The Market Thread

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steross

he/him
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Mar 31, 2004
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Ok, I have a general question.

I used a spreadsheet for my index investing that is basically a complicated form of DVA, dollar value averaging. Essentially, the spreadsheet assumes the market to go up a certain amount each day and adds or subtracts money based on how far off reality is from expectation. It is more complex than that, but that covers the idea. I don't end up buying and selling every day because of some other factors in the sheet.

Now, my question is can anyone see a downside of using covered calls, or even writing puts, to add premium income to this strategy?

For instance, right now I am -4.52% below the point that I would begin to sell a portion. If it reaches that point, I put in an order to sell. If I wrote a covered call, I'd get the premium if it doesn't get back there. If it does, I am going to programmed sell anyway and still keep the premium.

Any thoughts? I understand options but I'd be a big fat liar to say that I am very knowledgeable about options. But, this just seems like a small amount of income with little risk. (You can tell me that the entire spreadsheet idea is crazy if you want but I'm not gonna listen to that.)
 

LS1 Z28

Territorial Marshal
Oct 30, 2007
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Ok, I have a general question.

I used a spreadsheet for my index investing that is basically a complicated form of DVA, dollar value averaging. Essentially, the spreadsheet assumes the market to go up a certain amount each day and adds or subtracts money based on how far off reality is from expectation. It is more complex than that, but that covers the idea. I don't end up buying and selling every day because of some other factors in the sheet.

Now, my question is can anyone see a downside of using covered calls, or even writing puts, to add premium income to this strategy?

For instance, right now I am -4.52% below the point that I would begin to sell a portion. If it reaches that point, I put in an order to sell. If I wrote a covered call, I'd get the premium if it doesn't get back there. If it does, I am going to programmed sell anyway and still keep the premium.

Any thoughts? I understand options but I'd be a big fat liar to say that I am very knowledgeable about options. But, this just seems like a small amount of income with little risk. (You can tell me that the entire spreadsheet idea is crazy if you want but I'm not gonna listen to that.)
You may already know this, but entering a position with a cash secured put and exiting with a covered call is what's called the "wheel strategy." It's generally considered to be one of the safest option writing strategies out there.

I don't really see much risk associated with writing CSPs at the price you want to buy and CCs at the price you want to sell. The primary risk is that the price could hit your target and then move away before the option gets exercised. You would pocket the premium, but you might miss your entry/exit point.

I've never really done much with options, but I've always been intrigued by this strategy. It seems like it would be an excellent way to generate additional profit if utilized well.
 
Maybe I’m the only one going through this but this period of time really sucks when it comes to trying to meet monthly bills. I never had this many problems during 2008 or 2020. We were fortunate enough we didn’t lose our jobs during those times but I have to admit I’ve never felt this much stress on a daily basis. Something has to give. Everyday households cannot keep this up without something really bad happening as far as mortgage and other loan defaults.

supposedly this has been the worst first half of the year for the S&P 500 since the early 60’s.
 

Duke Silver

Find safe haven in a warm bathtub full of my jazz.
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Sep 17, 2004
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Maybe I’m the only one going through this but this period of time really sucks when it comes to trying to meet monthly bills. I never had this many problems during 2008 or 2020. We were fortunate enough we didn’t lose our jobs during those times but I have to admit I’ve never felt this much stress on a daily basis. Something has to give. Everyday households cannot keep this up without something really bad happening as far as mortgage and other loan defaults.

supposedly this has been the worst first half of the year for the S&P 500 since the early 60’s.
I did. My worst time was when the aca was passed. It ruined my life as I knew it. I found a new job with better benefits that aca didn’t make a living hell. Now is 2nd. I am noticing the inflation pretty heavily
 

LS1 Z28

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Oct 30, 2007
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Inflation came in higher than projected again for June. Inflation adjusted wages are down 3.6% year over year. You have to think this guarantees at least a 75 basis point rate hike by the Fed. The question now is whether or not they could go higher.

 

TheMonkey

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Sep 16, 2004
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Inflation came in higher than projected again for June. Inflation adjusted wages are down 3.6% year over year. You have to think this guarantees at least a 75 basis point rate hike by the Fed. The question now is whether or not they could go higher.

An article on inflation featured a photo of boneless pork at $2.49/lb? I wish that was representative of the situation.
 
Oct 7, 2008
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Crypto has to rebound, right?!
You jest but the riskiest assets are performing the best the last few weeks. A lot of the beaten down growth stocks have recovered 50% plus from their lows. Also interesting is that Bitcoin and Etherium seem to have decoupled a bit lately with ETH outperforming BTC the last several weeks.