ken, also my paper updated 07/15/2008 never mentions percentage drop to purchase additional leaps. the previous version did however. my paper states purchase additional leaps if the current leaps do not generate sufficient monthly income. this does usually happen around 7 to 10 % drop. drjoe
--- In ConservativeOptionS
>
> ken, i agree regarding adding new leaps with 2.5% drop. after a 40% correction as we had i would recommend not picking up any more leaps until a 7.5 to 10% correction. had one used the cash allocated for additional leaps with each 2.5% one would have run out of cash very early one. a 40% correction had not occured since for 70 years. drjoe
>
> --- In ConservativeOptionS
> >
> > Rob:
> >
> >
> >
> > If you read thru some of Dr.Joes's papers, he mentions each 2.5% or so drop
> > from original cost as his potential trigger to add in more Leaps. During the
> > "crash", adding every 2.5% would have more than likely drained much of the
> > cash reserves the strategy recommends having, so there were times (early in
> > the crash) that 2.5 or 3% would trigger a purchase, but as the downdraft
> > deepened there were times when I would wait (biting my nails along the way)
> > actually hoping the rebound was now coming, but when it didn't I would say
> > probably my trigger was more on the order, on average, of somewhere between
> > 7-10%.
> >
> >
> >
> > I would immediately sell ATM short calls against the new positions at the
> > appropriate ratios to maintain the proper deltas in case of a market turn
> > up, but then the following month would fold those new positions into my
> > overall average cost basis and make my new determination as to what strike
> > the short call should be, based on that new average cost basis. Since I
> > traded the strategy in both a tax deferred account and also a taxable one, I
> > maintained different spreadsheets for the positions in each one even if they
> > were actually for the same ETF in some cases. I don't know if it made a
> > difference overall, but since in many cases I put Long Leaps on at different
> > times in each of these accounts, I felt it made sense to keep the
> > calculations separate. There however did come a point in time, when the
> > values of the long leaps was once again above my average cost basis in both
> > accounts, so I would be selling the same strike short calls in both accounts
> > when that happened. Not so always during the down side of the market.
> >
> >
> >
> > As you suggested, there was definitely a lot of gut wrenching going on, but
> > no more so than with my overall investment portfolio, and at least with the
> > DLS I was continuing to generate pretty good income from the short calls
> > along the way.
> >
> >
> >
> > Along the way also I did put some of my own "spin" on the strategy. I am
> > able pretty much to watch the markets every day, so there were months when I
> > would buy back the short calls early, only to either roll them down or
> > resell the same strike again when the market came roaring back. As I said
> > previously, the incredible daily volatility made it possible for me to some
> > months be in and out of short calls several times. Not every month did it
> > turn out to be the better choice, but overall it definitely goosed my
> > monthly income from the short calls. The other thing to be cognizant of is
> > rolling over the Long Leaps or selling appreciated ones at month's end to
> > pay for the ITM short calls on the market rise. Since some of the Leaps got
> > to be so deep in the money, the spreads were ridiculous and it became
> > impossible sometimes to get out even at parity, so those were the months
> > when I would not buy back all the ITM short calls, then exercise one or more
> > of my long leaps on expiration Friday to at least get out of the leap at
> > parity and not lose any intrinsic value there, as well as not buy back any
> > extrinsic value of a short call even on expiration Friday. Same with the
> > times I needed to roll long leaps, so as not to basically buy time value AND
> > sell below parity, I would allow the ITM short calls I sold to be assigned,
> > exercise the long leaps, and then purchase the extended maturity long leaps.
> > This way only paid for the time value of the new Leap calls. Saved me quite
> > a bit in $$'s to market makers and is one of the few circumstances where
> > exercising a DITM call makes sense (at least to me).
> >
> >
> >
> > Hope this all helps a bit. As you can see I am a satisfied customer of
> > DLS.LOL
> >
> >
> >
> >
> >
> > Ken
> >
> >
> >
> >
> >
> > From: ConservativeOptionS
> > [mailto:ConservativeOptionS
> > Sent: Tuesday, March 02, 2010 5:30 PM
> > To: ConservativeOptionS
> > Subject: [ConservativeOption
> >
> >
> >
> >
> >
> > "I bought more Leaps as the market went down"
> >
> > Ken, what triggered your decision to buy more leaps? Were you looking at
> > percentage drop from the average cost, or perhaps every 2.5 or 3 points in
> > depreciation? And when you bought more leaps, did you immediately sell new
> > calls against them? If so, were they ATM calls or the same calls you already
> > had? That drop in equity had to be gut wrenching!!
