I didn’t. I avoid banks and other financial businesses as too risky.
TSLA did that to me since December 2924 and I’m still ahead in Tesla.
TSLA is volatile and it has yet to wipe out my gains.
Who says I only trade calls on just one stock?
You are certainly entitled to your opinion.
Mechanical? How so? Not only have I studied accounting but most of my professional life as been dealing a huge variety of businesses as a System Analyst, a business hardware sales rep, as a website developer with clients on several continents, as a Management Consultant, as an insurance sales rep, and as a student of business and investing not to mention my family’s various businesses. My clients include US Steel and GM, and my employers include IBM, NCR, and Colgate Palmolive.
My early assignments were often about inventory management. I thought I knew a lot about inventory but every new client showed me that inventory management was very much industry specific, an iron ore mine is very different from a car assembly plant, from a shoe factory, from a spare parts business. Business is not just numbers, it’s people.
A truck spare parts customer taught me an interesting lesson. Truck owners/drivers are pretty good credit risks, not because they have pristine credit ratings. They extended credit to new customers for the first sale. To extend further credit the truck owners had to pay up previous debt. No credit, no parts, no trucking. They paid up. As a management consultant I liked to visit the field where my customers operated. Tracking down tardy truck drivers was quite an adventure.
How, exactly does the above relate to trading the stock and its derivatives? BTW, do you know my TSLA cost basis? Give it a guess.
$–9.02 on stock trading
$-25.19 on option trading
Because my calls are ITM, deduct $20.00
Net NEGATIVE $-14.21 per share
I stopped trading puts over a decade ago, too risky!
Who says I don’t?
Half a century? Funny thing, long before I started investing I watched my dad reading the stock market pages in the daily newspaper and taking notes on index cards. I could not imagine anything as boring as that.
Some 35 years ago I decided to visit Las Vegas to see what the excitement was all about. A good friend asked me how much I was going to gamble. I’m not a gambler but casinos are fascinating. I replied not much. He insisted that the only way to really live the experience was to bet a significant amount. So I did and lost some $800. Las Vegas was a dud but instructive. They had little pamphlets about the various games and the advisory to play only for entertainment. I took the whole set home for further study. Las Vegas was instrumental in my new view of the stock market, Play the role of the House, not the Gamblers. The games are all rigged in favor of the House. One can do that selling covered calls. What one needs is a tool to find the best calls to sell. There are hundreds of stocks and option chains list hundreds or even thousands of option per share. There is no way to find the best to sell without a proper tool. I had some spreadsheets but they are tedious and error prone. Over the years I had developed a web-app to manage my portfolio and I added a section to manage covered calls. What was notable is how my performance improved as I went from eyeballing to simple spreadsheets to fancier ones, to the Covered Call Selector web-app which is a spreadsheet on steroids. Not only does it pick the best option in an option chain but it compares them across the various stocks being researched. This mechanical aide is a fantastic helper.
Being able to find the most productive calls to sell reduces the risk considerably. Just math, mechanical math.
Before I forget, I added a Roll Selector that is a great help in navigating the inevitable volatility of the stock market helping rolling up or down as the circumstances warrant.
The Captain
