Monday, September 19, 2011


Welcome new readers from the DITM talk I gave this past Saturday at the monthly SFBAOG (San Francisco Bay Area Options Group) held every expiry Saturday of the month (barring conflict, as with Oct.).
This expiration had lots of activity, as I had several options (sold puts and calls) expire, either OTM (out-of-the-money worthless) in which case I just keep the premium; or ITM (in-the-money)where I take on or sell the stock - puts or calls, respectively.
I am now down to 15 stocks in my portfolio (more in the family), with this Bear market only endangering 3 of the positions. With these, I continue to milk the call premium and take the 3% or better dividends (much better than zero CDs, etc.) and hold them, much like a Bond, until they invariably return to the Buy price - sooner or later.
The only stock put to me last week was PM (Morris Int'l) at 70; since the current price is below that strike/buy price, rather than accept less than the full intrinsic amount (top part of ITM stock), I sold calls ABOVE the buy price - the 70s, as it goes ex-D Friday, the 23rd.
Despite the fact that nearly 100% of analysts and strategists are calling for a higher year-end market, it is possible things are "different this time". Fortunately, the DITM plan works best when markets go sideways to down slowly (not crashing). As I said in my talk, if a stock moves down a few points at expiry, one can "step down" to the next strike price, still receiving the whole amount originally expected, receiving an even higher dividend %.
I also write a sentiment blog every Monday based on my CMT topic - links can be found

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