| StockFetcher Forums · General Discussion · Interviews | << 1 ... 18 19 20 21 22 ... 41 >>Post Follow-up |
| four 5,087 posts msg #136968 - Ignore four |
7/22/2017 1:52:26 PM https://www.moneyshow.com/articles/optionsidea-33262/6-ways-to-reduce-short-straddle-risks/ 6 Ways to Reduce Short Straddle Risks 12/09/2013 8:00 am EST Focus: OPTIONS Michael Thomsett Image Michael Thomsett Founder, Thomsett Publishing Website Even though the short straddle has a reputation for being an extremely risky strategy, the risks are not as bad if you know what you’re doing, says option expert Michael Thomsett of ThomsettOptions.com. The short straddle is dangerous because, well for one thing, both sides are short. Making things even riskier, one side or the other is always in the money. Even so, the true risk of the short straddle might not be as severe as traders often assume. Consider how much risk is reduced in the following circumstances: 1. Premium is very rich. The best short straddles (a short straddle is selling a call and put on the same underlying, same strike and same expiration) are those that, given the at-the-money or near-the-money conditions, offer overall very rich premium. 2. Expiration takes place in one month or less. Try to limit short straddles to very short-term options, because time decay will be rapid in the final month. 3. Keep an eye on the strike versus current price. Plan to close positions as soon as possible, especially those moving in the money. A slight move often is offset by declining time value, so even unfavorable moves can be countered with a profitable close. You can also roll out to a later expiration to avoid exercise. 4. You plan to close both sides once time decay starts to hit. Or, if intrinsic value moves too quickly, you plan to roll forward (up in strike with the short call or roll down with the short put) and duplicate the strategy. The forward roll might become inevitable for one side depending on direction of price movement. Ideally, the stock price will not change much, so time decay could make both sides work profitably. 5. You also can cover the short call or put if circumstances make it necessary. You can cover with stock or long options, although that’s an expensive proposition. The attractive shorts usually have a correspondingly expensive long, so covering with long options is not the best way out of the straddle. 6. You are willing to get exercised as long as it nets out to a profit for you. Exercise can be a good thing. As long as the market value is within the profitable point range above or below the strike, exercise is still profitable. Even though these numbers look like the idea can work out, remember the one rule about short combinations: Even when they work on paper and even when they should work in practice, they can also go wrong, expensively and quickly. If you’re going to do short straddles, keep them within sight of expiration and be willing to accept the risks. Also make sure you have the equity to meet margin requirements, which are equal to 100% of strike value. One last item: Since this position includes two short option positions, make sure you are approved for this type of trade before trying to place it. By Michael Thomsett of ThomsettOptions.com |
| four 5,087 posts msg #136969 - Ignore four |
7/22/2017 2:02:47 PM https://www.moneyshow.com/articles/optionsidea-42990/5-option-strategies-to-optimize-portfolio-returns/?&pg=1 5 Option Strategies to Optimize Portfolio Returns 07/09/2015 8:00 am EST Focus: OPTIONS Michael Thomsett Image Michael Thomsett Founder, Thomsett Publishing Website Since options are one of several tools that traders can use to optimize profits and minimize risks, it is imperative to know specifically which options strategies to use, so Michael Thomsett, of ThomsettOptions.com, highlights five option strategies for traders to consider. Options are one of several tools you can use to (a) optimize profits and (b) minimize risks in your portfolio. But you need to know specifically which options strategies are going to achieve this difficult two-part goal. 1. Covered Calls The covered call is a popular and widely understood strategy. You own 100 shares and you sell one call. As long as you accept the downside risk of the stock (which you have whether you write covered calls or not), this is a smart and profitable idea. But the first step should be to make sure you pick stocks wisely, using smart fundamentals to ensure low market risk and strong financial trends. Also, make sure you pick a strike that, if exercised, will produce profits in the stock. If you write covered calls slightly in-the-money with about one month to expire, you are going to generate annualized double-digit returns consistently. It’s more profitable to write one-month calls every month than to write a one-year call once per year. Check the options listings and you will see that although you get less cash for the short-term options, it works out to more on an annualized basis, because time decay is accelerated in the last month. 