Just a FYI,.... I've been geting a lot of PM's over the last several weeks. Just letting folks know I don't respond to PM's. If the reason for the PM are to ask personal questions about the trades which i have not shared here, such as the number of contracts, then assume such info is irrelevant to the trade, analysis, and discussion.
Glad to report my Feb naked puts expired as I hoped they would. Hope things worked out for others as well. I currently have otm trades open for March, April, and June. Nothing for May yet. Averaging out my trades for the year, shows I'm currently on track to earn about 16% annualized. However, since I use a reasonable degree of leverage to "goose" my year end results, I'm actually on track to earn closer to a theoretical 20% annualized return for the year. Of course, that assumes no sig losses along the way. (A theoretical improbability.) (I use the term "reasonable degree of leverage", to distinquish myself from those who trade "you know what", and use an excessive degree of leverage.) I anticipate a certain % of stocks getting put to me each year. I actually "hope" to earn an even higher % return on those secondary trades via covered calls, than I did on the initial naked put..... as I'm hopeful those secondary trades will be initiated less otm than the primary trade was. However, part of that issue will be dependent on whether the VIX continues it's trend down or reverses. Bottom Line.... Being picky in the stocks and strikes I select, earning between 13 - 19% on my initial otm naked puts, using a reasonable degree of leverage, selling covered calls and collecting dividends on the stocks put to me, and diversifying among stocks, sectors and expy months,.... my goal (hope) is to earn a 20% return by year end. Yes, I could set an even higher % return goal than 20%. But as we all know, the higher ones % goal, the lower the probability of actually achieving it.
I noticed a number of my posts and trades were miissing after ET did their weekend maintenance. For example, my last trade of $19 CRUS, with a $1.00 credit for June. Anyway, on another issue, it's no secret that my annualized % return goal is 13 - 19% per naked put, and I've been averaging 16%.... plus an extra goose via leverage. The leverage goose is ment to bring my year end % return to the 20% area. I actually ended the year of 2012 up about 22%. Therefore, I will now either be using less leverage for 2013, and/or selecting even lower strikes for my % return goal per trade. That being, instead of earning 13 - 19% per trade, I may drop it to 11 - 15% for many trades..... unless we have a crash and stocks are really cheap. I'm satisfied earning a 20% return each year. I'd rather lower 2013 % return goal a few percentage points below this years 22%,... and in return, have an even higher "probability" of achieving that goal at year end. If I can do 20% for 2013, via naked puts, covered calls, dividends, and leverage, I'll be satisfied with that. On a positive note.... it should be even easier to find stocks that meet my criteria, if I'm accepting lower strikes and/or credits. And I may not mind raising my degree of leverage use a little, if it means selecting "even lower strikes" than I normally would. The question is, will I still earn my 20% return goal at year end, via the new adjustments to my strategy? I'll just need to re-balance everything a little.
Sold puts on $35 IACI for May. Credit $0.90 Annualized % return........12% otm safety cushion 14% I have a similar trade that expires in March, so this will hopefully be it's replacement. Company is financially healthy, and reasonably valued at my BE price of $34.10 They also pay a dividend, in case I end up owning it. http://finance.yahoo.com/q/bc?s=IACI&t=2y&l=on&z=l&q=b&c= The % return is lower than my average of 16%, but I've decided to lower my % returns, until there is a sig market correction. I'd rather use a little more potential margin leverage, to make up for the lower than usual % return.
Maestro - Here's one to run through your magic analysis machine: Titan Wheel International (TWI), not to be confused with Titan Equipment (TITN) which we've both sold puts on in the past. TWI is a falling knife today because of an earnings miss. I sold the Jan 2013 $15 or $17.5 puts back in August and they turned out fine. After I've had a chance to review the earnings, I may do something at one of those strikes again. As ever, this info is worth what you're paying for it.
I didn't do a full analysis on TWI, but most of it. Still too far away from trading at my desired price, and potential strike, to spend time doing a full analysis, since it may never get there. However, the analysis I did indicates it is a financially healthy company. Thus, when it becomes a little more reasonably priced, it may be worth the risk of a trade. Thus, I will add it to my watch list, and if/when it alerts me at 18.3, I will consider selling a $15 put when the credit meets my demand. Technically, I'll probably wait until it trades between $17.5 - $18 before initiating the trade. I just want to be alerted at $18.3, so I have time to check it out again. Big % drop today, but i would NOT call the stock a falling knife, as it has "recovery potential". That being, it may not ever get to the $18 area, before the bargain hunters grab it. But that is where I need it to trade, to get the strike and credit I'd want. Even a price of $17.50 is not unreasonable, if someone wanted to reach a little. But I prefer an otm cushion. Hence my interest in a $15 strike, if/when it trades in the $17.5 - $18 area.
Sold puts on $18 TIBX for May. Credit $0.60 Annualized % return......16% otm cushion... 16% http://finance.yahoo.com/q/bc?s=TIBX&t=2y&l=on&z=l&q=b&c= Company is financially healthy and reasonably valued. I'm glad I have some puts expiring in 2 weeks, as my degree of leverage is getting close to the "naughty zone". Was gone all day, so didn't know order had filled til now, so this is a late entry for the day.
Today I closed this this $10 ARO trade for $0.10. Thus keeping 75% of the credit, while closing the trade 6 weeks early.
When you see the market trading at an all time high, when it probably should be trading closer to it's lows,..... this is why I ignore option strategies with double sided borders. I want to allow a stock the "flexiblity" to fluctuate in at least one direction "unrestricted". The benefit of 2 potential credits, is often neutralized, by now having 2 ways to lose money. I don't need the stress and uncertainty, of worrying about a stock moving too far in 2 directions. I prefer having one direction "open ended", with some flexibilty in the other direction. (That being, I have the flexibility to potentially buy the stock if I choose to.) Hence my preference for a naked put selling strategy.