Originally Posted by Nightfyre:
While I appreciate the sentiment, people being risk averse is why I am able to reap strong returns, and I find confidence in the ability to roll and the underlying prices I am selling versus the value of the company from a financial perspective.
My biggest risk is margin call, so I leave a healthy buying power buffer to absorb positions turning against me. I also ensure that I can take on any one position I enter with straight cash and vary expirations (to mitigate assignment risk). However, I will end up leveraged up to 4-5x underlying value by running multiple positions.
I accept that a catastrophic event like a -20-30% market-wide week might break me; however, if volatility is up, you can roll a lot further down to reduce margin requirements - plus my hope is that in that situation I can liquidate my vixy position to buy me enough breathing room to avoid forced liquidation and ruin.
The biggest trouble I have gotten into is when not sufficiently diversifying the sectors I am selling in. Admittedly, I haven't really experienced full leverage and full blown crisis yet, and this market has proven resilient, so rolling down and out has been effective in preventing losses. I have taken shares a handful of times - and generally sell calls at or above my price taken until they go away. I haven't lost money yet in any given position - but have incurred opportunity cost losses, if you will, from extending positions by rolling down and out.
Sounds like a high leverage, high risk wheel strategy to a point. The goal is obviously to keep selling puts and avoid getting assigned. correct?
One question I get from people on varying trading strategies is if you are doing it full-time or working? Many of my strategies are designed to be useful from a time management perspective while also valuing risk management since I cannot watch the market all day in real-time. Many new traders are learning/reading about strategies that maybe can't be accomplished by someone with a full-time job.
Originally Posted by lewdog:
Jesus. How to you find underwear strong enough to hold your brass balls?!
Seriously. I don't know JACK SHIT about trading naked OTM put options (on margin too?) , but I know enough to know I would never have the balls for that! [Reply]
Originally Posted by Nightfyre:
While I appreciate the sentiment, people being risk averse is why I am able to reap strong returns, and I find confidence in the ability to roll and the underlying prices I am selling versus the value of the company from a financial perspective.
My biggest risk is margin call, so I leave a healthy buying power buffer to absorb positions turning against me. I also ensure that I can take on any one position I enter with straight cash and vary expirations (to mitigate assignment risk). However, I will end up leveraged up to 4-5x underlying value by running multiple positions.
I accept that a catastrophic event like a -20-30% market-wide week might break me; however, if volatility is up, you can roll a lot further down to reduce margin requirements - plus my hope is that in that situation I can liquidate my vixy position to buy me enough breathing room to avoid forced liquidation and ruin.
The biggest trouble I have gotten into is when not sufficiently diversifying the sectors I am selling in. Admittedly, I haven't really experienced full leverage and full blown crisis yet, and this market has proven resilient, so rolling down and out has been effective in preventing losses. I have taken shares a handful of times - and generally sell calls at or above my price taken until they go away. I haven't lost money yet in any given position - but have incurred opportunity cost losses, if you will, from extending positions by rolling down and out.
Also, I wasn't making fun of you or anything like that. Indeed sir, I also commend your brass bullocks! I sincerely hope everyone on here makes a fortune. [Reply]
Any smart people want to educate me/us on reverse splits?
I bought 166 shares of STAF @ 0.57 on a whim yesterday. When I checked today, I had a message saying they performed a 1 for 6 reverse split. Now I had 27 shares at 3.44.
I just looked and it's up 52% after hours and is sitting at $5.64. What a windfall, eh?
Is this typical of reverse splits? Seems odd to me, but I'll admit to being a major noob. [Reply]
Originally Posted by Captain Obvious:
Any smart people want to educate me/us on reverse splits?
I bought 166 shares of STAF @ 0.57 on a whim yesterday. When I checked today, I had a message saying they performed a 1 for 6 reverse split. Now I had 27 shares at 3.44.
I just looked and it's up 52% after hours and is sitting at $5.64. What a windfall, eh?
Is this typical of reverse splits? Seems odd to me, but I'll admit to being a major noob.
Not familiar with the stock but nearly every reverse split I've witnessed did not turn out well. I'd get a stop loss on that sucker.
Originally Posted by Captain Obvious:
Any smart people want to educate me/us on reverse splits?
I bought 166 shares of STAF @ 0.57 on a whim yesterday. When I checked today, I had a message saying they performed a 1 for 6 reverse split. Now I had 27 shares at 3.44.
I just looked and it's up 52% after hours and is sitting at $5.64. What a windfall, eh?
Is this typical of reverse splits? Seems odd to me, but I'll admit to being a major noob.
So you had 166 shares at .57. A 1 for 6 reverse split means that you now have 1/6 the number of shares at 6 times the price, so the value is the same. It's usually done because the stock is about to be de-listed because the price is too low. I generally pay no attention to splits or reverse splits.
Originally Posted by Captain Obvious:
Any smart people want to educate me/us on reverse splits?
I bought 166 shares of STAF @ 0.57 on a whim yesterday. When I checked today, I had a message saying they performed a 1 for 6 reverse split. Now I had 27 shares at 3.44.
I just looked and it's up 52% after hours and is sitting at $5.64. What a windfall, eh?
Is this typical of reverse splits? Seems odd to me, but I'll admit to being a major noob.
Generally done for companies in trouble. Not sure on the after hours bounce but this generally isn't a financially solid company/move. But it can be done in an attempt to get listed on an exchange as well (possibly a positive outcome). [Reply]
Originally Posted by Captain Obvious:
Any smart people want to educate me/us on reverse splits?
I bought 166 shares of STAF @ 0.57 on a whim yesterday. When I checked today, I had a message saying they performed a 1 for 6 reverse split. Now I had 27 shares at 3.44.
I just looked and it's up 52% after hours and is sitting at $5.64. What a windfall, eh?
Is this typical of reverse splits? Seems odd to me, but I'll admit to being a major noob.
Reverse splits FAIL 95% of the time. They are NEGATIVE not positive.
Normal splits of 3:1 or 5:4 or 2:1 indicate a growing strong company.
Reverse splits are the OPPOSITE of forward splits and also the opposite in terms of success. [Reply]
Originally Posted by lewdog:
Biotech getting crushed.
I was coming in for my morning checkup thinking I was going to be happy, and then I saw the list of biggest declines. Cruise ship companies, Schwab, IBM, etc. Yeesh.
I'm still up a bit overall, but not nearly where the market is. [Reply]
Originally Posted by Rain Man:
I was coming in for my morning checkup thinking I was going to be happy, and then I saw the list of biggest declines. Cruise ship companies, Schwab, IBM, etc. Yeesh.
I'm still up a bit overall, but not nearly where the market is.
Yeah weird day. I got stopped out for losses on quite a few trades today even though all indexes are green. That’s pretty rare for me. [Reply]