2. Uncovered Puts In considering the risk/reward scenario of covered calls, also think about the uncovered put. Usually considered very high-risk, the actual market risk of uncovered puts is the same as risks for covered calls. Among the pro and con is the flexibility to roll out of the put without regard to the stock price. With a covered call, a roll has to be made in consideration of the basis in stock, so that exercise will not create a net capital loss. With the uncovered put, it does not matter which strike you roll to as long as you avoid exercise. Early exercise is not impossible, but it will not occur as long as the put remains out-of-the-money (when the stock price is higher than the put’s strike). The uncovered put strategy benefits from time decay. The short position loses value as expiration approaches and the put can be bought to open at a profit as long as the stock has not moved below the put’s strike. 3. Ratio Writes Think beyond the covered call as well. A ratio write is a covered call with partial covered and partial uncovered sides. For example, if you own 300 shares and you sell four calls, you create a 4:3 ratio write. You can think of this as four calls with 75% cover or as a combination of three covered calls and one uncovered call. As long as time decay outpaces any growth in future intrinsic value, this is a profitable strategy. Pick strikes out-of-the-money and then track carefully to make sure you don’t get exercised. Also watch out for any ex-dividend dates that arise before expiration. If your ratio write positions are in-the-money at ex-dividend date, exercise is a strong possibility. If these positions go in-the-money, you can close (hopefully at a profit), roll forward, or accept exercise. NEXT PAGE: Is It Safe? Variable Ratio Writes The ratio write can be made safer with a variable ratio write. This is the same strategy but using two strikes. For example, if you bought 300 shares at $37 and the stock is now at $39, a 4:3 variable ratio write could consist of two 40 calls and two 42.50 calls. Using expiration within one month will maximize time decay, reducing market risks effectively for OTM positions. If the stock begins moving up, either of the strikes can be closed or rolled. But having the cushion between the two strikes makes it easier to avoid exercise and to end up with positions you can buy to close at a profit. 5. Synthetic Stock A defensive position is justified at times as well. For example, if you are bullish on appreciated stock, but also concerned about the possibility of a downside correction, consider some advanced options ideas. This is especially worthwhile for high-yielding stocks when you want to hold on to your positions at least through ex-dividend date. These positions include synthetic short stock (100 shares plus a long put and a short call) or collars (the same idea, but with two out-of-the-money strikes. A synthetic short stock has calls and puts with the same strike, but a collar involves a short call with a strike above the current price, plus a long put with a strike below. In both of these defensive positions, if the stock price rises, the short call is covered by the 100 shares of stock, so this side of the trade is a covered call. If the stock price declines below the put’s strike, you can sell the put at a profit to offset stock loss (or you can exercise the put and sell shares at the fixed put strike). All strategies involving uncovered short positions are also subject to collateral requirements. For uncovered short options, this is 100% of the strike value. For example, if you sell an option with a 45 strike, you must have at least $4,500 per option in your margin account as collateral. There are many more ways to use options for portfolio management. The point to remember is that more and more, conservative investors are using options to reduce or eliminate portfolio risks and that is just smart investment risk management. The older perception of options as reckless high-risk gambles still applies if options are used speculatively, but conservative investors now can play the game as well. |
| four 5,087 posts msg #136970 - Ignore four |
7/22/2017 2:09:09 PM https://www.moneyshow.com/articles/optionsidea-30716/another-way-to-manage-risk/?&pg=1 Another Way to Manage Risk 11/03/2015 8:00 am EST Focus: OPTIONS Michael Thomsett Image Michael Thomsett Founder, Thomsett Publishing Website Option traders are familiar with the protective collar, which guards against downside risk in volatile markets, but there's another less familiar strategy, which not only guards against market risk, but also provides double-digit returns, says Michael Thomsett of ThomsettOptions.com. The dividend collar is a strategy that is quite different than the protective collar, although as a starting point it hedges the same risks. In the regular collar, you own 100 shares and you open a short call and a long put, both out of the money (call's strike above current price and put's strike below). The dividend collar might do the same, or reverse the sequence, or be based on the same strike for both options. In that case, it becomes a synthetic short stock position. In all cases, the strategy is opened with the idea of capturing the upcoming dividend while also eliminating all market risk. If you open and then close a dividend collar every month, you convert quarterly dividends into monthly dividends. For example, you apply this strategy to three companies, each paying 4% annual dividend, and with ex-dividend cycles in different months (Jan/Apr/Jul/Oct; Feb/May/Aug/Nov; and Mar/Jun/Sep/Dec). This results in your getting a quarterly dividend of 1% every month, meaning you end up with a 12% yield. Market risk is eliminated due to a three-part hedge: 1) The cost of the long put is paid for by the short call. 2) The short call risk is covered by 100 shares of stock. 