during
> this market correction. Of course one always has to look at both up and down
> markets and assess their own risk profile, and tolerance for drawdowns, but
> I wanted to say that my experience with implementing the DLS strategy has
> been one of both regular income monthly as well as significant capital gains
> on the long leaps positions.
>
>
>
> Perhaps it is just dumb luck that I started using DLS during Q3 of 2008, but
> the methodology made sense to me, and although I have tweaked it somewhat to
> fit my own risk tolerances, and sales of long leaps to capture gains and
> offset short call losses, overall I am extremely pleased with having decided
> to read your paper, do my research, and implement a DLS plan that in most
> respects is reasonably faithful to the trading plan you lay out in your
> paper. I have also experienced drawdowns, added to my long leaps at times
> appropriate and am now waiting for another opportunity to add more long
> leaps (I expect another dip and will take advantage of that should it happen
> to add to my long leap positions).
>
>
>
> I have seen in the past year or more (except for your "away" time)
> continued "criticism", some of it at times almost nasty, and cannot
> understand how, even with all of your disclaimers, and almost begging people
> NOT to follow DLS, the cynics and critics continue to attack you almost
> daily. Yet, you continue to politely attempt to answer their "questions".
>
>
>
> I say this because I hope you will not allow the naysayers to deter you from
> continuing to contribute to this group, and would also add my request to the
> one or two others made that if you have the time, and your personal issues
> allow it, please put together a document on your PUT selling strategies for
> the benefit of those of us that recognize your experience and understanding
> of the markets, and would like to add your insights on this strategy to our
> own arsenal. I for one have been selling naked puts on and off for better
> than 30 years (I think my first naked Put trade was back in 1976 or so), and
> would welcome understanding your strategies as well.
>
>
>
> Again, welcome back, and may all our short calls finish 10cents out of the
> money!!
>
>
>
> Ken Ginsberg
>
>
>
>
>
>
>
> From: ConservativeOptionS
> [mailto:ConservativeOptionS
> leigh
> Sent: Tuesday, December 01, 2009 11:52 AM
> To: ConservativeOptionS
> Subject: [ConservativeOption
> !!
>
>
>
>
>
> dan, when someone has a buy and hold portfolio in retirement do they employ
> a timing mechanism? as with a home...i don't get my home appraised
> daily....i have not sustained a loss until i sell my leaps which i don't
> plan to do as they are part of my core portfolio (would be in my buy and
> hold)...the premiums generated are my monthly income. if i had equivalent
> stock portfolio (not leaps) i would have about 500,000 invested. (leaps
> reduce exposure)...
> 170-200k loss if i weren't trading dls. i do not plan to revise the strategy
> to add a timing mechanism.
>
> i don't encourage anyone to use the dls strategy. this paper started because
> we were discussing a lot of option strategies and people kept asking me the
> same questions about my trading. i therefore wrote the paper to answer most
> of the questions. if no one ever trades this that would be ok with me. it is
> by no means something to follow to the letter. if someone does trade it they
> should use the paper as a general guideline and implement their own
> experiences and skills to manage based on their style and risk management.
> drjoe
>
> --- In ConservativeOptionS
> <mailto:Conservativ
> wrote:
> >
> > Hi,
> >
> > I appreciate all the information you supply and am particularly
> appreciative
> > of the honesty with which you report your results.
> > That said, I wonder about the efficacy of the DLS strategy when used
> without
> > some sort of market timing mechanism to keep you out of downtrends.
> > You reported an average return of $3,000 per month over the last 39 months
> > based on an investment of $299,000. However you also report a drop in
> value
> > of your leaps of about 25%. This indicates that the leaps are now worth
> > about $224,250 or a loss of $74,750.
> > Over the 39 months you gained $3,000 x 39 for a total of $117,000 less the
> > capital loss of $74,750. This means that if you wanted to maintain the
> > $299,000 amount for your leaps, you would have a total income for the
> three
> > years of $42,250, or about 4.4% per year.
> > This seems a far cry from your goal of 30% per year for the DLS strategy.
> > Are you planning to revise the DLS strategy to incorporate some sort of
> > timing mechanism?
> >
> > Dan (dan2fl)
> >
> > -----Original Message-----
> > From: ConservativeOptionS
> <mailto:Conservativ
> > [mailto:ConservativeOptionS
> <mailto:Conservativ
> > leigh
> > Sent: Monday, November 30, 2009 6:54 AM
> > To: ConservativeOptionS
> <mailto:Conservativ
> > 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
> > <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
> > > [mailto:ConservativeOptionS
> <mailto:Conservativ
> > > leigh
> > > Sent: Sunday, November 29, 2009 2:20 PM
> > > To: ConservativeOptionS
> <mailto:Conservativ
> > > 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
> 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
> > > > 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
> > > >
> > >
> >
> >
> >
> >
> > ------------
> >
> > Yahoo! Groups Links
> >
> >
> >
> > No virus found in this incoming message.
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> > 14:31:00
> >
>
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