I wouldn't risk my retirement account on any put plays, especially naked puts. Covered calls would be my retirement play. Covered calls can really juice up the returns.

Naked options are for play money.

Ask him:
Hedge Fund manager James Cordier apologizes after losing almost all of his clients money - YouTube

Or her:
Karen The Supertrader from Tastytrade: Is Karen Bruton the Supertrader a FRAUD? - YouTube

 

Ouch! Permanent loss of Capital is real and VERY difficult to overcome. That's why I'm attracted to Value investing which has you investing with a Margin of Safety.



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Aside from SKYW, I recently sold all my airline stocks as they are trading near their intrinsic value and I was sitting on 90%+ gains. Mr. Market is an emotional rollercoaster. Priced airlines for bankruptcy in late Spring now has them fully valued and might ever go higher in the midst of the winter COVID spike.

Side note: Be careful out there folks, market as a whole is priced at eyewatering valuations.

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I cashed out Delta a week ago for some nice mullah. I’m making a little on American right now, bought at $9ish. Keep thinking it’ll go up more but maybe I’m being greedy.

Had royal Caribbean stock I bought at the low and made good money on. Sold that a month ago.

Im not as smart as Tegridy but his PLUG tip has netted me a few hundred bucks this week. Thanks!

 

PEs are too high. Unless earnings come roaring back, hang on for the ride downhill. When throwing darts on the wall works for too many Joe 6packs, it’s time to be leery.

 

I’m not sure I agree that naked puts “risk your retirement account”. Several reasons;

1-They’re going to have to be cash secured. MAX loss is if you get assigned shares and the company goes to $0 and....
2-You shouldn’t write naked puts on anything you don’t want to own. If I can get 100 shares of a company I love and want more shares of, the cash used to secure the position will simply buy me 100 more shares at a lower cost basis. And then, I sit on my hands.

If it expires OTM, I keep the premium and repeat on the same great company I want more shares of.

You should never be able to write naked puts for more than the cash you have available. That being said if you have 350k in cash and you write a put on AMZN and you don’t want the shares, you maybe shouldn’t have done it in the first place.

I maintain that naked calls are much riskier. If you throw $350k down on an AMZN call gamble and it expires worthless, you took a dumb risk to being with (unless you have $350k you want to burn and it’s an inconsequential amount).

Now, the next part of the discussion is if writing cash covered puts is an efficient use of capital or not. I think not; which is why I tend to only write puts in my Margin account.

 

these types of metrics are what keep people from market and building wealth. People always find silly metrics to not get in and time when to get out. I would be much MUCH further behind in my retirement savings right now if I’d followed these mainstream institutional type things. TSLA, SHOP, MELI, AMZN to name a few I would have missed out on 10-20x returns on.

Find excellence, buy excellence, buy more excellence, sit on hands. Most importantly, do whatever makes you sleep easy at night.

 

Selling cash-secured puts on companies one wants to own, compared to naked puts on the SPX (what Karen was doing), are two different animals.

 

Sure, unless this run up lasts another two years and then just goes side ways for another two years. Then what? You lose out on another 30%? And what are you going to do with your money for 5 years waiting for the next correction?

 

I already made that distinction. There are many traders who would advise against buying companies that are down in "attractive" areas of price but YMMV.

I trade cash settled options and futures so always protecting the down side. You can get hurt badly in the market so I always advise people I don't know to be very careful.