When it comes to stocks, I have no idea what stocks will rise,... or when they will rise,... or how much they will rise,... or how fast they will rise,... or when they will stop rising,... or when they will reverse the rise and drop. Trying to maximize POTENTIAL of a profit, instead of a PROBABILITY of a profit, is a fools game. I'm very happy earning 13 - 16% returns on my trades, which have a very high probability of being successful. And when the occasional stock is put to me, I tend to earn an even higher % return on the subsequent covered call. BTW, the annualized % returns I earn are real. Unless a spread trader uses all his funds for investing, his % returns are merely theoretical. And thus have no relation to how he will end the year. Put another way,... if I hypothetically earn 15% annualized on all my trades, using all my funds, i will have earned 15% at year end. Start with $100,000, and thus end the year at $115,000. No margin used. The only way a spread trader can earn a similar % return at year end, as he is earning on each trade, is to also use all his funds. And that means he is using MAXIMUM MARGIN LEVERAGE. Probably in the area of 10 times the value of his account,.... if not higher.
What diaoptions doesn't understand is.... One can HOPE a stock drops for a higher credit. One can HOPE tech support holds. One can HOPE the VIX rises. One can HOPE a stock for a good earnings report. BUT...... HOPE is not a strategy.
<<< Trying to maximize POTENTIAL of a profit, instead of a PROBABILITY of a profit, is a fools game. I'm very happy earning 13 - 16% returns on my trades, which have a very high probability of being successful. And when the occasional stock is put to me, I tend to earn an even higher % return on the subsequent covered call. >>> Regarding my current 13 - 16% annualized return goals: That is based on current market conditions. When the VIX was in the 20's or higher, my % returns on trades were higher. When the VIX drops, so do my % returns. I trade the market as it is. Not the fantasy I wish it to be.
Sold puts on $9 MRVL for Nov. Credit $0.30 Annualized % return..... 15% http://finance.yahoo.com/q/bc?s=MRVL&t=5y&l=on&z=l&q=b&c= Reasonable tech support in the $10 area, per the 5 year chart above. Company fundamentals are a mixed blend of mostly positive, with a few just "so-so" metrics. But is financially healthy, and reasonably valued at my $9 price, with a BE of $8.70 Currently going through a few issues, but that is what creates buying opportunities for solid companies.