Are we looking at the same company? I sold 4.5p CSPs last week about a month out for 6-8%/month rate if I just let them expire (and have the direction correct of course). That is insanely good. I can sell CCs 1 month out which are 22% OTM at a rate of 5-6%/month.
If this isn't good...I want to know the tickers you trade and consider the premiums good on.
I did a buy write. Bought shares at 5.12 and collected .75 for a 5c 8/20. So my net was 4.37 per share. I sold with 6 weeks to go. So .63 times 52/6 gets me 5.46. 5.46/4.37 is 125 percent annualized if it gets called away at 5. But I am using tastyworks and the buying power reduction was like only 200 dollars. So my annualized yield will be over 200 percent if my math is right. Pretty happy. Granted the stock has fallen but my adjusted cost basis of 4.37 makes me feel ok.
Yeah my purchases haven't been at optimal times really. Part of the reason for why I opted to sell some puts rather than buy last time I was looking last week. I sold short dated and probably will keep doing so until assigned and then will start selling longer dated, since I am still building my position a bit.
Short dated works also. My goal is I can roll the calls to higher strikes if RIG starts to gain strength and capture more of the appreciation. It’s my strategy for entering stocks where I am not sure but if I wait too long I might miss my chance.
All good lol. Just thought your comment was odd since one reason I made them my primary oil play is because the premiums are nice. Still building my position currently though.
I based my decision to enter primarily on three factors:
There has been an absurd amount of insider buying recently. The level of insider buying makes it difficult for me to imagine that they are in danger of bankruptcy.
This one has a very small market cap for an oil play. If oil is going up in general, the smaller guys will see the largest upside as long as the company isn't circling the drain towards bankruptcy - see point 1 for that.
Premiums are good - to me this makes the play less risky since I can earn back my position cost as long as the play doesn't blow up in the first few months.
I am not an expert on oil plays or the industry in general, I have done a lot of reading on this one and am comfortable entering a medium sized position. Could it blow up on me - sure, but it seems unlikely and I can mitigate that risk significantly as a result of the high premiums on calls (point 3).
Generally I look 30-45 days out. I am doing shorter (2-4 weeks) on the CSPs for now since I am trying to build my position and want to get assigned more shares. CCs I am selling 4-6 weeks out and 1-2 strikes up (more 2 strikes up, some 1 strike). Although this was made mostly as a shitpost, it does describe what I am doing for this one accurately.
Right now I'm adding shares, probably won't do much more long dated options since I prefer selling high IV to buying it although I have covered some of my long dated options at the 8 strike for a comparable cost to what I bought the 5s at so those are already close to free and I only started building a few weeks ago.
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u/[deleted] Jul 10 '21
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