Castanza

Is it really picking up pennies when your making 30-40% ROC a year? Ask the traders from LTCM. They were heavily leveraged. 25:1 debt ratio....I’m selling otm cash covered puts on blue chip equities which I already own. Hardly an equal comparison.

Is it really picking up pennies when your making 30-40% ROC a year?

The writing of puts takes very little effort on blue chip stocks especially if you're not greedy about premiums and go decently out to 95%+ profitability range. I just don't see how this is anymore risky than owning the underlying stock. As Greg pointed out. Value investors are just as likely to hold BAC on the way to zero as someone who would write puts for premiums with the risk of potentially getting assigned. Now if you do this on say Beyond Meat yeah you're a moron. But doing this on SPY or other securities you would hold long-term, I don't see the risk. Maybe I'm missing something....the majority of you on here are much better investors than myself. How many of you would liquidate a portfolio of $SPY if it dropped 15% in a day? If this were to happen the person who got assigned shares now has the advantage vs the person who is holding. I could write covered calls and collect premiums while you have to hold until SPY climbs back to your dca before you could sell or write covered calls. Think about worst case scenario. Stocks gaps down due to bad earnings or after-market news. Let's say 20% on a $1,000,000 investment. You're out 200k if you owned the stock, but you can close the position and move on. If you sold the same notional in cash secured puts, you're going to have to pay more than 200k above your sale price to close the contract because now vol has exploded across the term structure and the puts you sold are now going to be at a premium (unless if they're WAY out of the money - and even then, massive bid/ask spreads). So your two choices are to accept a loss greater than 20% to close the position and stop the bleeding OR to be stuck with the position. It's NOT the same dynamic as owning the underlying stock. Say MSFT is at 140 and I sell strikes at 115 collecting premiums. If MSFT happens to gap down and I get assigned shares bi deal. I have more leverage with my shares than the guy who bought shares at 140 and is now holding the bag. If MSFT bottoms out there I can now sell covered calls and still profit off my cost basis or simply hold long term. But if you bought at 140 you’re going to be taking a loss until it’s back to your cost basis. I don’t see the risk. If MSFT drops 20% I’m buying anyways. I’m collecting premiums up front so really the only thing to keep this stars they going is to not get assigned (which isn’t bad) plus if I buy an OTM put at say 110 and structure the ratio of buy to sell 2:1 I’m only going to lose money on in the range 110-115. Anything below that is a profit and anything above 115 is a profit of premiums. These are just rough numbers.

For institutional trader yes. For PAs you can wait until expiration and take delivery or close out with limited vega and theta exposure. Well yes, that is what I characterized as being stuck in the position. The capital is tied up until expiry OR you lock in a loss greater than the common stock. If you're only selling 1 month puts, being locked up isn't a big deal, but your premiums are tiny, transaction costs eat most of it, and you can expect these things to move against you more frequently. If you sell them further out, much more opportunity to make greater premiums, less frequency of a negative outcome if held until maturity, but ALSO tying up capital when you're wrong OR taking greater losses than in the common. It's not the same thing as stock ownership and comes with its own set of psychological barriers/problems/biases to work through. I personally like options, but they're not easy and certainly not a substitute for outright stock exposure IMO. Again, I'm not denying the risk. But I think you're overstating it. MSFT has better premiums doing it weekly than it does monthly. Also avoiding earnings weeks can help reduce risk. Plus if you're really worried about a 20% drop you can offset premiums buy buying a few OTM puts. edit: And you could get whipsawed on that hedge put. So it doesn't completely negate risk.

The writing of puts takes very little effort on blue chip stocks especially if you're not greedy about premiums and go decently out to 95%+ profitability range. I just don't see how this is anymore risky than owning the underlying stock. As Greg pointed out. Value investors are just as likely to hold BAC on the way to zero as someone who would write puts for premiums with the risk of potentially getting assigned. Now if you do this on say Beyond Meat yeah you're a moron. But doing this on SPY or other securities you would hold long-term, I don't see the risk. Maybe I'm missing something....the majority of you on here are much better investors than myself. How many of you would liquidate a portfolio of $SPY if it dropped 15% in a day? If this were to happen the person who got assigned shares now has the advantage vs the person who is holding. I could write covered calls and collect premiums while you have to hold until SPY climbs back to your dca before you could sell or write covered calls.

