Comments on: Why So Many People LEAVE the Covered Call Strategy… and What They are Doing INSTEAD http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/ This trading methodology shows you how to protect your downside and leave your upside totally open for growth. Mon, 06 Sep 2010 13:24:53 +0000 http://wordpress.org/?v=2.6.2 By: admin http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4562 admin Tue, 06 Apr 2010 15:29:02 +0000 http://blog.radioactivetrading.com/?p=215#comment-4562 Delta isn't one of the criteria we pay much attention to. But, the initial put option is less than 20% In The Money when that is coupled with low max risk numbers, we naturally get puts that range from 0.55 to 0.75. The lower max risk options will have higher delta since you are paying for more intrinsic value and the risk is only the time value portion of the option. Delta isn’t one of the criteria we pay much attention to. But, the initial put option is less than 20% In The Money when that is coupled with low max risk numbers, we naturally get puts that range from 0.55 to 0.75. The lower max risk options will have higher delta since you are paying for more intrinsic value and the risk is only the time value portion of the option.

]]> By: Davo http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4552 Davo Wed, 31 Mar 2010 10:28:20 +0000 http://blog.radioactivetrading.com/?p=215#comment-4552 What type of delta do you look for on the put? Do you then sell a lower put with a closer expiration? What type of delta do you look for on the put? Do you then sell a lower put with a closer expiration?

]]> By: Kurt Frankenberg http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4484 Kurt Frankenberg Fri, 05 Feb 2010 20:33:15 +0000 http://blog.radioactivetrading.com/?p=215#comment-4484 Thanks Albert! Come check out the free YouTube videos and free resources on www.radioactivetrading.com as well. Thanks Albert! Come check out the free YouTube videos and free resources on http://www.radioactivetrading.com as well.

]]> By: Albert Murray http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4471 Albert Murray Tue, 02 Feb 2010 20:46:58 +0000 http://blog.radioactivetrading.com/?p=215#comment-4471 I'm printing this for future , frequent, reference ! Best, most enlightening, options conversation I ever had the luck to stumble onto I’m printing this for future , frequent, reference ! Best, most enlightening, options conversation I ever had the luck to stumble onto

]]> By: Kurt Frankenberg http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4428 Kurt Frankenberg Tue, 19 Jan 2010 19:43:27 +0000 http://blog.radioactivetrading.com/?p=215#comment-4428 You're flirting with one of the TEN Income Methods, there. I use this with another option play to get a little extra BUMP out of a Married Put. Most recently I did a Bull Put Spread within the context of a Married Put along with another options play to take out almost ALL of the risk with CTSH. Earnings is approaching, and I have no worries since if the news is DISASTER... I only lose 1.9%. On the other hand, as with any Married Put trade, my upside is limitless. Cross yer fingers with me! Happy Trading, Kurt You’re flirting with one of the TEN Income Methods, there. I use this with another option play to get a little extra BUMP out of a Married Put.

Most recently I did a Bull Put Spread within the context of a Married Put along with another options play to take out almost ALL of the risk with CTSH. Earnings is approaching, and I have no worries since if the news is DISASTER… I only lose 1.9%.

On the other hand, as with any Married Put trade, my upside is limitless.

Cross yer fingers with me!

Happy Trading,

Kurt

]]> By: Mike http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4427 Mike Mon, 18 Jan 2010 11:32:49 +0000 http://blog.radioactivetrading.com/?p=215#comment-4427 Do you ever advocate marrying your married put to a way out of money bull put spread ? Do you ever advocate marrying your married put to a way out of money bull put spread ?