3) The risk of declining share value in the stock is protected by the long put. The dividend collar is best opened a week to three weeks before ex-dividend date, and using options expiring after. As long as the net original cost is zero or a credit, the options are "free" because one covers the other. And as long as exercise produces breakeven or a profit, you cannot lose there either. The position is closed in one of four ways: Your short call goes in the money and is exercised. The stock value falls below the put's strike and you exercise the put, selling shares. The call goes in the money and gets exercised early, in which case you get the capital gain instead of the dividend. You close the stock and option positions on your own and take profits. This strategy has numerous variations, and a thorough study of the many kinds of risks involved will help you to develop the ideal. The best outcome, of course, is to earn double-digit returns with no market risk. This is possible only with a small window of stocks, and only if and when the parity is there and the pricing proximity is just right. But this does occur. It takes time and research but is worth it to get to that risk-free double-digit return. |
| four 5,087 posts msg #136971 - Ignore four modified |
7/22/2017 2:12:46 PM https://www.moneyshow.com/articles/optionsidea-43128/benefits-of-the-covered-call Benefits of the Covered Call 08/03/2015 9:00 am EST Focus: OPTIONS Michael Thomsett Image Michael Thomsett Founder, Thomsett Publishing Website Michael Thomsett, of ThomsettOptions.com, highlights the benefits of the covered call in options trading and examines the two main criticisms against it, but also why he feels the argument against it is flawed. Benefits of the covered call include generation of income without added market risk. The comparison between the covered call and simply owning shares of stock demonstrates that added covered call income discounts the basis in stock, thus reducing market risk. There are two criticisms of the covered call. First, if the underlying price declines below the discounted basis in stock (stock reduced by option premium), the overall position loses. However, if you own shares prior to opening the covered call, this risk already exists. In fact, the stock-only risk is higher because the basis is not discounted by the sale of a covered call. Second, if the underlying price rises significantly above the strike, the short call is exercised and stock is called away. This is a lost opportunity risk that also exists if stock is sold to take modest profits but prices then continue to rise. Covered call writers generate profits consistently and accept the lost opportunity risk. The rationale is that covered calls create profits from three sources (capital gains, option premium, and dividends) and the consistent profits are justified even though on occasion profits could have been higher. The argument against covered calls is flawed. As a stockholder, you might sell shares too soon to take profits, in which case you are exposed to the same lost opportunity, but without the added benefit of the covered call premium. In addition, you have three choices for mitigating lost opportunity risk. First, the short call can be bought to close (even when in-the-money, time decay makes it possible to close at a profit and then replace the position with a higher strike or wait to see where the underlying price moves next). Second, the short call can be held even when in-the-money, to see whether accelerating time decay may produce a profitable outcome prior to expiration. Third, the position can be rolled forward, the process of buying to close and then selling to open a later expiration at either the same strike or at a higher strike. When using the same strike, this act creates additional income because later expiration translates to higher time value premium. When comparing covered call writing to the alternative of owning shares without offsetting option positions, the market risk associated with stock ownership is reduced for downside movement, and in the case of upside movement, you accept exercise at a profit or take steps to avoid exercise. Another worthwhile exercise is to compare the benefits of selling uncovered puts, versus covered calls. The market risk is the same for uncovered puts as it is for covered calls and this position is not as risky as it might appear at first. When buying stock and writing a covered call, you can finance 50% of the stock purchase price with margin. In comparison, opening an uncovered put requires 100% collateral. For example, if you sell a 50 strike put, you must deposit at least $5,000 per option in your margin account. Another benefit of the covered call is that you earn dividends as long as you continue holding the stock and assuming that you own it before ex-dividend date. With an uncovered put, there are no dividends. However, with an uncovered put, you can wait for a decline in time value and buy to close at a profit, regardless of how far or in which direction the stock has moved. You can also roll forward without worrying about the strike price, because there is no risk of having stock called away. There is a risk of having 100 shares put to you below current market value if you let the put expire in the money; this is why diligence is required with the uncovered put. You must roll forward or close to avoid ending up with shares of stock. |
