The US market continues to hold up well despite the new Covid mutation.
SPY daily chart below:
Chinese equities continue selling off while the US market gains, and BABA has not done very well after their earnings report. My preference is for BABA to be higher than 140 by Dec. 17th (when the put I sold expires) so I can sell another cash secured put. Either way if it closes below 140, I’ll just have another 100 shares which is decent.
Hi, I’m Nathan. I majored in Finance and minored in Piano Performance at Boston University (graduated in 2020).
Outside of trading/investing, I enjoy programming, teaching and playing piano, teaching and playing Go, fishing, and watching anime. I also started my own Boba company while at BU.
I'm currently teaching Go full time, which has been the best job I could ever hope for. I'm also currently attending the App Academy bootcamp which started in January 2023.
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4 thoughts on “11/28/2021 US stocks bounce to start the week, and Chinese stocks continue to fall.”
Suggestion: Since you are doubling down, I would consider selling straddle for half/reasonable position. It might pay you while you wait on this taking the turn. Good luck on this.
Sort of yes. Suggesting to sell both calls and puts at a certain strike, essentially, you are willing to buy or give away your shares at. that strike, if you get assigned.
For example, last time you sold 140 puts, you could’ve sold 140 calls and puts, then your cost would be much lower, as you will connect premium on both legs.
Yes, you might lose your shares, if the stock is above the price on the expiry date, but technically you wouldn’t lose, since your time horizon is years, and you can roll to next month or further out at a different resistance level strike to avoid the loss. Definitely, requires more patience and challenges our bullish thesis.
As you know any stock sold this bad, will have ton of supply and it wouldn’t spike back up, immediately. It would have lot of pit stops on its way back. If I were you, I would at least do it on half position, if I am very bullish on something longer term, as it would reduce my avg cost.
Another option is to just sell covered calls OTM at resistance and buy puts OTM at support, i.e., collar strategy. This is not for collecting premium, but using the premium you collect from covered calls to pay for the puts, gives us downside protection.
Obviously, no one knows when these it will bounce, but I hope there is turnaround soon. Good luck out there!
Thank you for the detailed response! This definitely sounds like a decent strategy (selling calls) to collect income since my time horizon is indeed long term. The collar strategy is interesting, although I don’t think I really need the downside protection, I might as well just sell calls instead to reduce my cost basis.
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Suggestion: Since you are doubling down, I would consider selling straddle for half/reasonable position. It might pay you while you wait on this taking the turn. Good luck on this.
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Thanks for the suggestion, are you recommending I sell calls against my current shares?
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Sort of yes. Suggesting to sell both calls and puts at a certain strike, essentially, you are willing to buy or give away your shares at. that strike, if you get assigned.
For example, last time you sold 140 puts, you could’ve sold 140 calls and puts, then your cost would be much lower, as you will connect premium on both legs.
Yes, you might lose your shares, if the stock is above the price on the expiry date, but technically you wouldn’t lose, since your time horizon is years, and you can roll to next month or further out at a different resistance level strike to avoid the loss. Definitely, requires more patience and challenges our bullish thesis.
As you know any stock sold this bad, will have ton of supply and it wouldn’t spike back up, immediately. It would have lot of pit stops on its way back. If I were you, I would at least do it on half position, if I am very bullish on something longer term, as it would reduce my avg cost.
Another option is to just sell covered calls OTM at resistance and buy puts OTM at support, i.e., collar strategy. This is not for collecting premium, but using the premium you collect from covered calls to pay for the puts, gives us downside protection.
Obviously, no one knows when these it will bounce, but I hope there is turnaround soon. Good luck out there!
LikeLike
Thank you for the detailed response! This definitely sounds like a decent strategy (selling calls) to collect income since my time horizon is indeed long term. The collar strategy is interesting, although I don’t think I really need the downside protection, I might as well just sell calls instead to reduce my cost basis.
LikeLike