Characteristics of a good and Low risk Deep ITM covered call

[bulldozer]

Paris,
your quote>>"Effkay,

"with a Collar (CC + protective Put) you can be close to 100% protection but the return will be close to zero"
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Paris,

Your learning fast.

But you still got more learning to do, b4 you dive in the deep-end in Option trading.

bull

No offence meant!

 

[parisd]

I give up with you Bull, you broke all the interest of having this Thread.

JUST READ:
Situation 1: A Deep ITM CC
Stock ask at 500, Call Strick 300 bid at 220, expiration end Feb
profit if stock unchanged 20p (not much I know)
profit if stock raise 20p
profit if stock drope to 400; 20p
profit if stock drope to 300; still 20p (not bad for a drop of 40%)
profit if stock =280 ; 0
Start to lose if stock < 280

Situation 2: An ATM CC
Stock ask at 500, Call Strick 500 bid at 40, expiration end Feb
profit if stock unchanged 40p
profit if stock raise 40p
profit if stock drope to 480; 20p
profit if stock =460 ; 0
Start to lose if stock < 460 (protection is as little as 8% compare to 40% in scenario 1)
Profit if stock drope to 400; minus 60p - yes you lose money ! Not the ITM (scenario1)
profit if stock drope to 300; minus 160
profit if stock =280 ; minus 180 (Scenario 1 Deep ITM CC is still not losing money)

Disadvantage of ITM CC: Lower return than ATM CC (as long as stock is unchanged)
Advantage of ITM CC: Much bigger downside protection.

Yes Bull I know what means Delta Vega Gamma and Theta.

Why did I lose 15 minutes to type this for a 21 years veteran, dont ask !

NOW BULL UNLESS YOU CAN EXPLAIN TO US YOUR 100% PROTECTION NO NEED TO REPLY, OK.

 

[parisd]

So Your protection is a collar? Did I give the answer that you could not give yourself ?

Sorry but with a collar, I dont think you can pretend to achieve the returns of an ATM CC not even the returns of an ITM CC. So you are far away from the 10%+ per month.

 

[bulldozer]

Paris,
You think just because youv'e just discovered about the "collar" You have become an xpert on Options! Your broker could have told you about it this morning!
MY HEDGE IS GREATER THAN THE "COLLAR". ONLY A HEDGE MANAGER's, A BOOKIE, MRKT MAKER's, GEORGE SOROS, WARREN BUFFETT WOULD KNOW WHAT IT IS. I DONT THINK A ORDINARY BROKER WOULD KNOW WHAT IT IS! ONLY ONE OF MY BROKER's KNOWS WHAT IT IS.

Here is a question for your broker: Ask him how to protect/hedge a £3 ml "strangle 350 pt otm position" on the footsie 100 index,? and what other hedge is stronger/better than a COLLAR?

You seem to have a short memory? I SAID I DONT LIKE DOING "CC ITM, OTM, ATM". BECAUSE ITS THE STUFF NOVICE DO. THE BROKERS LOVE PEOPLE THAT DO THEM BECAUSE IT BRINGS THEM IN MORE MORE MORE COMMISSIONS.

Please put the details on the forum when you have entered your ITM CC trade, so we can all see the progress to its final conclusion. Cant wait.

Please read the thread about 8 places down on CC [covered call options]

BULL

Good luck and happy trading.

 

[Effkay]

Bull:

I don't really know what you're trying to prove......If you have knowledge about hedges then please share it....if you don't want to share it then please go away and mint your money with your 100% protected trades....

 

[Effkay]

Also Bulldozer can you tell me:

how are options priced?

An honest answer would be appreciated

Thanks mate

 

[bulldozer]

FK,
Ask ur broker or the author's of the books youv'e been buying!!!. or the guy's that took the seminar fee's of you. DONT ask me to give you anything!!.
All I'm trying to prove to you is! that the "CC itm, otm, atm" are dogs with MANY FLEASSSSSSS. The Calls premium does NOT give you protection for the down-side on your stock!! [the CC trade is "Unlimited loss with SMALL LIMITED gains"]
and I'm trying to HELP you from losing your cash.
But you dont seem to grasp anything that I say, because ur lacking in wisdom, understanding and manners.
I have nothing to GAIN by proving anything to you. Perhaps you will now go into this trade with both eyes open and with more caution.
Finally, please do your self a favour read YOUR last few posts, perhaps then you will see why I'm not replying to your requests.
Hopefully this will be the end of this dialogue.

Bye Bye for the last time.

bull

 

[Robertral]

Hi,

Without me reading through all the rubbish, what is the argument????

 

[bulldozer]

Rob,
I'm confused with your comments, How do you come to the conclusion that something is rubbish without first reading it?

Here's a question for you to say weather its rubbish or not:
Stock price 500p, strike 450, price of call 50 intrinsic+10pts time value =60pts with 4-6 weeks left to xpiry.
Would you do a "50 pt ITM covered call position" for a small benefit of 10 pts [£100 ] less costs including all other costs of assignment. on a £5,000 stock value. and does the premium taken give adequate protection if the stock drops 20-50 %?
would you do this strategy on a 500K stock value or £1ml stock value.

 

[bulldozer]

Paris quote:
"So Your protection is a collar? Did I give the answer that you could not give yourself ?

Sorry but with a collar, I dont think you can pretend to achieve the returns of an ATM CC not even the returns of an ITM CC. So you are far away from the 10%+ per month"
============================================================.