| four 5,087 posts msg #136972 - Ignore four |
7/22/2017 2:15:57 PM https://www.moneyshow.com/articles/optionsidea-43071/covered-call-proximitymdashidentifying-the-best-choice/?&pg=1 Covered Call Proximity—Identifying the Best Choice 07/24/2015 8:00 am EST Focus: OPTIONS Michael Thomsett Image Michael Thomsett Founder, Thomsett Publishing Website Michael Thomsett, of ThomsettOptions.com, highlights the importance of covered call proximity and while dollar values of longer-term options are higher, Michael also emphasizes that options traders may find that the annualized return for short-term options are much better. Covered Call Proximity is the determining factor of the short call’s value. The closer the underlying price is to the strike, the greater the option’s price response to the price movement in the stock. The farther the proximity, the less responsive premium levels will be. Those wanting to avoid or defer exercise may shy away from close-proximity positions or, worse yet, may select OTM positions expiring much later. Both of these decisions adversely affect outcome. You are likely to realize many more profits by focusing on close-proximity, soon-to-expire strikes. The proximity, however, is only one of two issues. The other issue is time to expiration. In selling covered calls, you want to get the greatest dollar amount possible when you sell to open, so longer-term options are more attractive, at first glance, because time value is higher. But leaving the exposure for a longer period also increases risks. The solution normally is found in options expiring between one and two months. During this period, time decay accelerates more than at any other time. Even though dollar values of longer-term options are higher, you will find that the annualized return for short-term options are much better. In other words, you will make more profit writing six 2-month options per year, than you will writing two 6-month options. To annualize, calculate the return (divide option premium by the strike). Then divide the return by the number of days between now and expiration. Finally, multiply by 365 to get the equivalent annualized return. An equally troubling aspect to covered calls is the risk of loss. Because a covered call includes ownership of stock, a decline in stock value makes the option profitable but not the stock. If price declines below net value, you will have a net loss. The net value is the basis in the stock, reduced by the premium received for selling the call. For example, if you paid $52 per share for 100 shares and sold a call for a premium of 3 ($300), your net value is $49 per share. If the share price falls below this level, you have a net loss. In this situation, you can sell another call to make up the difference, but if the strike yields less than your net value, it creates a loss. You can also just wait out the price movement, hoping for the price to rebound. But these alternatives are not satisfactory. As an alternative, consider other strategies. These include the variable ratio write, in which you sell more calls than you cover, using two strikes. One issue with this strategy is the collateral requirement for the uncovered options, equal to 100% of the strike value. For example, if you buy 300 shares at $52 per share and then sell two 52.50 and two 55 calls, you are out-of-the-money on all four options, which is desirable; but you also have to deposit additional collateral of $5,250 for the uncovered option. Another way to achieve the same market risk is with the uncovered call. You have to deposit collateral in this case, as well. But market risk is the same as covered call risks, with more flexibility. For example, if you sell an uncovered 50 put, you have to deposit collateral of $5,000 in your margin account. If the stock price falls below $50 per share, you can close the put or roll it forward. The big advantage in rolling is that you are not concerned with the strike because you will not have to worry about net loss on stock (as you do with the covered call). Disadvantages to the uncovered put include no dividend and less cash outlay. For the covered call, you can open the stock position for 50% and leverage the other 50%; and there is no collateral requirement. The uncovered put demands more cash for collateral, in exchange for more flexibility. For all of these strategies and alternatives, selection of the most advantageous proximity between strike and current price of the underlying is a key to managing risk. This, plus time to expiration, defines the difference between a successful risk management strategy and one heading for problems. |
| four 5,087 posts msg #136974 - Ignore four |
