Options and real estate wedlock - a beginner level trade on a real estate backed asset

[Apollyon]

Because we'd hear about it if they sustained it long term. Buffett's annualized career return is 19.8%.

Would we, though? You speak with speech authority when you're shutting him down. What I saw in Manhattan were guys way richer than me, and I didn't know the ins and outs from their business. I do not doubt they're doing it, and much better than I could (just like they couldn't doctor as well as us, some, maybe, but not most).

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[JacobMcCandles]

Would we, though? You speak with speech authority when you're shutting him down. What I saw in Manhattan were guys way richer than me, and I didn't know the ins and outs from their business. I do not doubt they're doing it, and much better than I could (just like they couldn't doctor as well as us, some, maybe, but not most).

Yes, because these wouldn’t be people that are just way richer than you. These would be billionaires and billionaires typically don’t amass their money unnoticed. Per Forbes, in April 2023, there are 765 billionaires in the US. I suspect quite a bit is known about each of them financially. Starting with $5M at 35, not contributing anything, and getting 20% return per year would give you $1 billion at 65 and $13 billion at 75.

I don’t doubt that people can do it over the short term (less than 10 years or so) but it typically takes one bad year (and there will be a bad year in that time frame) and these people get financially crippled. As long as people know the risk, more power to them, but making those kind of returns seem easy or low risk is false advertisement.

 

[TooMuchResearch]

I hope this post ages well over time. Do your own due diligence. I'm NOT a financial advisor. Just a dude that likes to play with money.

I've probably received a dozen or so messages from different people regarding options and/or real estate. In the spirit of education, here's a trade that I think is significantly better than any syndication out there. So anyone considering investing in a syndication, should consider this trade as well. I personally hold 725 of the following contracts and expect to get ~ 40k from that.

Ticker: MPW

What is it? Medical real estate REIT that owns about 400+ hospitals/freestanding ERs/rehab facilities.

Current price: $7.5/share

Current Dividend yield: $1.16/yr (expected to drop soon which is a reason why the stock has been hammered). Dividend announcement going to happen soon that may create some wild volatility especially if there's an unexpectedly large drop in dividend.

Why in this world did it drop 70% from it's peak last year:

The Bear case:

1) REITs as a whole have not done well due to increase in interest rates.
2) 2 largest tenants (Steward and prospect) have had large losses during covid leading to deferred rent and MPW helping them as tenants. Prospect for example had rent deferred this year and a part of rent was forgiven in return for equity into their managed care business. Receiving equity instead of cash rent investors didn't like.
3) Covid disrupted hospital financials for operators which are MPW tenants - MPW tenants have incurred huge losses during covid and are now finally recovering as volumes have recovered especially in outpatient money maker procedures.
4) Short attack. Historically high short selling at 20%. Which basically means an extra 120 million shares (20% of all shares which is 600 million) have been sold by people who never owned the stock to begin with causing significantly high selling pressure and price drop.
5) Increasing question about inability to cover dividend payment and anticipation of a cut due to rent deferrals ($0.29 per share per quarter - $1.16/yr aka >15%).

The Bull case:

1) Hospital financials are improving. Volumes are back. Staffing shortages are improving. Travel nurse utilization is improving.
2) VALUE. It's already dropped 70% from peak (You know...buy low sell high. Buy when everyone else is fearful kind of thing). MPW holds 19.2 billion of real estate and real estate related assets and 10.8B of debt. So they have a book value of ~ 8.4B. Currently the stock price puts the market cap at 4.5B. That's basically 53 cents on the dollar of assets. Granted if you look at the balance sheet, out of 19.2B, 2.4B is equity in real estate related firms and NOT directly real estate properties/assets. Then if you assume all those equity investments of MPW go to 0; then it's still an enterprise with a book value of 16.8B. Subtract debt and you have 6B. Current price is trading at 75 cents on the dollar.
3) Hard to predict the future, but we're heading towards terminal/plateau of interest rate hikes based on current fed guidelines (Expected to have 1 more rate hike in September). Next year if the rates back off, the entire REIT industry will benefit.
4) Mission critical Assets. You need hospitals.
5) Experienced sponsor that has been through 2008 as well as multiple tenant bankruptcies in the past and have always been able to squeeze their investment back.

