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Thunder Good-Oil

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Long story shorter, for me:

I have bought to close a few puts - but to lock in the premium profits. Now I will probably buy the put contracts back before expiration Friday if that will release my reserved cash before the weekend.

Rolling the covered call (as the guy on YouTube is explaining) can grab more net premium. But I’m probably fine for shares to be called away and I’ll just wait until Monday for the cash.

MicroStrategy (MSTR) has been great to sell contracts against. The premiums are very large AND if assigned shares (after selling the covered calls) way above the current share price, the well out of the money contracts still have good value enabling more covered calls that can be sold (even if those contracts are well out of the money).
 

Velo Vol

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But if Bitcoin falls below 18k I think that I will be stuck with MSTR shares for a good while.
This would make me nervous. I know the odds of bitcoin dropping to "zero" drop slightly more each day, but the fact that there is fundamentally nothing supporting it is hard to forget.
 

Thunder Good-Oil

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This would make me nervous. I know the odds of bitcoin dropping to "zero" drop slightly more each day, but the fact that there is fundamentally nothing supporting it is hard to forget.
MSTR could easily fall to zero.

I feel like I do need some crypto exposure for the long term. MSTR is a good way to have it if they aren’t over leveraged. They are also not a diversified crypto - they are Bitcoin. I might add COIN at some point. I do however want to see crypto settle down first. I picked up some RobinHood expecting it to be a crypto player. But they’ve been horrible (although still solvent). The Reddits/Wall Street Bets might be punishing them for their involvement with the meme stock sell out for the benefit of those that had the big short positions. HOOD also targets tiny accounts which isn’t too profitable (but if they don’t churn those accounts then it would pay off LT). And I think that they are over reliant on cash for order flow. They’re a PR disaster.

I haven’t revisited the crypto ETF world lately. Maybe there’s a good option in there. Crypto, NFTs, and block chain aren’t going away. The question is how big they can become. I think that thousands of crypto names is very dot com bubble-like.
 

Thunder Good-Oil

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Debatable at this point in time, as the direction of things still seems hard to predict.

So how much have you lowered your cost basis in MSTR via options trades?
No, I think that I do need some crypto exposure. I think that up to 5% isn’t unreasonable. 2%-3% might be an ideal target. I’m still well below that. MSTR is a really good vehicle as collecting premiums has been pretty easy.

I think my MSTR premiums are around $30-$40/share. Mostly from selling the puts. I haven’t had shares called away yet, but have written twice as many put contracts. I’m not really doing the wheel exactly as it is outlined. I am waiting for capital gains on any shares that I’ve been assigned instead of lowering my basis when selling covered calls. I’m also keeping my time to expiration less than 3 weeks.

The MSTR ($206.34) puts have really high premiums right now. I’ll likely accumulate more assigned shares, but I think I’ll sell the 200s for one of the next 3 Fridays (last/bid/ask):

220923 P 200 (9/8.5/9.4)

220923 P 185 (4.3/3.7/4.6)

220930 P 200 (14.56/13.2/14.5)

221007 P 200 (19.41/17/19.3)

The implied volatility is over 125% on MSTR, so even when it moves in the wrong direction it isn’t too hard to exit with a profit.

Bitcoin is under $18,500 right now. But the MSTR shares actually appear to be bid up slightly ATM.
 

Thunder Good-Oil

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Housing starts and building permits come out at 8:30am. Some weakness there is what those looking for the Fed to be gentle on Wednesday afternoon will want to see. Mortgages went up slightly on Monday.

It’s quite the dichotomy. If the Fed doesn’t see the economy cooling off a bit they’ll hit hard with rate hikes. Equity investors won’t like bad economic news, but if it’s good they won’t like the interest rate environment.

At least the month over month inflation was mild. That makes everybody happy.
 

walkenvol

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Lots of $15/hour jobs aren’t being filled. Maybe the next couple of levels better aren’t as plentiful. But I think that anybody that wants a job can have a job. They might need a roommate to afford a nice apartment and riding public transportation might be necessary (but they can work at home and have Amazon deliver their groceries). On the other hand, millennials might could struggle to live within their means. Keeping up with the Joneses is hard to resist for many.

