multi-strategy options traders

Discussion in 'Options' started by ptrjon, Apr 29, 2010.

  1. ptrjon


    Hey all. I've been thinking a lot about different strategies and am thinking about beginning to trade using several different strategies. Long calls, long puts, short puts, and covered calls(for dividends). Does anyone else trade like this? Any thoughts?
  2. You wontbe collecting any dividends with covered calls since the div price is priced into the calls.

    Simply buying a call or a put to leverage you guess on the timing and direction of the market historically is a huge loser. Selling naked puts will probably net you a high % of winners and then one loser will clean you out of all the small wins you made on the other naked puts.
  3. ptrjon

    ptrjon 100 shares of JNJ and then sell a call at strike price 70. You may be surprised to see some dividends.

    Thanks for the optimism. I bought 2 contracts of PFE 20 2012 LEAPS calls, $1.04 per contract. I think that futuristically, I may be a huge winner.
  4. There's no inherent edge to diversifying among strategies. Timing, selection and money management are of greater importance.

    Dividends are priced into puts and calls so there's no advantage to a covered call over a naked put from the standpoint of dividends (the NP's advantage is less slippage and commissions).

    And there's no advantage per se to dividends since they're paying you with your own money and creating a taxable event. Now if you can find dividend paying stocks that are going to rise, that's a whole nuther story - but the key there is a stock that rises, not the dividend.
  5. I think that futuristically, you have absolutely no idea what you are doing. But we need people in the 95% to give the 5% their profits.
  6. What’s the 70 call going to do for you? Unless you go far far out into the LEAPS those 70 calls are basically worthless options? The stock will fall by the amount of the dividend the moment Xdiv day is over. That’s not an opinion it’s a fact. The 10 cent call won’t do a thing for you.

    I am not being optimistic or pessimistic just realistic.

    If you think buying a LEAP is going to make you a huge winner all I can say is good luck, it’s a crap shoot.
  7. ptrjon


    a covered call is buying stock and shorting calls.
  8. Ni kidding? wow.

    the problem is the moment you collect your div on the stock the stock falls about the amount of the div and all you've done is create a taxable event. You collect the div and pay tax an the stock is now worth the same less the amount of the div, you've not made a dime.
  9. ptrjon



    You're right. The stock prices have gone down since the company's started paying dividends. These stocks shouldn't have paid dividends to the company's owners.

    I do the majority of my stock trading in a roth account. Absolute return is my goal, with no regard to taxes.
  10. You need a formula to calculate the return:

    d = m/v


    d = density
    m = mass
    v = volume
    #10     Apr 30, 2010