boilermaker75
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Posts posted by boilermaker75
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The usual, wrote 280-strike, Nov 19 expiration puts on BRKB for $1.15 per share.
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I've done things similar to all your scenarios. I have kind of gravitated to shorter term puts, sometimes writing them the same week they expire right up to expiration. I like getting the play over with, especially if there are potential margin considerations. Plus as you point out the incremental increase in time premium decreases as you increase the time to expiration.
As long as you pick a strike price that is at a good valuation you will do ok. It just limits your profit if the stock takes off. I now do 75% of my put writing on BRKB. BRKB is also my largest position, by far, so if it takes off I am happy! Although I wish it stays here for years so Buffett can buy a lot of it back.
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9 hours ago, benchmark said:
when you roll out the puts, don't you lose money on your current puts already?
Yes you buy back your current puts at a loss, or just a reduction in your profit, but sell the further out expiration puts at a greater premium.
Let's say the strike is $50 and the stock is around $49.5 at closing. You can buy pack the put at about $0.50 and sell the put expiring the next week for much more than $.50, maybe > $1.
Or if you had sold the original put for $1.50, you just might want to close the position at a $1 profit.
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22 hours ago, DJS said:
I do this consistently and look at it exactly the same way as you and @boilermaker75 ... selling insurance. I'll usually do it with a company that I either already own and am looking to add to, or one that I'm looking to start a new position in but maybe some unrelated news, market sentiment or whatever has been lifting the general market up as a whole. Rather than wait on the sidelines for a pull back that may or may not come anytime soon, I sell insurance on the company and collect the premiums, which alone can actually create a pretty good return.
One thing I'll add is that if there is a modest decline, rather than be put the shares, I'll usually just roll the put out and collect the premium again. Now if there's a large decline where there's not enough premium to make it worth doing again, I'll let it be exercised and most likely be buying even more shares in addition as that's really the ideal opportunity I was waiting for to begin with
Excellent first post DJS
Edit: and welcome to CoBF
Exactly what I do now. Try to roll out the puts if I can pick up enough premium, unless I am doing it to pick up the shares.
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2 hours ago, Gregmal said:
shorted some PTON immediately AH at 81 and 74. Having just had a front row seat with Z, I think I can guess what the news digestion is going to look like LOL.
EDIT: grabbed a bit of ATUS AH at 18 as well. Both trades looking for the momo to continue for a good bit. Probably into next week.
Very nice Greg! I made a little money writing calls on PTON, but I should have been buying puts. I kept thinking what do you see in garage sales? Exercise bikes. I should have gone in bigger.
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Thanks for those links GFP. So they have a Munger designed dorm with windowless bedrooms at U of Michigan and Munger says students love it and fight to get in it.
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1 hour ago, abcd said:
I am curious on how the brokerage house charges interest, when you sell puts without having the cash balance in the account to support it, meaning you will have to use your margin to honor the put, when it is time.
No charge till you are put to. Only then are you on margin and charged interest. (Edit: It is like putting in a limit order to purchase a stock that will put you on margin. No interest charged till the order actually executes.)
When it is getting close to expiration and it looks like I might get put to, I will buy the put back and sell a further out put at the same strike price. This picks up additional premium and delays going on margin. till hopefully the put expires worthless. This works very well with BRKB. I have been writing puts on BRKB ever since the B shares became available and I have never had a trade where I have lost money.
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5 hours ago, spartansaver said:
Best of luck in all your other games this season.
Thanks, same to you!
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15 minutes ago, spartansaver said:
Should be a good one, you guys have beaten some good teams this year.
As have you!
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Should be a fun game this weekend. Go Boilers!
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I wrote some BRKB 280-strike Nov 12 expiration puts for $1.61 per share this morning. I would not mind getting these put to me, it would be like buying BRKB today at $278.39. Although it would put me on margin and I would then write some 280-strike covered calls, effectively the same thing as the original put sale. If BRKB closes out of the money I pocket the insurance premium. It is a little like being on margin, but getting paid instead of paying.
Edit: I have been doing this for about 25 years.
