I just looked at your latest tweets and every time you give a reco, I check out the price and the chart on the option. And every time I can't help but wish that you gave it a day or 2 in advance when it's usually 50-100% higher. I'm sure it is related to risk vs. price movements etc. Can you let me know why you would not sell Deck's puts for example last thursday or friday for a much higher price? Or use any other as an example if you like.
Much appreciated.
Don
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Don,
I try to find the TSM stocks offering a good combination of risk and premium. Too, I prefer to forecast Puts offering more than $1 in premium. As time to expire nears, I accept less downside protection, i.e., last week my limit was 7.5%; this week it's 5% (for the Jan expiration in 12 days). So an option's premium has to return >18% annualized and, at the same time offer the required downside protection.
DECK is trading in an area of prior support (in early Dec), but it also is trading between its falling 20-day moving average and its rising 50-day moving average. I wasn't happy with the risk situation last week, but am this week.
Given the TSM list of 200+ stocks, there's usually a small list (10 or fewer) that offer Puts meeting my requirement. I could relax the criteria, but that would increase risk markedly, especially if the market was choppy.
Ric Miller, Ph.D.
6-Sigma, Master Black Belt
