Kev's Gettin' Nekked, Join In!

[AlexeyBiC]

Alright, let's see what we can do with this. Let's discuss Naked Options. After this introduction I will try to keep it short and current as to thinking and trades. Please add your thoughts, knowledge, experience, and wisdom. To those who already know this, my admiration, to those who do not, my information.

Observations:
#1. It is better to be a seller in advance, than a buyer later.

#2. Something you rarely hear on the news (lately) is that, "There was a steep Incline in the Stock Market today!"

So the importance of Defensive Strategies, is very important. Sometimes it's best to get Bear Nekked.

As others have shared with me the importance of the VIX Volatility indicator, so shall I with you. Sell Naked 19 Puts on the VIX any chance you get,then you own them at 17.80 and if you get those assigned to you you're lucky, and that would only happen because the rest of the market went way up too. Aiki paved the way for this insight.

[AlenaJaF]

Recent Options Thinking:
When I knew SWC was going to go down (Public Information in Montana), I applied for Naked Options. Then I wasn't trapped into the shares as they went down, after I had already sold Oct 17.50 CC's for 3.50 (on a $16 channeling stock). The PPS was 15.98 on May 22, and I sold SWCJC 17.50 Calls for 3.50. That's 21.902377%.

Right now I find it easier to see things that AREN'T going to happen.

Good Moves:
Covered Calls:
SWCJC Oct 17.50 $3.50 (PPS 15.98)
PALIU Sep 7.50 $1.00
TRAFI Jun 45 $2.20

Stocks that went ITM:
BNIFA Jun 105. Sold CC's for 5.20. Went straight past Go and keeps going. Worth owning.
JRCC Jun 45 2.50 (PPS 39.00 on 6/2)
ANRFQ Jun 85, Sold for 4.80/85.42 and 7.10/88.78

[AlexaaBuigo]

Naked Options:
Calls:
ANR Jun 85 ANRFQ 7.10/PPS 89.249 (Should have bought more shares to cover on this Runner when it passed the Strike Price. Duh.
VIXFX Jun 22.50 (Peaked at 24.12, Pucker Up). Didn't get exercised because of the uncertainty of going down, and Premium paid by them adding to their cost. Lucked out on that one. Sold Jun 22.50 Calls for 2.20 so I was O.K. until 24.70. Should have read Aikis post earlier.

Puts:
DRYS Jun 85 Puts DQRRQ 3.30

Edge of the seat Naked Options:
Sold VIXFX Jun 22.50 Calls for 2.10, Aiki warned us about being careful here, but I had already done it when I thought the market bottomed on Friday, and then VIX went past the 23.50 as he said could happen. 25 is fairly extreme, and I was nervous but didn't get exercised at a VIX high of 24.21, so they didn't want to take the possession, or risk of it dropping plus their Premium.

[Alealokato]

Great start on a thread, Kev. I'm looking forward to following the 'action', and even contributing when it slows down to my speed.

One question so far, are you long or short the DRYS puts?

I figure you are short, because we are talking about getting nekked here.
If so, there's one to watch today.

Anyway, great thread!

[Albertsmact]

Yes, I sold Jun 85 Puts on DRYS, which brings up the very important subject we need to talk about with Options. When selling Calls near the top or Puts near the bottom, what do we do when the stock exceeds our expectations and goes In The Money? This depends upon how strongly we feel about the stock and our original decision. In the case of Naked Puts such as DRYS, I wouldn't mind too much having DRYS put to me because my Cost is the Strike Price of $85 minus the Premium received of 3.30= 81.70, which probably won't be exercised voluntarily unless it hits a PPS of close to $80.00, or at expiration automatically. So, if this was a Call I had sold and it went into the money, if I felt it was going to keep going, I would buy shares to cover near the Strike Price. Since it's a Put, I could:

1) Sell more Naked Puts.
A) ITM Puts: The 85 Puts I sold for 3.30 are now worth 4.70. This approach would require more money and confidence than I have. There is still some excess value in the Premium because the PPS is only ITM by 1.38 but the Premium is 4.70! I could keep doubling down and then write you letters from the homeless shelter.