Investing General Discussion

Indyocracy

Indyocracy

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Fogel said:
Original put was .47 at 38 strike. If I were to roll up to say 40 strike now, Its .30 ask to buy out the original and the bid for 40 strike is .65. So I'd be making .17 from the original buy out and then an additional .35 from the roll up, correct?

The big thing I was just curious was if chasing higher strikes was a winning strategy
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As long as you want to own the stock at the price you will hold it at there is no harm in chasing premium. Just never go above what you would pay for the stock just because the premium is tempting. You can always start selling covered calls above your cost basis or hold the stock long term.
 
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Sanrith Descartes

Sanrith Descartes

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Fogel said:
Original put was .47 at 38 strike. If I were to roll up to say 40 strike now, Its .30 ask to buy out the original and the bid for 40 strike is .65. So I'd be making .17 from the original buy out and then an additional .35 from the roll up, correct?

The big thing I was just curious was if chasing higher strikes was a winning strategy
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Speaking only for myself, I dont roll very often. In your example I would look at that and be like, cha-ching, I made easy money and wait until next week sometime when I could buy to close for a few pennies. Also look at what your option transaction fees are. When dealing with low numbers like these it can eat into profit.

Edit- let me add I am generally risk averse.

Edit 2 - look at the math. Standing pat you make 47 cents with near zero risk at this point.
 
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Blazin

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taebin said:
I guess it depends on the drop. To me there is quite a big difference between a 3% drop and a 20% drop. But if I could safe harbor tens of thousands when the likelihood of an immediate correction is imminent, I don't see why I shouldn't. You do this for a living and know much more than I, but there was a post not long ago from someone who saw the damage COVID was going to cause further out than most of us, swapped over to bonds prior to March 23rd, then moved back to SP500 in May/June timeframe. Obviously it's hard to know the all clear to move things back and trying to time the market isn't smart, but still.

You said 'in fact so many feeling that way it's probably the wrong move'. I would think if there was a mass exodus to the bond market from the SP500, that would only exacerbate the dip and make the move even smarter. Is the right move really just sitting it out while everyone else is ducking for cover? My time horizon is long, but still seems silly to sit in a dip when it sure feels like it's coming.
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Need to not confuse when we are talking about trading, making a living/income, vs. long term passive investing for retirement.

It's easy to sell it's harder to know when to get back in. The getting back in is where people fuck up, especially when wrong. So let's say you sell and instead of dropping we rally 5% most investors freeze up in that situation and don't want to buy back in at the higher price. What would you use as your barometer for when it would be safe to reinvest the money? If you did this prior to 2016 election we rallied without a significant pullback for over a year. And people did do this, and month after month they watched the market climb ever higher away from them.

I do all sorts of timing the market, and like you mentioned I do this for a living some 60yrs a week for many years, and despite that my retirement account sits in an index fund and I don't touch it. If you must I would sell "Some" if that would give you comfort to have cash to redeploy lower so you can feel you are taking advantage of a dip (getting to cheer it on) vs just feeling like your portfolio is declining. Or you could buy some deep OOM puts which will likely expire worthless but would cushion you from a decline. This in my opinion is likely a waste of money. Since you aren't using the money now or anytime soon once we recover the drop whenever that may be all the angst over the decline will have been for nothing. It's meaningless down the road other than it benefits you when you are still adding new money every paycheck.
 
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Hateyou

Hateyou

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taebin said:
I guess it depends on the drop. To me there is quite a big difference between a 3% drop and a 20% drop. But if I could safe harbor tens of thousands when the likelihood of an immediate correction is imminent, I don't see why I shouldn't. You do this for a living and know much more than I, but there was a post not long ago from someone who saw the damage COVID was going to cause further out than most of us, swapped over to bonds prior to March 23rd, then moved back to SP500 in May/June timeframe. Obviously it's hard to know the all clear to move things back and trying to time the market isn't smart, but still.

You said 'in fact so many feeling that way it's probably the wrong move'. I would think if there was a mass exodus to the bond market from the SP500, that would only exacerbate the dip and make the move even smarter. Is the right move really just sitting it out while everyone else is ducking for cover? My time horizon is long, but still seems silly to sit in a dip when it sure feels like it's coming.
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That was me that did that and it’s the only time I’ve ever done an immediate move with my 401k and probably the only time I ever will. Reading the pandemic news for months gave me a feeling that it was going to mess with supply chains. My wife went to a trade show in an industry entirely supplied by China and she came back telling me everyone’s supply lines were cut with no idea of when it was going to start back up. Major companies with a lot of money were just shrugging and saying they were fucked. My gut feeling combined that dire news just gave me a feeling that global supply was going to take a brutal hit and it didn’t seem like the stock market had any idea it was coming.