> >
> > Thanks,
> > RFH
> >
> > --- In ConservativeOptionS
> > <mailto:Conservativ
> > <ken_ginsberg@
> > >
> > > Rob:
> > >
> > >
> > >
> > > I also started trading it in 2008 (a bit after you) and the market went
> > into
> > > the toilet, but based on my feeling that the market would come back, I
> > > followed the DLS "plan" even though my worst drawdown was probably on the
> > > order of about 35%-40% or a bit more. I bought more Leaps as the market
> > > went down, sold appreciated Leaps when I had to buy back SC's that were
> > ITM
> > > on the way back up, and overall have generated significant income along
> > the
> > > way, and my Leap positions are now also very much in the green as well. I
> > > rolled the Long Leaps when appropriate and am quite happy with the overall
> > > results even though I will be honest and say I did have some 2nd thoughts
> > > during the worst of it, but having been through several severe "crashes"
> > > before, I felt the market would come back, and even though not to its
> > > original highs, my perseverance has definitely paid off.
> > >
> > > I used 3 ETF's along the way, SPY, IWM and EFA and am actually hoping for
> > a
> > > bit of a retracement to be able to invest more cash at better prices in
> > the
> > > strategy.
> > >
> > >
> > >
> > > Hope this helps.
> > >
> > >
> > >
> > > Ken
> > >
> > >
> > >
> > >
> > >
> > > From: ConservativeOptionS
> > <mailto:Conservativ
> > > [mailto:ConservativeOptionS
> > <mailto:Conservativ
> > RobertH
> > > Sent: Monday, March 01, 2010 11:47 PM
> > > To: ConservativeOptionS
> > <mailto:Conservativ
> > > Subject: [ConservativeOption
> > >
> > >
> > >
> > >
> > >
> > > Ken, I must have missed the post, but how long have you been trading the
> > > Call DLS? I started in January of 2008 and did very well until the
> > downturn.
> > > I pre-decided to stop if the account declined 20% from my starting point.
> > I
> > > stopped, but with a little more than a 20% loss.
> > >
> > > RFH
> > >
> > > --- In ConservativeOptionS
> > <mailto:Conservativ
> > > <mailto:Conservativ
> > Ginsberg"
> > > <ken_ginsberg@
> > > >
> > > > Jeff:
> > > >
> > > >
> > > >
> > > > DrJoes DLS strategy that I have been trading is his DITM Leap Call
> > > Strategy
> > > > vs. Monthly Short Calls as detailed in his paper in the files section. I
> > > > have not used his Leap DITM Put strategy, although after reading his
> > paper
> > > > and some of his posts here I will be spending some time studying it and
> > > > possibly implementing it at some time in the near future if I find I
> > > > understand it as well as I do his DLS strategy.
> > > >
> > > >
> > > >
> > > > Ken
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > From: ConservativeOptionS
> > <mailto:Conservativ
> > > <mailto:Conservativ
> > > > [mailto:ConservativeOptionS
> > <mailto:Conservativ
> > > <mailto:Conservativ
> > > srj3inc
> > > > Sent: Saturday, February 27, 2010 3:40 PM
> > > > To: ConservativeOptionS
> > <mailto:Conservativ
> > > <mailto:Conservativ
> > > > Subject: [ConservativeOption
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > --- In ConservativeOptionS
> > <mailto:Conservativ
> > > <mailto:Conservativ
> > > > <mailto:Conservativ
> > Ginsberg
> > > > <ken_ginsberg@
> > > > >
> > > > > Jeff:
> > > > >
> > > > > Let me just say I have been trading DrJoes DLS strategy since ...
> > > >
> > > > ------------
> > > > Ken,
> > > >
> > > > Great to know that DLS is working for you.
> > > >
> > > > Can you pl. update us if you are trading the LEAP strategy or selling
> > > short
> > > > term PUT against the DITM LEAP PUT strategy?
> > > >
> > > > Thanks,
> > > >
> > >
> >
>
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