If owning a company that's trading on pennies on the dollar due to massive price drop and holds 400+ hospital building hard assets is interesting to you then here's a safer way to make a play

The trade:

Sell cash covered puts - $6 strike January 2024 expiration. (see attachment)
Premium you receive = 56 dollars per contract based on todays closing prices
Absolute return in 5 months if price stays above $6 = 56/(600-56) = 10.3%
Annualized return = 24%

So...your outcomes:

1) MPW stays above $6 - You made 10.3% in 5 months. Great. 24% Annualized return. Rinse and repeat, sell more contracts for future dates.
2) MPW drops below $6 - Great you can buy MPW for $6/share (8.4B assets for market cap of 3.6B, 43 cents on the dollar), start collecting dividends (If they stay at $1.16/yr then that's a 19% dividend, but I think we're in for a cut), and start selling covered calls. Between covered calls and dividend, probably an easy 20+ percent return until eventually a long term recovery happens for the reit industry and the hospital operators.

Disclaimers:

1) I'm not a financial advisor. Just a regular dude.
2) You'll experience massive volatility as this REIT somehow is becoming a meme stock with such large short percentage.
3) Do your own due diligence.
4) I have sold 725 of the above contracts with naked puts (leveraged) with an average premium of $56.24 per contract that I've received. But instead of requiring the full cash which is $600 ($6 strike x 100 shares) - 56.24 = 543.76 per contract, I only require $250 - premium (56.24) = 193.76; giving me a cash on cash return 56.24/193.76 = 29% in 5 months.
5) This post may not age well at all as I cannot predict the future and this stock could go to $1 or penny stock value.
6) The exact numbers may be off just a tiny amount since I'm going on memory rather than looking up everything as I write this post

For anyone considering physical real estate or real estate syndications into private companies. In my humble opinion, as of today, this may be a better play.

Buy low sell high. Buy when everyone else is fearful. Sometimes to make money you have to hold a falling knife.

Good luck to all.

If it's down 70% and the chart looks okay and the thesis is okay, I'd rather just buy shares, but I don't understand options.

 

[TooMuchResearch]

Thesis: that chart looks like death.

 

[Apollyon]

it typically takes one bad year (and there will be a bad year in that time frame) and these people get financially crippled.

Isn't that the "gambling" analogy, though? Putting all your money in - doubling down, essentially - and, if you lose, you do, versus keeping the gains (which should be extensive) in reserve, so that a big loss isn't a total loss?

 

[JacobMcCandles]

Isn't that the "gambling" analogy, though? Putting all your money in - doubling down, essentially -and, if you lose, you do, versus keeping the gains (which should be extensive) in reserve, so that a big loss isn't a total loss?

Then it goes back to what it takes to get 20+% returns and that’s typically moves that can go very bad very quickly.

 

[Apollyon]

Then it goes back to what it takes to get 20+% returns and that’s typically moves that can go very bad very quickly.

Like day trading - but, day traders use all of their capital, and that's when they lose it all. I'm not the best on Cyanide's charts, but, I don't think they only work if scaled - half as much would make half as much, at the same profit margin, it seems. No need to be ruined from one bad year. Otherwise, I don't think I'm getting your point. I don't think he's trying to sell a "get rich quick" scheme.

 

[JacobMcCandles]

Like day trading - but, day traders use all of their capital, and that's when they lose it all. I'm not the best on Cyanide's charts, but, I don't think they only work if scaled - half as much would make half as much, at the same profit margin, it seems. No need to be ruined from one bad year. Otherwise, I don't think I'm getting your point. I don't think he's trying to sell a "get rich quick" scheme.

I don’t think anybody called it a get rich quick scheme. I would call it an unsustainable long term plan.

 

[thegenius]

If it's down 70% and the chart looks okay and the thesis is okay, I'd rather just buy shares, but I don't understand options.

You can do that...you get a bit more leverage with options and OP is doing options on margin too...which is leverage on-top of leverage. Like super-leverage.

Although once a stock is a few bucks a share...there is no real point in doing options. Just buy the shares. I'm talking in the $1-$2 dollar range.