]]> By: kurt http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4420 kurt Wed, 13 Jan 2010 13:31:34 +0000 http://blog.radioactivetrading.com/?p=215#comment-4420 Yes, the married put is a BULLISH strategy. So you would employ it when you are optimistic about your stock pick going up. If you are wrong and the stock moves sideways, there is the issue of time decay. In the case of a covered call, time decay is a positive thing. However! I am less concerned about a sideways moving stock and more about what to do with a trending stock. If she's covered with a married put, I have protection against a reversal, even a dramatic one. AT the same time, I have no limit on the upside. I'm okay with paying a little for the protection, especially because sometimes I predict a stock's movement incorrectly ;-) and because married puts WAY outperform covered calls when a stock heads up in good steam. Yes, the married put is a BULLISH strategy. So you would employ it when you are optimistic about your stock pick going up.

If you are wrong and the stock moves sideways, there is the issue of time decay. In the case of a covered call, time decay is a positive thing.

However! I am less concerned about a sideways moving stock and more about what to do with a trending stock. If she’s covered with a married put, I have protection against a reversal, even a dramatic one.

AT the same time, I have no limit on the upside.

I’m okay with paying a little for the protection, especially because sometimes I predict a stock’s movement incorrectly ;-) and because married puts WAY outperform covered calls when a stock heads up in good steam.

]]> By: Troy http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4419 Troy Wed, 13 Jan 2010 09:19:06 +0000 http://blog.radioactivetrading.com/?p=215#comment-4419 One other factor though...what happens when the stock doesn't move for months at a time? With a covered call, you profit. With a married put, you lose money. So seems to me, if you think the market is going higher but still want protection you do the married put, but if you are clueless as to market direction, take the decreased cost basis as a natural hedge and accept a capped profit as the trade off. One other factor though…what happens when the stock doesn’t move for months at a time? With a covered call, you profit. With a married put, you lose money. So seems to me, if you think the market is going higher but still want protection you do the married put, but if you are clueless as to market direction, take the decreased cost basis as a natural hedge and accept a capped profit as the trade off.

]]> By: Kurt Frankenberg http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4322 Kurt Frankenberg Tue, 24 Nov 2009 21:15:28 +0000 http://blog.radioactivetrading.com/?p=215#comment-4322 Reply to Bill: Not always. I usually pick a put a strike or two in the money and at least five months out. Sometimes I get one a year or two out! It just depends on the individual stock. I use the PowerOptions platform (available for free trial at www.poweropt.com/rat) to do all the heavy lifting for me math-wise. Thanks for writing! Reply to Rich: Now, WHY on Earth would you want to use less capital? Would that be to leverage returns? Of course it would be. Now, the synthetic of a married put is NOT a long call... it is a long call PLUS a commensurate amount of capital on deposit. If you do not have the capital to risk on a married put, trading a long call in its place means you may be over-leveraged. I have a few videos and blog articles on this subject. Feel free to submit more about this question; it's a common misconception that trading married puts carries the same risks as trading long calls. Happy Trading, Kurt Reply to Bill:

Not always. I usually pick a put a strike or two in the money and at least five months out. Sometimes I get one a year or two out! It just depends on the individual stock.

I use the PowerOptions platform (available for free trial at http://www.poweropt.com/rat) to do all the heavy lifting for me math-wise.

Thanks for writing!

Reply to Rich:

Now, WHY on Earth would you want to use less capital?

Would that be to leverage returns?

Of course it would be. Now, the synthetic of a married put is NOT a long call… it is a long call PLUS a commensurate amount of capital on deposit.

If you do not have the capital to risk on a married put, trading a long call in its place means you may be over-leveraged.

I have a few videos and blog articles on this subject. Feel free to submit more about this question; it’s a common misconception that trading married puts carries the same risks as trading long calls.

Happy Trading,

Kurt

]]> By: rich http://blog.radioactivetrading.com/2009/11/why-so-many-people-leave-the-covered-call-strategy-and-what-they-are-doing-instead/#comment-4319 rich Tue, 24 Nov 2009 03:05:14 +0000 http://blog.radioactivetrading.com/?p=215#comment-4319 buying stock and buying a protective put at the same time is really a synthetic call option at the same strike price and you don't have to use as much capital. buying stock and buying a protective put at the same time is really a synthetic call option at the same strike price and you don’t have to use as much capital.

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