Wednesday, January 07, 2009

Selling Puts or Buy/Write?

Not exactly a new theme, but a fine article by Peter Stolcers in the new Futures & Options Trader magazine sheds new light on these opportunities. The magazine is downloadable and subscriptions are free. The articles profile strategies that are not just for futures and/or options traders and the systems profiled are generally a few notches down in sophistication from the Stocks and Commodities type. Well worth the price!
With 10 days till Jan expiration, here are 4 sample naked put selling scenarios. Now these are just look-see things, not recommendations, but it gives you a sense of the scale of opportunity in these various equities. Worst case is the market really tanks and you're forced to buy the underlying at a significant discount to today's price, which means you better have some free capital available, or be prepared to cover the position at a loss pre-expire.
I favor the GE and XLE situations.
Finally, Dr. Brett is sharing some of his pivot trading tactics although he uses a proprietary pivot calculation tempered by a volatility factor to determine R2-S2 pivot levels. You can find a great (IMHO) pivot calculator on the ride side of this blog under DATA & CHARTING. The calculator has 3 different calculation settings, so if you want to narrow the range of the standard (classic) pivot calculations, use the Camarilla model.

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