 

[thegenius]

Isn't that the "gambling" analogy, though? Putting all your money in - doubling down, essentially - and, if you lose, you do, versus keeping the gains (which should be extensive) in reserve, so that a big loss isn't a total loss?

Yes it is. It's gambling. Options is a casino, 100%. Buying shares in good companies for the long term (decades) can build wealth.

I think even option traders sometimes forget (or don't really account for) probabilities. They understand it but sometimes don't consider it. For instance selling covered calls. Or frankly writing put options. Two very basic strategies. writing covered calls is as conservative as it gets. You don't take on any more risk than just owning shares outright. People sometimes tell themselves "I can write a covered call 30-45 days to expiration, make an extra 1.5% from premiums, rince and repeat. Do that 9-12 times a year and your annualized return is ~20%". Problem is statistics makes this virtually impossible. Selling that covered call or cash secured put carries a probability of "failure" and the odds are overwhelmingly against you successfully winning 9-12 times in a row. If you win 85% of the time and lose 15% of the time, winning 85% of the time 10 times in a row is nearly impossible.

So yes most people who trade options gamble. Pure and simple. There are some who are timely and can do it to help augment yield...but it's really only an extra 3-5% / year kind of thing. Even that's great, frankly but it requires patience. Very hard to do.

 

[cyanide12345678]

You deleted that chart pretty quickly but did your chart start at the lows of 2020?

That was old data that I removed (it was 110% return and didn't account for the recent dip I've had this month). Here's the current 3 year running. Etrade only gives me a 3 year look back on performance. It's August 28th 2020. The new high after the bear market.

 

[cyanide12345678]

Yes, because these wouldn’t be people that are just way richer than you. These would be billionaires and billionaires typically don’t amass their money unnoticed. Per Forbes, in April 2023, there are 765 billionaires in the US. I suspect quite a bit is known about each of them financially. Starting with $5M at 35, not contributing anything, and getting 20% return per year would give you $1 billion at 65 and $13 billion at 75.

I don’t doubt that people can do it over the short term (less than 10 years or so) but it typically takes one bad year (and there will be a bad year in that time frame) and these people get financially crippled. As long as people know the risk, more power to them, but making those kind of returns seem easy or low risk is false advertisement.

It's easier to pull off 20% when playing with capital less than 1M. When you have millions of dollars and your trades literally can move the market, then it's not the same anymore. With my current 600k account, my savings from income itself protects it from "blowing up". I can indefinitely hold positions and collect premium because our income and savings is still substantial compared to account size.

Also, the billionaires and multimillionaires didn't get there by getting a 8-10% return. Not everyone just gets a 10% return from the SP500.

 

[cyanide12345678]

Like day trading - but, day traders use all of their capital, and that's when they lose it all. I'm not the best on Cyanide's charts, but, I don't think they only work if scaled - half as much would make half as much, at the same profit margin, it seems. No need to be ruined from one bad year. Otherwise, I don't think I'm getting your point. I don't think he's trying to sell a "get rich quick" scheme.

Not trying to selling anything actually. Have nothing to gain here. Don't have any syndication real estate course to sell. Don't have any options course to sell.

I personally gained at least 200k more from learning options compared to boglehead investing in 3 years. I'm trying to educate. If someone finds value, they can learn and try it with small change and see how they like it. That's all I'm doing. Helping my fellow ER doc community. Or atleast that's what I'm doing in my mind. I don't know what you guys are perceiving however.

 

[cyanide12345678]

If it's down 70% and the chart looks okay and the thesis is okay, I'd rather just buy shares, but I don't understand options.

Yes. Chart looks like death. Thesis is based on fundamentals only. Buying directly at current price could be a lot more volatile with significant downside since the stock could continue it's negative momentum. The options piece allows to protect downside by keeping a lower strike price as an entry price, therefore, protecting downside. So instead of a limit order for a lower price, a cash covered put order basically pays you to wait for price to drop, and that payment was 9% for a january expiration 150 days away (~20 percent annualized return) while having a 28.5% downside protection ($5 strike rather than $7 current price).