I think that the extreme gas price spike trickled down to everything else. Biden’s energy EOs are a disaster. We were a net exporter not long ago.

I wouldn’t want to be German though. They are staring at an energy crisis. They better keep their nuke plants online if possible. The US still has a far more favorable energy mix. For now.
In Germany right now and have been struck by the volume of firewood stacked up at the houses. Congrats to all the anti nuke folks - you’ve driven Europe back to pre-industrial times! That’s one hell of a big and long lasting forrest fire with all that lumber heating homes
 

walkenvol

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Nice move man. You saved yourself some money.
It’s sort of like holding stocks with unrealized gains - money isn’t made until sold there. In my case, the money isn’t really saved unless I reenter the market below my exit point which is easier said than done IMO. I could enter today and will be 10%+ better than if I had stayed put but I keep thinking we’ve got a ways to go before we find the bottom of this. It’s going to take a lot of luck to guess at the correct entry point as I’m greedy I’m not wanting to lose more.
 

walkenvol

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There is no upper limit. If somebody can consistently get a 25% annual return on $1,000 it will be over a million in less than 30 years. Without adding another dollar. It goes much faster by consistently adding more to the investment pool.

Wealth grows faster if more is added as you go. Like making annual contributions to IRAs and maxing out contributions to a 401(k) up to their employer’s maximum match. Building wealth has a lot to do with living well within your means. Somebody that spends $4 at Starbucks every morning before they go to work is spending $1,000/year. Driving a car until the wheels fall off gets you to a great financial position far faster than trading in for a new car every 2 or 3 years. It just comes down to what makes you happy. Some want to spend and enjoy all of their money in the present. There’s nothing wrong with that. They’ll have far less of that money later in life.

Doubling your investments every 4 or 5 years is very much a possibility. Some people do it much faster - typically by taking on more risk. More risk can also end badly. But being smart about taking on risk more often than not will be lucrative. One of the better sayings is it doesn’t matter when you get into equity markets - it matters how long you’re in equity markets. Growth can be explosive. Most that jump in and out are going to miss the really positive return days that can have a dramatic effect on long term returns.

Starting early is a huge advantage. People that start saving in their 20s do so much better by the time that they retire relative to those starting in their 40s or 50s.

I forget what the DJIA and S&P 500 have averaged. Somewhere between 10-15% possibly. That is easy to mirror with the SPY and DIA ETFs. Mix in the QQQs. Add a handful of shares of stock issued by really well run companies and the results will exceed those broad market averages. Even those late to the party owning Amazon or Tesla or Microsoft and many others did very well.

If taking on risk has an adverse effect on somebody’s day to day life, then they probably shouldn’t get involved. But saving exclusively via CDs, money market accounts, or short duration bonds usually will lose value over time relative to inflation.
TGO is way more astute than me if indeed he averages 25% annually over a long time frame. I’ve been at this for almost 40 years and while I’ve certainly had some years where I’ve made 25% +, I’ve also had years where I’ve lost that much too. There’s been stretches where I thought I’ve never accumulate enough to be able to quit working. There’s a lot of high energy investors with a lot of knowledge who post to this thread, but I still am not sure if all my efforts along the way paid off more than simply investing in ETF’s and committing to add some every paycheck.

Good luck!
 

Vol737

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J Powell going to swing the sledgehammer again Wednesday (.75) and really crush this market. My gosh, why didn't they start gradually raising rates last year. With our debt and the rapidity of rising prices, what in the world led the Fed to believe inflation was "transitory"? Huge miscalculation.
 

Go aeiou

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J Powell going to swing the sledgehammer again Wednesday (.75) and really crush this market. My gosh, why didn't they start gradually raising rates last year. With our debt and the rapidity of rising prices, what in the world led the Fed to believe inflation was "transitory"? Huge miscalculation.
Those are some smart guys.
hindsight is 20/20
 
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Vol737

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Those are some smart guys.
hindsight is 20/20
They are and they have a lot of info, but there were quite a few saying they needed to get started in Q4/21 and Q1/22 to start slowing this thing down. Myself being one of that chorus. Would have much preferred that instead of the blunt force they’re using right now. Some good buying opportunities coming up though if one is long term focused.
 

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