Paris,
Like i said in one of my post to you, You dont even know the maths or %.
How does a profit of 10 pts on a £5,000 stock equal 10% per month??
Its not even 3%.
10 pts, and thats without deducting the costs and the costs of assignments. BY Your own admision you said the "trade was not worth doing with a £1000 holding stock" because all the profits would be swallowed up by costs.

Do you know that Options are priced at £10 per point?? So 10 pts =£100 minus costs you would be left with LESS than 8pts = £80 at BEST!
So now tell the viewers what is £80 profit on £5,000 is in % terms =..................per month. [fill in the blank]

By the way the viewers counter has just broken 700

Fk,
DONT EVEN THINK ABOUT ASKING ME ANYTHING! UNTIL YOU HAVE LEARNED SOME MANNERS. [your just a small fish thinking its cool to swim with sharks.] when in reality you cant even swim, and all Ive been trying to TELL you is dont dive in cause the sharks WILL get you and your money.

Bull

 

[Effkay]

Bulldozer:

Thanks for that...it just shows that you really don't actually want to teach a thing and that you're just putting people down........what's the point? No-one's impressed!

If i've been rude I've not meant it...and I can honestly say that....however if you want to help people then that's really nice of you, but it seems that you actually don't and that's fine....just let people find their way.

Thanks

 

[Effkay]

Rob,

I wouldn't worry about the argument really.....we were basically discussing ITM covered calls, and Bull said that he would never do one, he would only touch otm covered calls.

To which we said that ITM gives more downside protection and so may be a more conservative trade..

Bull however didn't quite take that on board and has 100% downside protection on an atm covered call apparently, when asked where the protection came from, he wouldn't answer.....and that's about where we are now!

 

[Robertral]

Surely this all comes down to your utility function; how risk averse you are, so I these figures a relative to your risk preferences.
Covered calls are not my style but I think they were a good strat last month on the FTSE with realised vol being way lower than IV, but in the next 2 months I think it might be the wrong stratagy, on the FTSE anyway.....(Vol is on the up)
Covered calls have never been my thing as they have no downside protection....If I had to I'd sell a straddle, but again, vol is at an all time low hence it seems madness to sell vol here.....

Why employ covered calls when you can short a put???? surely the costs involed in a CC are much greater than those associted with shorting a put......just a thought

 

[bulldozer]

I said "Covered Call strategies are NOT what i do.
I also said i dont BUY STOCK.
I also said an "OTM CC" is better than "ITM CC"
I also said YOUR "ITM CC" has no downside protection.
i also said "the profits from YOUR "ITM CC is not GOOD RISK/REWARD.
i also said YOUR chosen strategy is for novices.
i also said dont trade the stuff and put your money in Premium Bonds until youve moved from the "milk" [novice]
I also said i would not teach my knowledge to people like you who are ungrateful, lacking in manners, and lacking in Wisdom,respect, etc.

Ask your broker why a OTM CC is better than YOUR ITM CC or for that matter start a NEW thread on "OTM CC .v. ITM CC" and I promise I will not post one single post.
I will also bet you £100 against your £10 that the majority of xperienced option traders will agree on the "OTM CC" is a better choice than YOUR "ITM CC"

Now as for me teaching people for free: Ask the people how much profits they have made from my posts, my reccommendations, my advice, and how much i charged them.
Visit>> www.tacticaltrader.com [astrazeneca, ftse 100 options etc]
Please remember what I said to you DONT ask me for anything.

 

[Effkay]

Ok thanks for your responses mate, very helpful!!

You never seem to answer questions in a straightforward manner...but anyway I shall argue no more!

Thanks for everything

Apologies to anyone for boring you with this thread.....to talk about the merits of covered calls or otherwise I have made a new thread

 

[bulldozer]

Dear members,visitors,

I would like to apologise to any one that was offended by my posts and the manner in which i responded.
When i see someone tries to recommend a strategy on the board and if I feel that the "strategy"
has NO dow-side protection for a measly return, I feel its my duty to let the members/visitors know the risk involved.
Now I would also like to add to the viewers something that was NOT mentioned in this thread:
"A 50 pt ITM CC" and stock value at 50pts HIGHER than the writen strike, even if the stock rises BY 50-100 percent your profits HAVE BEEN CAPPED at ONLY 10 pts [£100 max-costs this is what has been recommended in this thread]
"50-100 pt OTM CC" With the stock rise of 50-100 percent would show a huge profit.
However, I'm NOT saying you should do the "50-100 pt OTM CC" This also has NO DOWN_SIDE PROTECTION.
Get advice from your broker before entering a trade. and finally remember> HAVING NO POSITION IS A POSITION.!!

Bull
Always be hedged and expect the unexpected!

 

[parisd]

All I suceed to know with my first Thread on trade2win is that Bull has £500K or £3M investedin options and that he has a almost 100% safe downside protection that very few like Warren Buffet , George Sorros and Bull are aware of and that they will not share it with us. Great !

Will check www.tacticaltrader.com , thanks for the link.
Bull is this site yours and are you trying to raise subscribers? You wrote: Ask the people how much profits they have made from my posts, my reccommendations, my advice, and how much i charged them.

 

[parisd]

While trying to retrieve the URL: http://www.tacticaltrader.com/

The following error was encountered:

Connection Failed

 

[Robertral]

x

 

[bulldozer]

Paris,
"Will check > www.tacticaltrader.com thanks for the link.
Bull is this site yours and are you trying to raise subscribers? You wrote: Ask the people how much profits they have made from my posts, my reccommendations, my advice, and how much i charged them."
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Paris,
You keep getting things WRONG! Will you ever learn?
No its not my W-SITE. Fortunatly for you and every body else its all FREE!

Bull