So it's a significantly lower risk play than actually just buying the shares. A cash covered put is LESS RISK than buying shares of the underlying. It is truly a risk mitigation strategy.

 

[JacobMcCandles]

It's easier to pull off 20% when playing with capital less than 1M. When you have millions of dollars and your trades literally can move the market, then it's not the same anymore. With my current 600k account, my savings from income itself protects it from "blowing up". I can indefinitely hold positions and collect premium because our income and savings is still substantial compared to account size.

Also, the billionaires and multimillionaires didn't get there by getting a 8-10% return. Not everyone just gets a 10% return from the SP500.

I’m not saying they got there like that. Apollyon posited that maybe a bunch of Wall Streeters were getting that kind of return long term. If that were so, they’d be billionaires. Billionaires didn’t become billionaires by trading options or getting 20% from the market year after year. They’re usually creators.

 

[thegenius]

I’m not saying they got there like that. Apollyon posited that maybe a bunch of Wall Streeters were getting that kind of return long term. If that were so, they’d be billionaires. Billionaires didn’t become billionaires by trading options or getting 20% from the market year after year. They’re usually creators.

agree. I'd make an option-trading ETF and return 25%/year and take 4% for me. Imaging the billions and billions of dollars you can make. I mean you would make like a billion billion dollars. That's a tetramillion dollars.

 

[cyanide12345678]

I’m not saying they got there like that. Apollyon posited that maybe a bunch of Wall Streeters were getting that kind of return long term. If that were so, they’d be billionaires. Billionaires didn’t become billionaires by trading options or getting 20% from the market year after year. They’re usually creators.

Billionaires are creators and entrepreneurs.

A disproportionate number of millionaires are investors especially in the real estate space.

Real estate has made so many millionaires in the US.

 

[emergentmd]

Billionaires are creators and entrepreneurs.

A disproportionate number of millionaires are investors especially in the real estate space.

Real estate has made so many millionaires in the US.

MPW at its 10 yr low. Other than Macro stuff, anything worrying you about them? I am considering going long on them. Yield is 11%, is this in danger or have they announced a cut?

 

[JacobMcCandles]

Billionaires are creators and entrepreneurs.

A disproportionate number of millionaires are investors especially in the real estate space.

Real estate has made so many millionaires in the US.

Would these same people be millionaires if they invested the same exact money into a US Total Market fund? I'd bet so.

 

[cyanide12345678]

MPW at its 10 yr low. Other than Macro stuff, anything worrying you about them? I am considering going long on them. Yield is 11%, is this in danger or have they announced a cut?

They cut dividend 1 month ago to 0.15 per quarter.

Yeah it’s at a 10 year low. The risk is that their largest two tenants - prospect health and steward health are going through some financial difficulties.

Prospect California properties should start paying rent again now, will find out next quarter if they have. Steward was able to do a refinance on its debt, so should be paying its rent as well now, will again find out for sure during next quarterly report.

If both tenants are back to paying cash, you should see a recovery, if they continue paying in non cash equity, then the market won’t be pleased.

There’s also a large amount of debt coming due, they’ve sold assets to pay off 2023 and 2024 debt. So if rates come down eventually in 2025, they should simply be able to refinance. But the question remains how much of a higher interest rate they get compared to their current debt.

The valuation though is very cheap. If things recover, they can be a multi bagger in 3-4 years as their assets are worth a lot more than market cap.

I’m personally out of mpw right now. Might go back if it goes below 5. It’s probably headed for $5 before there’s any large support. But my buying power is all used up in ewz, kbe, and fxi right now.

 

[cyanide12345678]

MPW at its 10 yr low. Other than Macro stuff, anything worrying you about them? I am considering going long on them. Yield is 11%, is this in danger or have they announced a cut?

11% yield is after the cut. They went from 0.29 per quarter to 0.15 per quarter. The drop in dividend does open up some 300M of liquidity for them to pay off debt.

 

[emergentmd]

Maybe a good buy, hold, covered call to hedge any further drops.

 

[cyanide12345678]

Maybe a good buy, hold, covered call to hedge any further drops.

Probably. As long as they don’t default on their debt and go into bankruptsy, which they shouldn’t since they have plenty of financing options. Between covered calls and dividend, definitely could result in solid gains.