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9 hours ago, gfp said:
Oh it's not so bad. Remember what a typical undergraduate dorm looks like. Mine was a concrete cell with no privacy and double occupancy. Restrooms shared for an entire floor, no kitchens, period. Quite a bit of detail in this presentation:
Exactly what my dorm was like. Of course I only lived there one year!
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6 hours ago, Spekulatius said:
While this is correct, you are getting screwed if bad news comes out subsequent to selling the put and the rock falls a lot. You are also getting screwed if the stock goes straight up, since you only get the meager put premium and nothing else.
But not as screwed as if you bought the stock at the higher price. So you do this only if you don't mind owning the stock.
It is like you are selling insurance, no different than BRK's main business, except "paying a claim" is actually buying a stock you want to own but at a better price. It is better than the insurance business if done right. Something Buffett used to do often.
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On 10/28/2021 at 5:26 PM, Gregmal said:
Got a few Jan 2022 42.5s for ~$1.2. If I get put the shares it's "good enough". The biz is inflation resistant and basically a royalty/call option on prosperity/wage increases for the poor people.
It is almost like getting paid for putting in a limit order.
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2 hours ago, DooDiligence said:
Eeek! Sounds like something the Chicom's would devise.
There are fire codes. So they can't build it unless it meets those codes.
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1 hour ago, Spekulatius said:
https://www.independent.com/2021/10/28/architect-resigns-in-protest-over-ucsb-mega-dorm/
The idea was conceived by 97-year-old billionaire-investor turned amateur-architect Charles Munger, who donated $200 million toward the project with the condition that his blueprints be followed exactly.
From the link, Chancellor Henry Yang has hailed it as “inspired and revolutionary.”
I was an Assistant Dean for Henry when he was Dean of Engineering at Purdue, about 30 years ago, until he left to become chancellor of UCSB. If Henry likes the idea it is probably worth doing. Henry is probably the longest running chancellor/president of any major university. It has been a while since I spoke to any faculty at UCSB, but when I did they loved him.
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After BRKB, my next three largest positions are BAC, WFC, and BK.
Edit: I have also been writing puts. Today I wrote WFC nov 12, 44-strike puts for $1 per share
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21 hours ago, Spekulatius said:
I learned something today. St Pierre and Miquuelon is still a French Island! That's why smuggling liquor makes sense. I guess it's mostly VAT arbitrage or do they have special liquor taxes there? Liquor isn't really outrageously expensive in mainland France.
Sorry for the OT post.
I learned that too recently, watching an episode of "Republic of Doyle."
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1 hour ago, johnpane said:
Selling a call you hold is not "writing a call", thus not "writing a covered call", thus not "writing a qualified covered call". Your whole argument rests on a section of Pub 550 that does not apply to the situation.
Exactly. When you write a call, you are creating a call that did not exist. Like writing an insurance policy. You get the premium and someone else gets the call (policy).
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14 hours ago, Spekulatius said:
Of course all the above will be used to build weapons. So you can future proof your portfolio buying $LMT. I actually added some today.
Buy shares in Skynet.
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Why don't they just confiscate all retirement accounts (IRAs, Roths, 401ks, etc) into the social security system and just give us the money they think we need in retirement?
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Kindle edition on sale for $1.99
https://www.amazon.com/dp/B01K1ATZU4?_bbid=19400979&tag=ebookdealspagesite-20
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On 8/31/2021 at 10:12 PM, mcliu said:
Which car has the most comfortable seats?
We have the Lexus NX, it's nice and reliable but the finishing is not great like German cars, and the f-sport seat suck so bad.
I had a Saab that had the absolutely most comfortable seats. I have never sat in any other car seat that comes close.
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I've was never an AC/DC fan, but I do like Back in Black!
Strategies for selling cash secured PUT options inside a retirement account
in General Discussion
Posted
I write OTM options. The closer to expiration the closer the strike price to the current price.
Today I wrote Nov 19 280-strike BRKB puts. I am currently short Nov 12 280-strike BRKB puts. As some are getting close to expiration I'll write some more.