Logic

Stock Talk

Phil L.

Phil L.

Linda,
I have been a subscriber for almost two months. I have also been very successful using it. I have been deviating from your recommendations as follows:
1.) I tend to buy your recommendation in tandem with a sometimes deeper sometimes more expensive option. For example, when you had us purchase the DG AUG 95 put and the stock rose, I purchased additional puts at 97.50.
2.) After watching swings on CC for weeks I decided (for myself) the time frame was too tight and sold at the next profit point. I made 15% +- and then rolled into a October 50 call.
3.) The only loss I took was on OMC when I sold at a 30% hit (the point you mentioned in a previous message), however, plan to buy back at a longer frame a week or so prior to earnings.
4.) When I couldn’t get the TPR 50 calls I bought the 45’s at 3.80. If it revisits 1.25 I will buy those as well.
My point is this. I have found that along with the additional risk has been an additional reward in the 50-100% range. Your research is on point but not always on time and I would expect nothing less. As the time gets closer I tend to roll out as I did on CC
My questions is (and I wish I had the time), I wonder if taking the additional financial risk buying the deeper option would prove more profitable over time. Maybe you have summer intern who could do a reverse analysis.
Is my path a logical progression of your ideas.
Your input would be greatly appreciated.
Phil

Linda McDonough

Linda McDonough

Phil,
You make a very interesting case. I attempt (key word here) to time most of the options trades to events that I expect to move the stock. That can be earnings, an investor presentation, competitor’s earnings, etc. As you note, the timing is a very difficult thing. You are quite kind but getting the analysis correct is not a guarantee either.
I have considered rolling to the next series once an option price falls a certain percent.
Sadly, there is no summer intern in the budget but I will do my best to pull these numbers together.
Thanks again for the input.
Best,
Linda

Phil L.

Phil L.

Linda,

I would agree that getting the analysis correct is not a guarantee. Only the IRS can provide that.

Just wanted to make sure I was relatively on track and that there was not a flaw in my logic.

Thank you for the reply

Phil

Linda McDonough

Linda McDonough

Phil,
Ah, yes, those devils at the IRS. They are NEVER wrong.
Linda

Abhi A

Abhi A

Hi Phil,

Very nice post. Interested in your rolling of CC options. Can you explain how to roll to Oct and does that mean I have to put in more money?

I have never rolled. Thanks for your help.

Phil L.

Phil L.

Abhi,

Rolling is simply selling an option with a closer date in this case July and exchanging it for an identical strike in this case 50 for a longer date. I chose October. While I believe Linda’s research is beyond solid, no one can predict the market or timing with 100% accuracy. The longer option will cost more money. If Linda’s timing is on point you would recoup some of the extra premium at sale. If her timing is off, you have used that money to purchase more time for her prediction to materialize. If and when it does the profit should make up for the premium as opposed to the closer option expiring worthless. I hope this answers your question.

Phil

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