I've been religiously writing ATM cash covered puts on this all year collecting premiums. I got assigned shares a few times. I also hedged a few times buying puts that offset premiums a bit but also gave some additional protection to the downside. Been averaging about 2-3% a month on the capital. Not quite as good as your strategy but if you're not looking to hold shares I don't think it's a bad strategy. You do miss the div though. Curious how many others on here sell covered calls or cash covered puts? In this environment it seems quite easy to do confidently. I saw Boilermaker has been doing something similar in an IRA I believe. Although I haven't been doing it strictly on BAC. I do it all the time with BRKB, WFC, BAC, and AMGN when AMGN 170-puts have sufficient premium. It's interesting to think about this at scale and why people choose to not do it. I mean if you had say 500k you could basically generate a 50-60k yearly income off this strategy with minimal risk. I mean even with say weekly SPY 280 puts (86% profit chance) you generate a $94 premium. Just say 25% for taxes so a 70.5 premium. You could do about 18 contracts a week and generate about 5k a month in income. Yeah you would get the shaft if the market tanked, but that would happen to your retirement accounts regardless. Why is this? Because the risk you're taking is many hundreds of thousands of dollars when it doesn't work out. You're selling insurance for a premium - it's great when the insurance doesn't have to pay, but a doozy when it does. As far as the strategy, I trade around my core positions ALL of the time. Take gains here, average down there, roll back. Also, I sell long-dated out-of-the money calls and tend to repurchase most of them on market dips 5-10% for 50-60% less, wait for the recovery, and rinse/repeat. All of these strategies take advantage of volatility - but they all suck-hard when they go wrong or you get whipsawed. The buying/selling the actual shares around a core position is probably the least risky, but also the least rewarding/leveraged. As LC said, works best when done on a portfolio of multiple securities you're already comfortable holding and low commission accounts. I get that but my point if if you're simply holding SPY and the market crashes you're going to be down a ton anyways. If you're holding cash and you get assigned shares selling puts what's the difference?

I've been religiously writing ATM cash covered puts on this all year collecting premiums. I got assigned shares a few times. I also hedged a few times buying puts that offset premiums a bit but also gave some additional protection to the downside. Been averaging about 2-3% a month on the capital. Not quite as good as your strategy but if you're not looking to hold shares I don't think it's a bad strategy. You do miss the div though. Curious how many others on here sell covered calls or cash covered puts? In this environment it seems quite easy to do confidently. I saw Boilermaker has been doing something similar in an IRA I believe. Although I haven't been doing it strictly on BAC. I do it all the time with BRKB, WFC, BAC, and AMGN when AMGN 170-puts have sufficient premium. It's interesting to think about this at scale and why people choose to not do it. I mean if you had say 500k you could basically generate a 50-60k yearly income off this strategy with minimal risk. I mean even with say weekly SPY 280 puts (86% profit chance) you generate a $94 premium. Just say 25% for taxes so a 70.5 premium. You could do about 18 contracts a week and generate about 5k a month in income. Yeah you would get the shaft if the market tanked, but that would happen to your retirement accounts regardless. Why is this?

Why wouldn't you just do this with cash covered puts? Weekly premium ATM is $1.89. If you get assigned then it's no different than your situation. Plus you can simply buy an OTM put as a hedge which offsets your premium a bit, but provides good downside protection. That's safer than placing a large amount of capital into a single company. Both strategies are capital intensive.

I've been religiously writing ATM cash covered puts on this all year collecting premiums. I got assigned shares a few times. I also hedged a few times buying puts that offset premiums a bit but also gave some additional protection to the downside. Been averaging about 2-3% a month on the capital. Not quite as good as your strategy but if you're not looking to hold shares I don't think it's a bad strategy. You do miss the div though. Curious how many others on here sell covered calls or cash covered puts? In this environment it seems quite easy to do confidently. I saw Boilermaker has been doing something similar in an IRA I believe. Although I haven't been doing it strictly on BAC.

Sold $MLR about a week ago at 33.5 a share. Couldn't pass up the 10% profit in a few weeks.

Writing $MO 10/11 39.5 puts

https://amp.businessinsider.com/wework-ceo-adam-neumann-layoffs-firing-tequila-shots-run-dmc-2019-9 Simply amazing

Sheetz gas station chain. - People love Sheetz food. - Tesla Charging stations. Not unique but their atmosphere and food are arguably best in class giving them some advantage over competition to entice people to charge there. - 530ish locations (Flying J has 650ish)

Sold my remaining $BREW Sept 20 $12.5 and $10 puts.

Are you buying puts with the VIX around 16?

When does personal responsibility come into play? I'm not disagreeing with your point, but I'm also not agreeing with it. My issue with much of the Democratic policies is they want to remove all personal responsibility, accountability and decision making from the process. We shouldn't have a nanny state, yet I agree there probably are some lending practices which are harmful (but shouldn't necessarily be illegal). On the radio the other day some workplace was offering to pay off student debt for signed employment contracts of a specific length of time. I'd imagine there are some shady practices in the fine print there. Is it not just as shady/predatory to make some "taxpayer" foot the bill for others poor decisions? Does that not also fall under predatory/shady lending practices? I didn't force you to take out a loan and I'm also not volunteering my money to pay for your loan. All you're left with is force which is simply predation on a faceless person aka the tax payer.