 

[JacobMcCandles]

Probably. As long as they don’t default on their debt and go into bankruptsy, which they shouldn’t since they have plenty of financing options. Between covered calls and dividend, definitely could result in solid gains.

I’m not familiar with them but what are their financing options? Re-financing in the short to medium term will be rough on any business.

 

[cyanide12345678]

I’m not familiar with them but what are their financing options? Re-financing in the short to medium term will be rough on any business.

Options include:

1) sell assets to pay debt. They’ve done this so far for 2023 and 2024 debt. This however decreases revenue and cash flow and puts pressure on future dividend.
2) all their debt is un encumbered. It’s all debt on the business (bonds essentially), properties in their portfolio do not have mortgages. They could get mortgages against their properties.
3) sell more bonds to pay off old bonds - very undesirable option since bonds are trading at 13 percent for them.
4) get rid of dividend - saves another 360M per year and pay off debt more aggressively. The last dividend cut already is saving them 300M per year that will go towards debt.
5) sell their equity interest in the operators - they have a half a billion worth of equity in the managed care business of prospect. Last earnings call they said they will look into options to do something with this equity.
6) dilute shares and increase share count. Very undesirable with all time low price for the stock.
7) decrease costs, sell their jets etc.
8) use their 1.8B revolver credit line with Jpm.

It’s probably going to be a combination of selling assets and getting 1st place mortgages on the properties and using their revolver.

But yeah…. Their financials actually aren’t bad. They make a decent amount of money.

 

[emergentmd]

I think the game is if it doesn't go Bankrupt, it should bounce back. That is the risk and what you are able to tolerate.

 

[cyanide12345678]

I think the game is if it doesn't go Bankrupt, it should bounce back. That is the risk and what you are able to tolerate.

Yup. Otherwise if dividend stays the same then 11 percent dividend plus 10-15 ish percent for covered calls. It’s a great deal. There is recovery around the corner once fed starts decreasing rates.

It’s definitely an opportunistic bet.

Other potential scenarios include a buy out given by someone big since their real estate has greater value than their market cap.

And finally, this is one ticker that truly has potential for a short squeeze.

Id personally love to see one though i have no skin in the game with mpw.

Spy has broken through support levels so i think it’s going to be a rough ride the next few months so Ive gone back to my bread and butter - ewz and kbe.

 

[emergentmd]

Yup. Otherwise if dividend stays the same then 11 percent dividend plus 10-15 ish percent for covered calls. It’s a great deal. There is recovery around the corner once fed starts decreasing rates.

It’s definitely an opportunistic bet.

Other potential scenarios include a buy out given by someone big since their real estate has greater value than their market cap.

And finally, this is one ticker that truly has potential for a short squeeze.

Id personally love to see one though i have no skin in the game with mpw.

Spy has broken through support levels so i think it’s going to be a rough ride the next few months so Ive gone back to my bread and butter - ewz and kbe.

I think the fed rate will remain stable +/- 50 basis points for the next year then probably drop unless inflation runs rampant. Gas/oil going up, Big III will have to jack up prices after UAW gets their pound of flesh, UPS/Shipping will go up after the new labor agreement, Insurance going through the roof, Healthcare costing more, Business can't find workers so have to increase pay.

Inflation is and will be a real problem. If the fed gets a soft landing, RE will do well. This is the big question as inflation is the wildcard.

 

[JacobMcCandles]

There is recovery around the corner once fed starts decreasing rates.

That’s going to be a long corner. I’m not sure you can say a recovery is around the corner when the bottom hasn’t even dropped out yet.

 

[thegenius]

I think rates are only going to go substantially lower (> 75 bps) if there is a crash. Rates follow the 2 yr, they always do, 100% of the time going back in time. 2% yields get gobbled up when recession hits.

Rates have only stayed elevated on hiking campaigns for on average ~6-9 months. They will be cut because they are forced to, not because they have sympathy and want to make it easier to make a lot of money. It's very hard to find a sweet spot where you can keep rates an a even(ish) level for years/decades

 

[JacobMcCandles]

Any update on this action with MPW? It's down about 40% from your $7.5 share price and it has been in a fairly quick decline and I doubt it's going to turn around in the next several months. Do you still feel comfortable buying this at $6/share? Have you changed your outlook on this?