7/22/2017 2:41:47 PM https://www.moneyshow.com/articles/guru-46530/three-kings-50-years-of-dividend-increases/?&pg=1 Three Kings: 50 Years of Dividend Increases 07/21/2017 2:52 am EST Focus: DIVIDEND Bob Ciura Image Bob Ciura Contributing Editor, Wyatt Investment Research In today’s investing climate, a retiree looking for income might feel like a king without a castle. However, there are still good sources of income to be found and investors should start with the Dividend Kings, suggests Bob Ciura, editor Wyatt Research's Daily Profit. Dividend Kings are an exclusive group of just 19 stocks. Each has over 50 years of consecutive dividend increases Think for a moment of how stable a company must be in order to raise its dividend each year for five decades running. The past 50 years included several wars and recessions. And yet, not only did the Dividend Kings maintain their dividends through troubled times, they continued to raise them each year. Investors looking for stable, blue-chip dividend payers, should focus on these three Dividend Kings. Johnson & Johnson (JNJ) J&J might just be the Dividend King to rule them all. It has a strong business model, operating in pharmaceuticals, medical devices and consumer products businesses. J&J is a highly recession-resistant business, with growth potential thanks to the aging U.S. population. 2016 was a challenging year for Big Pharma, under the weight of a strong U.S. dollar, weak economic growth and political pressure over drug pricing. And yet, J&J continues to generate reliable growth, year after year. J&J has plenty of growth potential moving forward. Its oncology and immunology segments are particularly attractive, as these two areas contributed revenue growth of 24% and 15%, respectively, in 2016. J&J has multiple potential blockbusters in its pipeline, including Stelara and Imbruvica. With such strong cash flow, J&J has increased its dividend for 55 years in a row. The stock offers a market-beating dividend yield of 2.6%. Procter & Gamble (PG) Consumer products giant P&G is a titan of industry. It has dozens of brands that each collect more than $1 billion in sales each year. Among its key brands are Pampers, Tide, Charmin, Bounty, Febreze, Crest, Gillette, Old Spice, Pantene and Head & Shoulders. In all, P&G generates more than $65 billion in annual sales. Going forward, there is plenty of growth potential left for P&G, thanks in large part to its massive portfolio restructuring. P&G has sold off dozens of low-growth brands, such as Duracell and several beauty brands. This has streamlined P&G’s product portfolio, and given it a clear path to return to growth. Throughout its transformation, P&G has taken more than $10 billion out of its cost structure. The company is also using a significant amount of the proceeds from its asset sales to buy back stock. P&G has increased its dividend for 61 years in a row. It has a hefty 3.2% dividend yield. 3M (MMM) Last but not least is 3M, whose dividend track record makes it the king of the industrial sector. 3M has distributed uninterrupted dividends for more than 100 years. Moreover, it has increased its dividend for 59 years in a row. The stock offers an attractive dividend yield of 2.3%. 3M generated more than $30 billion of revenue in 2016. It is a diversified industrial giant. Last year, it generated a very healthy return on capital of over 20%. It is off to an equally impressive start to 2017. The company had a classic “beat-and-raise” first-quarter performance. That means it not only beat analyst expectations for the quarter, but it also raised guidance for the remainder of the year. Going forward, 3M expects 2% to 5% organic revenue growth this year, which will be more than enough to continue raising its dividend. That makes 3M a top pick for income investors. |
| four 5,087 posts msg #136975 - Ignore four |
7/22/2017 2:43:35 PM https://www.moneyshow.com/library/?expert=603spk |
| Eman93 4,750 posts msg #136976 - Ignore Eman93 |
7/22/2017 2:45:53 PM check this out, lots of good ones on this site. http://www.futuresradioshow.com/?s=85 |
| four 5,087 posts msg #136979 - Ignore four modified |
7/23/2017 12:07:07 AM https://www.moneyshow.com/video/10631/creating-an-income-strategy-with-options-/ Creating an Income Strategy with Options John Dobosz is deputy editor of investing content for Forbes Media and editor of Forbes Premium Income Report and Forbes Dividend Investor newsletter. He is responsible for money and investing coverage on Forbes.com and in Forbes magazine. Mr. Dobosz has also produced a weekly "Stock-of-the-Week" column on Forbes.com and frequently appears on Forbes.com's video network. He is also a senior editor for Forbes Newsletter Group, including its virtual events business, Forbes iConferences. Prior to joining the company, he spent five years with CNN Financial News, working with Lou Dobbs, where he produced long-form pieces and reported on management, entrepreneurship, and financial markets. -- Selling Covered Call for Income Bryan Perry https://www.moneyshow.com/video/10653/selling-covered-call-for-income/ |
| four 5,087 posts msg #136980 - Ignore four |
7/23/2017 12:08:05 AM EMAN, Thank you Never tried futures... |
| StockFetcher Forums · General Discussion · Interviews | << 1 ... 18 19 20 21 22 ... 41 >>Post Follow-up |
Copyright 2022 - Vestyl Software L.L.C.•Terms of Service | License | Questions or comments? Contact Us
EOD Data sources: DDFPlus & CSI Data
Quotes delayed during active market hours. Delay times are at least 15 mins for NASDAQ, 20 mins for NYSE and Amex. Delayed intraday data provided by DDFPlus