It was pure lucky guess on my end that I moved it when I did and that it crashed as hard as it did. It could have easily been a nothing burger and I missed out on months of gains which would be tens/hundreds of thousands missed if I ever get to retirement. I’m up 31% so far this year in 401k which is awesome.

I think that everything has stabilized to the point that even the inevitable multiple waves of covid this winter is not going to completely cut supply lines like it did last year. We are still going to have ups and downs and maybe mini crashes and rallies but I don’t think we are going to see a massive plunge like we did earlier this year. I’m happy I did what I did, but I’m not about to risk the lucky gains I made trying to time some short term volatility. Not with my 401k, that’s what a portion of my regular trading account is for.
 
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Borzak

Borzak

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See saw mode. Election predictions on one side, hope for a stimulus/bailout on the other. Seesaw along for a while.
 
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Furry

Furry

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I'm riding the wave. If trump wins I expect a rally, and it's looking more like trump will win to me. If I were more scared of biden I might consider a cash move.
 
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Falstaff

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Why do you expect a rally if Trump wins? And where are you getting the sense that this is more likely lately?

I think the market will continue to go up regardless of who wins on the continued hope of more stimulus. I don’t think Wall Street cares who is the president. I think a Trump victory will actually be worse in the short term because of the potential for unrest/protests spooking the market, but that will wane and I don’t think we’ll see anything near what happened in March/April. Similarly a Biden win will spook the market in the short term because everyone will go “higher taxes! More regulations” but that’s all bullshit and won’t last long. In either scenario the stimulus talks will still be fed to the market and they’ll lap it up.
 
Fogel

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June July and August showed that the markets don't care about the protests/riots. The market doesn't like uncertainty, and they know what they're getting with Trump while Biden is the question mark.
 
Sanrith Descartes

Sanrith Descartes

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Falstaff said:
Why do you expect a rally if Trump wins? And where are you getting the sense that this is more likely lately?

I think the market will continue to go up regardless of who wins on the continued hope of more stimulus. I don’t think Wall Street cares who is the president. I think a Trump victory will actually be worse in the short term because of the potential for unrest/protests spooking the market, but that will wane and I don’t think we’ll see anything near what happened in March/April. Similarly a Biden win will spook the market in the short term because everyone will go “higher taxes! More regulations” but that’s all bullshit and won’t last long. In either scenario the stimulus talks will still be fed to the market and they’ll lap it up.
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Trump is pushing to fully reopen the economy. Biden will support shutdowns as Coronachan cases rise. Shutdowns are bad for business. Biden is pro-regulation. That is bad for business. Biden is in bed with the progressives in his party. That is bad for business.
 
Falstaff

Falstaff

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Don’t disagree with any of this except I don’t think Biden is going to be as hardcore towards regulations as anticipated.
 
Sanrith Descartes

Sanrith Descartes

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Falstaff said:
Don’t disagree with any of this except I don’t think Biden is going to be as hardcore towards regulations as anticipated.
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Its not that I think he will be hardcore towards it as much as he wont act as a protection if the dems start passing regulations. With Trump they need to be able to overcome a veto. With Biden they will only need a simple majority to enact new regulations.
 
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Sanrith Descartes

Sanrith Descartes

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I am having an investing crisis of faith. I am really down on the FB censorship thing. Up until the Hunter Biden laptop shit, Zuck had been sort of walking the line and then jumped across once the laptop shit broke. Part of me wants to dump my FB out of principle and another part loves the returns they generate. I have a handful of "i refuse to own" stocks and I'm getting close to adding FB to the list.
 
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Furry

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A lot of stocks are toeing dangerous lines in the internet industry. I'm not that scared of having some exposure to facebook, mostly because I think twitter and google will be canaries in the coalmine. I fully expect twitter to just get lit on fire at some point, and I think Facebook will have the time and sense to adjust what they do in response.
 
Sanrith Descartes

Sanrith Descartes

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Furry said:
A lot of stocks are toeing dangerous lines in the internet industry. I'm not that scared of having some exposure to facebook, mostly because I think twitter and google will be canaries in the coalmine. I fully expect twitter to just get lit on fire at some point, and I think Facebook will have the time and sense to adjust what they do in response.
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I'm not thinking of dumping it from a perspective of the stock will get hammered. I'm thinking of dumping it because the censorship passes me off. Much like I refuse to own tobacco stocks. I just refuse to own them.
 
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