Hello all, I took level 1 last June and am waiting for results. We’ve all studied about covered call, protective put etc. in Level 1. Do any of you trade using puts as premium/protection for stocks which you are long etc… with your personal trading accounts ? I am interested in listening to anyone, who is practically applying stuff learnt in CFA curriculum to manage their assets/portfolio. Thanks,
I also took level one and now I am an options trader
Yes, but I rarely use options as protection. Usually use them as a means to achieve a leveraged directional bet on an underlying stock.
Not a big fan options trading any more, but I do like to write covered calls monthly with the strike a month out and 20% or so above the underlying. This is only for names that I would buy more if they came down, and plan on holding for a year or more. The idea being that a ~15-20% jump in the underlying one month would be fine with me, even when the shares were called away. The premiums I can pick up while holding the stock can easily amount to 10-20% of the initial purchase price over a 12month period. I know guys that have negative cost basis’s, if you want to look at it that way. The premiums also give you cash to buy more if the stock does hopefully come down. Works great with the value approach.
Thanks guys !!!
I have been doing covered calls. The problem with buying puts to cover long position is that it gets expensive unless you become more an active trader. so I have been doing covered calls this year. The market has been volatile which tends to increase the value of some options unlike two years ago. I tried to do covered calls in the past but will not earn enough premium.
Protective puts can be VERY helpful around earnings time for high beta names.