 

[valianteffort]

Any update on this action with MPW? It's down about 40% from your $7.5 share price and it has been in a fairly quick decline and I doubt it's going to turn around in the next several months. Do you still feel comfortable buying this at $6/share? Have you changed your outlook on this?

Wells fargo downgraded it to 4 dollars last week with I'm sure many to follow. probably would wait for the low 3's before action. Low 3's is long term support, bounced there in 2009 after the 08 crash. Given we haven't had the anticipated 'crash' yet it may slice through that. Tough to catch a falling knife here.

 

[thegenius]

Any update on this action with MPW? It's down about 40% from your $7.5 share price and it has been in a fairly quick decline and I doubt it's going to turn around in the next several months. Do you still feel comfortable buying this at $6/share? Have you changed your outlook on this?

comfortable buying at $6? I think the key thing here is that if people want to go long MPW, they need to be very patient, on the order of years...before this thing goes back above $10. one will likely have an unrealized loss on this position for a long time. The whole market isn't doing well now, the long end duration is going up which will eventually un-invert the yield curve. People are not used to this because usually when the treasury yield curve uninverts, it's due to the fed cutting short term rates, the short term yield falls, and the curve un-inverts. The fed is going to keep rates high for some time (probably another ~12 months?) until they start to ease a little.

 

[JacobMcCandles]

comfortable buying at $6? I think the key thing here is that if people want to go long MPW, they need to be very patient, on the order of years...before this thing goes back above $10. one will likely have an unrealized loss on this position for a long time. The whole market isn't doing well now, the long end duration is going up which will eventually un-invert the yield curve. People are not used to this because usually when the treasury yield curve uninverts, it's due to the fed cutting short term rates, the short term yield falls, and the curve un-inverts. The fed is going to keep rates high for some time (probably another ~12 months?) until they start to ease a little.

The OP has puts at a $6 strike for January 2024.

 

[thegenius]

The OP has puts at a $6 strike for January 2024.

I think he closed the position a long time ago.

 

[ProReduction]

I have no idea how the OP is claiming to make 10-15% return on covered calls when his position per his 1/2024 strike is going to be so far out of the money that there will be no bid whatsoever for his calls. Anything at a lower strike for future covered calls that gets acted on simply guarantees a realized loss.

 

[JacobMcCandles]

I think he closed the position a long time ago.

Nope, you're right. Looks like he said he was out. It would be nice if these threads were updated.

 

[Groove]

Here was chart I posted on August 24th:

Bearish criteria:

1) Price below cloud
2) Conversion line / Base line crossover
3) Conversion line and base line had both breached the lower border of the cloud.
4) Chikou span (lagging span or the green line) had also breached below the cloud.
5) Red, bearish Kumo twist on the right
6) SMA 50 below the 200
7) Death cross on the weekly with noticeable uptick in volume (increasing bearish momentum)

Here's today for comparison:

Pretty much looks the same. Continuation of a bearish trend. It continues to respect a downward channel on the weekly. Hey, you can't win them all. It was still an educational thread and who knows, it might reverse before Jan.

Meanwhile WTH happened to GOOG today? Ugh. I also added to my VIST position. I frick'en love that stock. I can't get rid of it. It makes me want to move to Argentina. Been bag holding it since $10. Closed my BCSF position. Chart turned bearish. I seem to always get burned by the financial sector stocks.

 

[cyanide12345678]

I think he closed the position a long time ago.

Yeah i was out a long time ago.

Current holdings:

Ewz 900 contracts $25 strike
Arkk 100 contracts $26 strike
Kbe 230 contracts $29 strike

Then have smaller holdings of UAL, dal, and pypl. Pretty small and insignificant holdings though compared to above.

 

[cyanide12345678]

Nope, you're right. Looks like he said he was out. It would be nice if these threads were updated.

It did go up 15 percent yesterday. But I’m out. I saw some other solid opportunities using a similar amount of buying power and i went with those instead because i wanted to move away from singles stock risk.

