covered calls

[Sunfish]

Hi All,

Have been interested in options for a reasonable period of time, and hence read this thread with a reasonable amount of interest.

I also see some of the same names still active on the forum.

Just wondering who is still heading down this path and how it is going?

Chilliia/Intrinsic_Value - did you continue with your investigation?

Thanks,

Matto

I've been testing it but the results are disappointing, at best. I currently hold 100 shares in Barrack and have lost $240 in share value while the written calls have improved a mere $60.

You get more premium in the US than here so it would be worse for BHP. Someone described it as picking up pennies in front of a steam roller and I'm starting to agree.

 

[Aaron_C]

Options trading in Australia is crap. The spreads are too high for any retail speculator to make a decent return. If you want to do it I suggest doing so in the US market or with forex as the markets are far more liquid.

 

[twodogs]

Options trading in Australia is crap. The spreads are too high for any retail speculator to make a decent return.

Ditto, I work the numbers hard ever day for naked puts and calls. spreads and strangles. Gave up covered calls as such a while ago, too risky holding the actual shares for writting against (I still hold for security and dividends only). I keep hitting the same issues and find it hard to place trades. The spreads are just not there to make a return for the risk, or there is just no depth. Even keeping to the biggest (BHP,RIO,CBA,NCM,WPL etc) it can be hard to find the other side of the trade. Outside the top ten, there is not much to trade even if the strategy is there.

Brokers that provide for on-line TMC help, but I have placed TMC orders with spreads the same as the buy/sell of the single legs and do not get filled. Ordering spreads one leg at a time is risky as without a good depth, there is a good chance the market will change before you can trade (usually the wrong way...). I know I'm looked upon as just a mug to be ignored/screwed when the pros see "commsec" on there screens !

One day I will be bold and look at US markets, but still finding my way around the local pool.

 

[matto_]

Am currently trading in the US - however have found the old timezone difference a bit of a challenge. ie. trading and put stop on - only to find that I got the worst price of the day if I am stopped out.

Havent looked into Aus for a while. Are the commissions still ludicrously expensive.

I am with a broker in the US and can place a trade for $1.50 per contract.

 

[wobbycarly]

Yes, they are. E*Trade is $34.95. This virtually takes the premium for the first contract. (Assuming writing an ITM, 4/5-week to expiry, call)

 

[im sparticus]

Kinda like selling comprahensive car insurance policies for $500 specialising in under 25s with six figure motor vehicles giving half away to the broker plus a 20% discount to the buyer and then wondering why the premiums just arnt covering the claims let alone making a profit.

ps there is no such thing a naked put, and a written put is just a synthetic covered call (they are not more or less risky they are the same) anyone who doesnt get this is on a suckers path to being fleeced.

 

[intrigued]

Kinda like selling comprahensive car insurance policies for $500 specialising in under 25s with six figure motor vehicles giving half away to the broker plus a 20% discount to the buyer and then wondering why the premiums just arnt covering the claims let alone making a profit.

ps there is no such thing a naked put, and a written put is just a synthetic covered call (they are not more or less risky they are the same) anyone who doesnt get this is on a suckers path to being fleeced.

You are incorrect, Naked put there is such a thing, if he sells a put without being short the quantity of stock represented by his short put or long another put spread against it.

A Synthetic call is the long stock + long put (if you write a call on this you would be Collared with capped risk and reward)

You mean a Covered call = Short (written) put.

But you are correct, anyone who doesnt get this is on a suckers path to being fleeced.

You need to know how to morph your position quickly.