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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