Stock Trading

[Del]

I should have bought a few shares of Walmart a month ago. BTW, where's MrPiper? He's supposed to tell me more about covered calls.

I hope he's okay. I want to learn more too.

I got permissions to trade options in my Vanguard IRA, and I sold some calls on my XLE and XLK there. I can figure this out for myself, but his coaching could save months of learning on my own.

Does he pick stocks that have promising upward potential, as most traders do?
Does he pick stocks with high share prices, so he can get more premium on fewer contracts and save commission costs?
Does he pick stocks with lots of implied volatility, so he can get more premium and a higher spread between strike and trade prices?

I've never been a stock picker, so this is new territory for me.

I suspect he has a strategy that works better than selling calls on index and sector ETF's.

All the same, US economy looks to stagnate for months and years to come, and market is overpriced. Selling calls is lucrative enough to keep our IRA's afloat during a prolonged downturn.

[Del]

Time to review my Volatility Crush trades from last week.

Review: For some stocks, implied volatility slowly inflates as earnings date nears. Volatility drops suddenly after earnings are announced. The options strategy is to sell naked puts and naked calls the day before earnings -- very wide spread and three or four months expiration. This makes the deal very sensitive to changes in implied volatility, but not too sensitive to gaps in stock price.

Buy to close the position after earnings are announced and market opens for an hour or so.

All of these trades were sized at $15k to 18k of buying power.

Profit/stock/notes

$274 AMZN/Amazon. I only went out 45 days. I should have gone out longer.
387 HD/Home Depot. I didn't expect a large crush.
644 TGT/Target. I expected this to crush large and be my biggest trade.
193 WMT/Walmart. I didn't expect much crush, and yet this was even less than I expected.

Overall, that's $1500. I shouldn't be disappointed, but I am just a little bit. I expected more profit from these trades. But still a really nice addition to my week.

My condors are at risk from the falling market. If it settles next week and resistance holds, I'll be okay. My account balance is over $80k, as I hoped. But not safely over yet.

[sweetandsour]

NVDA spiked up to 510 or thereabouts yesterday after their earnings release, after market closed. The PE is over 200 now. Too expensive, and crazy.
Meanwhile our FA still says recession or perhaps depression is coming, the feds won't stop until there is one. I told him to put our entire account into money market and CDs, and earn 5.5%.
I'm ever closer to selling covered calls. I need a good stock for that, with low enough price, and short term, like Piper does. If I could make 500 or more each month, that's all I need.

[Del]

NVDA spiked up to 510 or thereabouts yesterday after their earnings release, after market closed. The PE is over 200 now. Too expensive, and crazy.
Meanwhile our FA still says recession or perhaps depression is coming, the feds won't stop until there is one. I told him to put our entire account into money market and CDs, and earn 5.5%.
I'm ever closer to selling covered calls. I need a good stock for that, with low enough price, and short term, like Piper does. If I could make 500 or more each month, that's all I need.

I put the financial doom-sayers in a similar category as climate change alarmists. They both make money and get their clicks by stirring up fear.

On the other hand, there are real risks associated with bad weather (both financial and environmental), and it's smart to make preparations suitable to your personal situation.

Our national economy (and the world economy) is a large, buffered system. Constantly assaulted by meddling forces, and constantly striving to correct itself.

I don't foresee an economic depression and it looks like we have avoided runaway inflation, but we could be looking at a long span of stagnation and slow economic growth.

I see three primary forces at work right now:
- Adjusting to the effects of bad covid policy, which injected 30% more freshly printed money into the M2 money supply -- with no corresponding increase in productivity to balance it. Caused inflation.
- A shortage of workers, as many people retired early or just dropped out. Like me.
- Debt, deficits, and the constant struggle to support a government that is too big and expensive for our economy.

We have the capacity to adjust. America is still the richest, most welcoming, least racist nation on earth. Everyone wants to come here.
- We could extend legal status to Biden's millions of unskilled immigrants, so they can work and legally participate in America.
- We could encourage skilled immigrants from Asia and Europe.
- We could down-size government and free up thousands to work at productive jobs.
- AI will soon replace many current jobs, freeing humans to do more human jobs.

I'm not saying that change will be painless. I'm just saying that we have the capacity to adapt.
And we'd better get started. There's not much we can do to prevent China from attacking Taiwan, or the collapse of China's fake real estate market, or the eruption of a volcano in Tonga that affects our weather and crops.

I know one thing: We can't sell covered calls on CD's.

[sweetandsour]

NVDA spiked up to 510 or thereabouts yesterday after their earnings release, after market closed. The PE is over 200 now. Too expensive, and crazy.
Meanwhile our FA still says recession or perhaps depression is coming, the feds won't stop until there is one. I told him to put our entire account into money market and CDs, and earn 5.5%.
I'm ever closer to selling covered calls. I need a good stock for that, with low enough price, and short term, like Piper does. If I could make 500 or more each month, that's all I need.

I put the financial doom-sayers in a similar category as climate change alarmists. They both make money and get their clicks by stirring up fear.