I did lose significant gains but all in all the other opportunities i went in should result in clawing back some of my earlier gains and closing the year around 25-30 percent up ytd if my kbe, ewz, and arkk positions hold.

The last 2-3 months were rough and i went back to what has just always worked - EWZ. Have lost 11 percent in 3 months compared to 8 percent for sp500 which is essentially 60-70k. But as a put seller, it’s a waiting game. But still beating sp500 by almost 50 percent in the last 3 years since i started trading.

Current portfolio is attached. Believe it or not, this highly leveraged portfolio is what i would consider fairly safe. I’ve already dropped strikes on arkk, ual, kbe and decreased ytd profit goals from 200k to 180k to 160k. I will continue to drop strikes as needed if the market continues to be challenging and will decrease end of year profit goal if needed.

 

[cyanide12345678]

I’m a trader though. 37000+ contracts bought and sold year to date. My portfolio today is unlikely to be the same as my portfolio after a week.

The core holdings Stay the same usually, but the amounts change.

For example, 5 days ago arkk had a +3 percent day, i had 285 arkk contracts and 700 ewz contracts. That day i closed ark, ewz has a neg day that day so i sold more ewz positions and went to 950.

Yesterday ewz was solidly green while the entire market otherwise was red. I closed 50 ewz contracts and re-opened arkk now that it had dropped again and premiums were up again.

In short, im pretty quick to close my winners and take profits, and then dollar cost average into losers, to optimize maximum premium harvesting with given buying power

 

[cyanide12345678]

I have no idea how the OP is claiming to make 10-15% return on covered calls when his position per his 1/2024 strike is going to be so far out of the money that there will be no bid whatsoever for his calls. Anything at a lower strike for future covered calls that gets acted on simply guarantees a realized loss.

I never have been in the money on anything since last year when meta dropped 25 percent in 1 day.

My strike is flexible and changes. My mpw position is closed, though i was down to a $4 strike, i compromised on my total amount of profit. So….i still wouldn’t have been in the money even if i had held my position today.

All strikes are flexible. All positions are flexible. Profit goals are flexible.

 

[ProReduction]

I never have been in the money on anything since last year when meta dropped 25 percent in 1 day.

My strike is flexible and changes. My mpw position is closed, though i was down to a $4 strike, i compromised on my total amount of profit. So….i still wouldn’t have been in the money even if i had held my position today.

All strikes are flexible. All positions are flexible. Profit goals are flexible.

My bad. I missed that you appropriately followed up on this back in August: "I took the loss on my 155 day $6 strike position. I had 725 contracts here. Almost 100% realized loss ~ 40k (originally received $56 per contract and bought back and closed for $111 per contract i believe)."

 

[cyanide12345678]

My bad. I missed that you appropriately followed up on this back in August: "I took the loss on my 155 day $6 strike position. I had 725 contracts here. Almost 100% realized loss ~ 40k (originally received $56 per contract and bought back and closed for $111 per contract i believe)."

Yeah it was rolled into a $5 position, then that dollar 5 position made 30k in 3-4 days. In fact i rolled into a larger position, i think 1000 contracts or maybe even more? Don’t remember exactly but i made 30k back on the rebound. If you look at the last 3 months of mine, that’s the whipsaw in the beginning. But essentially, realized a loss, went bigger, larger position, made a profit and closed again. Then i opened a much smaller $4 position. But eventually closed that too when i realized that the gain per buying power being used was now the same for ewz and other etfs for my desired strike prices which i consider safe.

But the market hasn’t done well, so I’ve played very defensively. Multiple strike prices have been dropped while keeping the same expiration.

Ewz 26 -> 25
Ark 30 -> 29 -> 28 -> 26
Kbe -> 31 -> 30 -> 29
Ual 30 -> 27

The result of the above is that 2 months ago i had ytd gain of 130k and positions that would have made me 180k by jan

Now i have 105k of gain with positions with premium that will make me 162k by jan.

83 days left, i have a 17 ish percent buffer on my largest position.

If you really sit down and think about it, the market is dropping, but eventually whenever my position will win, and eventually it will, I’ll still be profitable. And eventually when the market recovers, i can go the other way and start increasing strikes and increase my eventual profits.

