Discussion ***Official*** 2021 Stock Market Thread

[dasherHampton]

market is a bit shit, but i've started writing covered calls against some very large positions that I intend to hold indefinitely. starting with monthlies with low premium and low risk to get my hands dirty

That's a great way to get started on options. I always ask myself "at what price level would I sell this stock?" and go as far out as I need to to get a decent premium at that price.

The furthest out I've ever gone is like 15 months, and only because the calls were going for a ridiculous amount. I usually go about 3-6 months out. Seems to be the best balance of risk/reward.

The downside is selling/trading options right now is that the retailers seem to be losing their abandon for buying puts/calls. It seems much harder to find those great 40-50% annual return type deals right now, and believe me - I spend hours every day looking. Hopefully they start to throw money back into the market soon lol.

 

[FelixDeCat]

^

Its all about volatility. The market has been threatening even a tiny 5% pullback because the VIX (which is used to calculate option premium) has been stuck in the teens for some time now. Typically this time of year its in the 20s. October is right around the corner. Every October there is usually a pullback.

However, nothing is traditional now with the federal reserve and us government interfering in the markets and economy, stopping "price discovery". And we still have even more trillions in spending. Hard to expect much selling, so put option premiums are going for peanuts on most stocks.

At least the Fed seems to finally be ready to accept its time to stop buying so many bonds it is buying to artificially suppress interest rates. A gradual taper is expected to be announced soon.

 

[dasherHampton]

What do you think about TAL, Felix?

Its so low I decide to sell some puts at $4 for a decent price. Am I going to lose my money? From what I've read it seems like they still have some options to create profit.

 

[FelixDeCat]

Its your money Dash. I avoid Chinese stocks on principal. Its seems hard to get reliable financials and there is always some sort of shenanigans going on. I guess if you did dip your toes, I would keep the bet small to be on the safe side.

 

[dasherHampton]

I have quite a few "how much lower can they possibly go?" bets right now.

Browsing my accounts:

BSQR
XELA
ATER
TAL
SENS

But if you subtract the option premiums the total risk is probably less than $10,000 total so not a huge deal.

lol I'm betting my SAVA money. Letting it ride.

 

[FelixDeCat]

Come on Fed, announce the taper.

 

[KB]

Come on Fed, announce the taper.

Why, are you hoping for a crash on the news? That fact that everyone expects a crash from the taper means it probably won't happen.
A taper still won't mean much higher interest rates either, as the 10-year t-bill still offers more yield than most international government bonds, and there is plenty of money that still wants these bonds, which keeps the rate down.

I have plenty of banks which should do well with higher interest rates and plenty of REITs which do better with low rates, so no matter what something should go up.

 

[FelixDeCat]

Because its beyond absurd for the Fed to be artificially suppressing interest rate price discovery beyond their ZIRP rates.

It just encourages wasteful government spending.

 

[jpiniero]

Why, are you hoping for a crash on the news? That fact that everyone expects a crash from the taper means it probably won't happen.

It happened last time they tried it.

Meme stocks are on fire today. AMC is up 14% and Gamestop is up 20%.

 

[dasherHampton]

Somebody is trying to take down SAVA.

 

[KB]

It happened last time they tried it.

When they do, I expect volatility, people running to Treasuries and the 10 year yield falling, and when the coast clears, stocks move up again

 

[jpiniero]

and when the coast clears, stocks move up again

You mean "they reverse course", which is basically what happened. I think the Fed learned from that and so they will just make up another excuse to not taper and not go through that again.

 

[dasherHampton]

So I did sell 1 put on SAVA at $55 for Jan for about $1600.

I freely admit: that's gambling. I may as well be sitting at a roulette table.

 

[FelixDeCat]

SAVA is under attack. Don't know if the accusations are true. Seems a tad too risky until things are resolved either way.

 

[dasherHampton]

lol I already punted.

Bought back the put for $2000 and sold a 40 for $900.

So my potential gain is down to $500.

 

[woodman1999]

If it touches 30 again, I may have to dive back in

 

[FelixDeCat]

Made some nice change in BYSI. Probably goes back down though.

 

[jpiniero]

I'll add that if the Fed does do a headfake tomorrow it could be a buying opportunity. Assuming you trust that the spending bills won't have any real tax increases.

 

[dasherHampton]

Man, just the thought that my entire SAVA position could have been destroyed makes me both shiver and cringe. As of now it costs 4.20 to buy back a Jan $20 put.

Some aspects of the market seem so simple but take a lifetime to learn. The options rule that states "the less time your contracts spend on the market the better" is one of those aspects. My understanding of the 50% rule grows little by little, trade by trade.

I stepped my current SAVA put down again to $35. Right now it's basically a contest to lose as little money as possible.

 

[jpiniero]

Sure enough JPoww said no taper any time soon.

 

[FelixDeCat]

n/m

 

[FelixDeCat]

Entering Q4. I wonder what's in store.

 

[dasherHampton]

My instincts told me to be patient with SKLZ. Maybe they were right.

We'll see.

 

[FelixDeCat]

My instincts told me to be patient with SKLZ. Maybe they were right.

We'll see.

I feel the same way with BYSI. Lon

 

[dasherHampton]

I feel the same way with BYSI. Lon

Ok, I sold a BYSI put. $20 for apr of next year. Sold for around $540. We can root for it together.

I got in on that whacky BBIG thing. lol I'm not even sure what that is but I sold 20 $3 puts yesterday and today its zooming.