I think there are two separate issues that some on here are conflating. Global Trade and Free Trade (Free Market System) The first is important and it easily can be elaborated on with the short skit "I Pencil". The second is something that does not currently exist and is the current motivation behind the tariffs. At the end of the day we are fighting government intervention with more government intervention. It's been a long time coming and the chickens finally came home to roost.

I don't trust the US legal system in general. It works sometimes especially when you are middle class and can afford a decent lawyer. Where the legal system breaks down completely is when the defendant is either a police officer, politically connected, very rich, or very poor. The poor get screwed over. If you are poor and the legal system gets you in its sights you are going to jail whether or not you actually did anything. The other 3 groups can do whatever they want and rarely suffer consequences for their actions. And the politically connected are at the top of the food chain. Even if you are very rich, if you are in a position to do real harm to the politically connected your life expectancy is very short indeed. I agree with this. But on the other end of the spectrum we have ambulance chasing lawyers who take ridiculous cases like "I spilled my coffee on myself and it burned me." and sue the hell out of companies for things that should be dismissed as common sense. The exodus of common sense in society has lead to the degradation, corruption, abuse and ultimate failure of our judicial system. And it's happening at an exponential rate.

58k a year may not be quite equivalent to others such as engineers etc. But at the same time teachers are public servants. No public servant job should use salary as the primary "attractant." How about go compare teachers salaries to the average wages of everyone in the cities who pay taxes to support them. You'd find the majority make much less and have much worse benefits (healthcare, guaranteed pension, summers off, tenure, etc) and completely over looking all the social benefits as well. Looking up my old hometown (high paying SD) the average salary was 34k for average citizens while teachers avg salary is 57k and range from 45-71k. That's a big difference and I'd be willing to wager that is a similar ratio wherever you look. I'm sure areas of discrepancy do exist.

Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large. Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak. I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce. I suspect tuition would go down, not up. Universities currently have incentives to continually raise tuition to fund internal salaries, various projects, etc. -- the typical bureaucratic incentives. They have been able to raise headline tuition more than inflation because of subsidies arising from federally issued or guaranteed loans. If that subsidy were taken away and the risk of loss were placed on universities, I believe they would find ways to cut tuition costs (and the attendant risk of loss on their guarantees) significantly. The public/private distinction is an issue, and public schools might continue to enjoy a taxpayer subsidy to some extent. But they are also the universities with the lower tuition costs to begin with, and legislators could make any university debt non-recourse to the state, preventing any taxpayer subsidy. I believe this is already the case for most public university systems in the U.S. -- although they are considered arms of the state for many purposes, their debt is not backed by the full faith and credit of the state that sponsors them. https://www.cnbc.com/2018/06/25/why-your-first-job-out-of-college-really-really-matters.html My concern would be that incentive's colleges to get jobs for graduates would create a more pay to play employment model. As the article above says 40% of college grads take jobs that don't require a degree. How would universities handle the inevitable lawsuits? Or is that not what you are saying in terms of accountability? I'm not sure what lawsuits you're referring to. Lawsuits on the guarantees? I may have completely misunderstood what you were saying. What I thought you were saying was that if students upon graduation could not find a job would be able to sue the college and put the loan back on them to be paid. What did you mean by accountability/guarantee?

Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large. Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak. I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce. I suspect tuition would go down, not up. Universities currently have incentives to continually raise tuition to fund internal salaries, various projects, etc. -- the typical bureaucratic incentives. They have been able to raise headline tuition more than inflation because of subsidies arising from federally issued or guaranteed loans. If that subsidy were taken away and the risk of loss were placed on universities, I believe they would find ways to cut tuition costs (and the attendant risk of loss on their guarantees) significantly. The public/private distinction is an issue, and public schools might continue to enjoy a taxpayer subsidy to some extent. But they are also the universities with the lower tuition costs to begin with, and legislators could make any university debt non-recourse to the state, preventing any taxpayer subsidy. I believe this is already the case for most public university systems in the U.S. -- although they are considered arms of the state for many purposes, their debt is not backed by the full faith and credit of the state that sponsors them. https://www.cnbc.com/2018/06/25/why-your-first-job-out-of-college-really-really-matters.html My concern would be that incentive's colleges to get jobs for graduates would create a more pay to play employment model. As the article above says 40% of college grads take jobs that don't require a degree. How would universities handle the inevitable lawsuits? Or is that not what you are saying in terms of accountability?