On the other hand, there are real risks associated with bad weather (both financial and environmental), and it's smart to make preparations suitable to your personal situation.

Our national economy (and the world economy) is a large, buffered system. Constantly assaulted by meddling forces, and constantly striving to correct itself.

I don't foresee an economic depression and it looks like we have avoided runaway inflation, but we could be looking at a long span of stagnation and slow economic growth.

I see three primary forces at work right now:
- Adjusting to the effects of bad covid policy, which injected 30% more freshly printed money into the M2 money supply -- with no corresponding increase in productivity to balance it. Caused inflation.
- A shortage of workers, as many people retired early or just dropped out. Like me.
- Debt, deficits, and the constant struggle to support a government that is too big and expensive for our economy.

We have the capacity to adjust. America is still the richest, most welcoming, least racist nation on earth. Everyone wants to come here.
- We could extend legal status to Biden's millions of unskilled immigrants, so they can work and legally participate in America.
- We could encourage skilled immigrants from Asia and Europe.
- We could down-size government and free up thousands to work at productive jobs.
- AI will soon replace many current jobs, freeing humans to do more human jobs.

I'm not saying that change will be painless. I'm just saying that we have the capacity to adapt.
And we'd better get started. There's not much we can do to prevent China from attacking Taiwan, or the collapse of China's fake real estate market, or the eruption of a volcano in Tonga that affects our weather and crops.

I know one thing: We can't sell covered calls on CD's.

You've pretty much listed the reasons for the coming recession. Also, apparently not all IRAs do covered calls.

[Del]

You've pretty much listed the reasons for the coming recession. Also, apparently not all IRAs do covered calls.

Good point. IRS allows covered call trades in IRA's.

But the IRA administrator may or may not facilitate option trades. Most banks probably don't. Might have to move some IRA money to someone like Fidelity, where your taxable account is.

[MrPiper]

You've pretty much listed the reasons for the coming recession. Also, apparently not all IRAs do covered calls.

Good point. IRS allows covered call trades in IRA's.

But the IRA administrator may or may not facilitate option trades. Most banks probably don't. Might have to move some IRA money to someone like Fidelity, where your taxable account is.

This is true. I would personally not move the IRA to Fidelity just because their platform for option trading is terrible. I much prefer E-Trade. There are many others, and Del certainly has a favorite as well, but of the bigger players, Fidelity is surprisingly poor for this purpose based on my experience.

[Del]

You've pretty much listed the reasons for the coming recession. Also, apparently not all IRAs do covered calls.

Good point. IRS allows covered call trades in IRA's.

But the IRA administrator may or may not facilitate option trades. Most banks probably don't. Might have to move some IRA money to someone like Fidelity, where your taxable account is.

This is true. I would personally not move the IRA to Fidelity just because their platform for option trading is terrible. I much prefer E-Trade. There are many others, and Del certainly has a favorite as well, but of the bigger players, Fidelity is surprisingly poor for this purpose based on my experience.

I only mention Fidelity because that is where S&S has his trading account. Sorry to hear that their trading interface sucks. I hope it isn't as bad as Vanguard's.

My IRA is at Vanguard. I will do my research and price-setting on TD Ameritrade's "Think or Swim" platform, then enter orders into Vanguard's interface. That's about all it will do... take orders. No looking at option chains, bid/ask spreads, open interest, or delta. Nuthin.

[sweetandsour]

You've pretty much listed the reasons for the coming recession. Also, apparently not all IRAs do covered calls.

Good point. IRS allows covered call trades in IRA's.

But the IRA administrator may or may not facilitate option trades. Most banks probably don't. Might have to move some IRA money to someone like Fidelity, where your taxable account is.

Yes. You said it a bit more precisely than I did, (I posted in a bit of a hurry).

I was actually considering moving some funds from one to another; I'm still doing some math while getting sidetracked today. BTW, it looks like I missed a rough day today with the market.
Glad you're back posting Mr. P..

[sweetandsour]

Good point. IRS allows covered call trades in IRA's.

But the IRA administrator may or may not facilitate option trades. Most banks probably don't. Might have to move some IRA money to someone like Fidelity, where your taxable account is.

This is true. I would personally not move the IRA to Fidelity just because their platform for option trading is terrible. I much prefer E-Trade. There are many others, and Del certainly has a favorite as well, but of the bigger players, Fidelity is surprisingly poor for this purpose based on my experience.

I only mention Fidelity because that is where S&S has his trading account. Sorry to hear that their trading interface sucks. I hope it isn't as bad as Vanguard's.

My IRA is at Vanguard. I will do my research and price-setting on TD Ameritrade's "Think or Swim" platform, then enter orders into Vanguard's interface. That's about all it will do... take orders. No looking at option chains, bid/ask spreads, open interest, or delta. Nuthin.

I'm not versed enough to know how good or bad Fidelity's option trading platform is, but I will look closer. I'm looking through the thread to find the practice site that Del mentioned, but don't immediately see it. BTW, what's the advantage of weekly terms vs monthly?