The StoNks thread

[Gwaihir]

Originally Posted by bubur [You must be logged in to view images. Log in or Register.]

gwaihir i wanna hear bout your dfen position a lil more, if youd indulge

i was in at like 17 left at 18.5, because i didnt have faith. now i see it risin, but still not confident

srs question does it perturb you it's a leveraged dividend that didnt move much for almost the entirety of 2020 or you feelin strong on this one? knowin it's ez to say that since its at 21 today

or is this purely a defense market = dfen idea? because thats what drove me away; I will be the first to admit i dont know what the fudge it means to be a 300% performance index and yet not move when portions of the index are fluctuating

I sell puts on the stock I wouldn't mind owning, at 10% below the ticker price 3 months out.

For Triple leveraged stocks, I sell puts at 30% below the ticker price.

The only way I come into possession of actual stock, is if the price dives 10% (or 30% if its a triple leveraged like DFEN), pocketting the premium in the meanwhile.

Once I do come into possession of 100 shares of the underlying stock due to the price actually falling to trigger an execution of the sold-put option on me, I sell calls on those shares at 10% above the strike price that executed on me (or 30% if triple leveraged etf) and then every time those calls expire worthless because it fails to actually go up 10 or 30% in that quarter, i re-calculate what a 10% increase from the current stock would be (or 30% in the case of triple leveraged) from its current ticker price as each quarterly stock expires.

This year, the "quarterlies" were/are Jan 21, Apr 16, Jul 16, and Oct 15.

With DFEN, I had 300 shares that triggered back in October for 11$ (which i collected 150$ per contract on in premiums)

I then sold 3 calls for January at 16$ (i got a lil optimistic and priced my markup at +40%) and collected aother 150$ in premiums per contract.

Total gain was 2400$ (150x3 in sold-put premiums, 500x3 on 11$ cost 16$ sale, and 150x3 on sold-call premiums) on an investment cost of 3300$.

I also won bigly on my Nikola puts.


Anyhow, this quarter I'm being a little more aggressive since I assumed everyone would be fully retarded this quarter investing confidently with a retard in the presidency, and so I went all in on put credit spreads for even money returns, with literally no securities in my portfolio at this time.

When the fantasy of Messiah Joe wears off after this quarter's options expire on Apr 16th, i will be sitting entirely liquid waiting for the market to pull back 7 to 10%.

Once it pulls back 7 to 10%, I will be taking put credit spread positions on all three major indexes only, stating that they will be up 10% in 1 year (and up to 2 months depending on when the next quarterly of 2022 expires,) from the then-price of SPY, QQQ, and DIA with the bottom of the put-credit range at the price of where the ticker is currently at after it falls 7 to 10%.

For example: Right now, SPY is 397/share.

This means if it had a 10% pullback the price of SPY would be at about 360/share.

+10% from 360$ is 396 (but the quarterlies for next year are priced in 5 dollar incrememtns)

This means, in this situation I would SELL a put for 395$, WHILE Simultaneously BUYing a 360$ put. This constitutes a 3500$ put credit spread, but the premiums are paying even money, so you're investing your 1750$ vs the market's 1750$ in delta between the prices of the two puts you're using as the spread.


Currently, the price of the options market prices a +10%/0% put credit spread on SPY one year to 14-months out at even money (a 100% return, approximately)

for example: right now it's 396.21/share. +10% would be 39.62 higher than its current price: 435$. Set your exp date to teh first "quarterly over 1 year out: March 18 2022, 435$ put currently sells for $5581 (because its 100 shares per contract). Likewise same EXP date 395$ put sells for $3473.
435$-395$ = 40$ spread (x 100) = 4000$ in the spread
5581-3473 = 2108$

This means out of that 4,000$ in the spread, the market would be playing THEIR 2108$ against YOUR (4000-2108 =) 1892$
2108/1892 = 111.4% gain potential.

This means when I make this move, if the index of the S&P500 recovers from the 10% pullback within 1 year, I will over double my money WHILE getting that money at the long-term capital gains tax rate on my standard trading account. Because I do not net 80,000$/year in income, but only gross 55k in salary with 4 dependents and a wife, after deductions my Gross Adjusted Income is less than 40k.

This means that I can literally double 40k invested with a long-term plan for free: no tax at all on it, so this is my plan on my standard trading account.

For my ROTH which doesn't have short-term gain considerations; i simply just continue doing as I've been doing, which is what I described foremost, above.



This second example is pretty much the standard play any competent investor should be doing when the market is pushing an all time high. If the risk of a prolonged recession scares you, then just widen the spread to a number below what you think it is possible for the market to pull back to, or instead of betting on a 10% increase, bet that its gonna be flat a year later, with a range that goes down -25% from the index price.

the only reason why you would invest in index funds, flat, without optioning into possession with a sold put, is if you think a massive downturn or a prolonged bull market is more than likely, because for all intents and purposes "pullbacks" (-7% to -13%) "corrections (-14% to -20%) and even "recessions" (-20% to -33%) are typically recovered within a year, and there are generally 3 pullbacks per year, a correction every 2 to 3 years, and a recession every 10 years statistically speaking.