Any solution that requires regulators to determine worthwhile degrees, etc., is probably far more complicated than it needs to be. Instead, why not make the university enrolling the debtor-student guarantee any federal issued or insured student loans? That way the institution in the best position to create a good education at the lowest possible cost is directly incentivized to do so. They also would be incentivized to help their students get good jobs after they graduate. A guarantee from that university seems to make much more sense than guarantee or loan from taxpayers at large. Wouldn't this create a massive discrepancy between private and public institutions? I mean public schools receive state legislator and federal funding. So having them guarantee the loans would still technically come back on tax payers right? I know the majority of their funding is probably derived from tuition but there is certainly a tax element. Whereas private universities receive no state/federal funding. Then you have the issue of capping tuition costs. How would you do this with the inevitable demand of either tuition increases to pay these guaranteed loans? Either that or they ask for more money from state and federal funding. I'm not saying your wrong but it seems like the money is coming from the same pool so to speak. I agree with the regulators part. I wasn't thinking of having them determine what degrees are worthless. More along the lines of recognizing supply and demand in the general workforce.

I distinctly remember sitting in my dorm room wondering why the hell I was paying 20k a year for power points. That's exactly what the majority of courses are. Yeah you get some valuable lab work and get to talk with the professors but the majority of "learning" is done on your own. Youtube can teach you Calc, Chem (minus the lab), Biology, Physics and everything else just as well. The only thing different is it's free and there is no accountability or way to prove you "learned" it. It's easy to see the value of education looking back in history. But looking forward not as much. Seems to be more about making connections and having a piece of paper to market yourself and check off a box.

wow that's great. Must be a really nice cabin at $315 per night vs all the other cabins on Air BNB at less than half of that. Hey that's what my family member told me. I never verified it lol perhaps they embellished. Looking now it actually looks like peak season is more around $230 a night :P So not quite half, but certainly not as high as I mentioned before. My apologies.

A bailout is completely ridiculous and would have a negative effect on the future of education and generations. It's a band-aid solution at best. A bailout is also a huge slap in the face to people who were responsible like myself. I went to college for Petroleum Engineering (2yrs). End of my sophomore year I realized the industry was starting to show signs of slowing. I figured hey, I don't want to be 60k in debt and not have a potential job lined up. So I dropped out and took a year off. To the scoff of my college friends and others I took a job as a lowly UPS driver and busted my butt on 12 hours days. I made pretty good money (I was lucky). I decided to finish school in another program at an online university. I don't believe that the university you go to really matters unless it's an IVY. Well I continued to bust my butt getting up at 4:30 in the morning to study, head to work, get home around 8 and then study a few more hours in the evening. Practically had no weekend etc. But when all was said an done I graduated basically debt free, had a good savings account and a job to hold me over until I found a job. Ended up only taking 2 months to find one that paid the same with way better hours. I'm in better shape than all my friend who WILLINGLY chose to take out enormous loans. I would say financially I'm 4-7 years ahead of most people I graduated with. So a bailout? No, screw that. I payed my way and I'm not paying for anyone elses poor decisions. I'm paying out of pocket for masters right now. I agree with some others on here that one of the most harmful things this education system has done to young American students is tell them "you must go to college." This bailout will do nothing but devalue higher and lower education further. In my opinion this generation needs to learn from their mistakes (whether it was their fault of not). If a bailout is given do you think these parents are more or less likely to push their kids into college at any cost? S many of these "white collar" jobs could be done by smart high school graduates with some basic training. But as it stands now the Bachelors degree seems to be the new GED and the Masters is quickly becoming the new Bachelors. That trend needs to be reversed. __________________________________ Solution? First and foremost I don't believe the govt should be in the business of loans. But being that it exists the system clearly needs reformed. Put stipulations on loans. 1.) Loans should only be given out to HS graduates who have good GPA's. 2.) Bureau of Labor should do studies every so often to see the supply and demand of jobs. Loans should only be given out to students majoring in say top 10 needed careers (RN). 3.) This dependency on govt loans needs to be reduced. I say ween the total number of loans given over a 10 year period until you hit 0. (maybe a it extreme) 4.) State schools shouldn't offer "worthless degrees." If you want a basket weaving degree then you can pay your own way with a private loan at a liberal arts university. 5.) Reform High School and add apprenticeships. Say Katie is good at math and has in interest in engineering. Well maybe starting junior year let her work at a local engineering firm for a few hours. This gives experience and lets employers find possible future employment. Perhaps if this is done some companies would come up with contracts saying "we will pay for your college education if you commit 5 years of post grad employment to us." Not only that it would help create better trained HS students. It could potential reduce this ridiculous barrier (Bachelors Degree) for many of these jobs and bring back merit to a GED. (I understand this might not factor in employment laws etc.) You don't needs a college degree to make a good livings. As it stands now poverty is less than 1% across any ethnicity if you follow these simple rules. 1.) Graduate HS 2.) Don't have a child before graduating HS 3.) Upon graduating HS take any full-time job you can get (can be minimum wage).