Hope that makes sense, it’s hard to explain and i don’t think i did a great job of it

 

[cyanide12345678]

Yeah it was rolled into a $5 position, then that dollar 5 position made 30k in 3-4 days. In fact i rolled into a larger position, i think 1000 contracts or maybe even more? Don’t remember exactly but i made 30k back on the rebound. If you look at the last 3 months of mine, that’s the whipsaw in the beginning. But essentially, realized a loss, went bigger, larger position, made a profit and closed again. Then i opened a much smaller $4 position. But eventually closed that too when i realized that the gain per buying power being used was now the same for ewz and other etfs for my desired strike prices which i consider safe.

But the market hasn’t done well, so I’ve played very defensively. Multiple strike prices have been dropped while keeping the same expiration.

Ewz 26 -> 25
Ark 30 -> 29 -> 28 -> 26
Kbe -> 31 -> 30 -> 29
Ual 30 -> 27

The result of the above is that 2 months ago i had ytd gain of 130k and positions that would have made me 180k by jan

Now i have 105k of gain with positions with premium that will make me 162k by jan.

83 days left, i have a 17 ish percent buffer on my largest position.

If you really sit down and think about it, the market is dropping, but eventually whenever my position will win, and eventually it will, I’ll still be profitable. And eventually when the market recovers, i can go the other way and start increasing strikes and invest my eventual profits.

Hope that makes sense, it’s hard to explain and i don’t think i did a great job of it

I guess it’s the options version of tax loss harvesting. Book a loss, open a distant position with a lower probability of failure and repeat until you win. Eventually when market does well, go the other way and start increasing strikes.

 

[JacobMcCandles]

But essentially, realized a loss, went bigger, larger position…

…but eventually whenever my position will win, and eventually it will, I’ll still be profitable.

I hope you do well and I’m glad you have a high income job to fall back on but those are two very dangerous statements.

 

[cyanide12345678]

I hope you do well and I’m glad you have a high income job to fall back on but those are two very dangerous statements.

Right now with spy dropping below 200 day moving average which is a huge bearish signal, any drop down in strike is a completely defensive play, so position size isn’t getting larger right now.

It’s hard to explain though - i mean 2 weeks ago i had closed ewz for $0.38 premium - then took that buying power into arkk, then closed arkk when that was profitable, then opened more ewz at a better premium. Now in the process of closing ewz positions again and going back into arkk into a better premium than what i closed at just last week.

But all in all ive made a lot of profitable trades in between, such that i dropped strikes but still maintained a ytd 160k outlook. The strike drops now were only defensive moves

Someone who doesnt do this as often as me just doesn’t understand the degree of flexibility i have.

 

[Groove]

Yeah, SPY daily looks terrible. My portfolio has most definitely taken a beating over the past 2-3 months. Weekly doesn't look as bad and I'm still optimistic for a reversal given very oversold conditions but most definitely in a bearish trend. VIX starting to pop above 20. I'm trying not to take any big positions until trend changes. Prob was premature with VIST other day but I've been with that stock for so long that I have faith in the long term.

 

[cyanide12345678]

Yeah, SPY daily looks terrible. My portfolio has most definitely taken a beating over the past 2-3 months. Weekly doesn't look as bad and I'm still optimistic for a reversal given very oversold conditions but most definitely in a bearish trend. VIX starting to pop above 20. I'm trying not to take any big positions until trend changes. Prob was premature with VIST other day but I've been with that stock for so long that I have faith in the long term.

4000 spx is probably a reversal. If it’s not, then we could be back to 3600…. That’s not going to be pretty C😂

 

[HemorrhagicShock]

4000 spx is probably a reversal. If it’s not, then we could be back to 3600…. That’s not going to be pretty C😂

I fully expect this to break through to the downside once it crosses 4000, with maybe a new local bottom around the pre-COVID highs (3200-3300).

How do I know? Because I've been aggressively investing in broad market ETFs that are overweight big tech (VOO etc.) over the last 3 years, and the best way to make money in the stock market (based on my entire history of investing) is it do the exact opposite of what I do.