Why ?
Because this is the opportunity to reduce the position cost to zero or even negative ! Once your holdings become zero cost, then there is no risk for you , no matter what happens in the market !
So, market corrections are great ! The key is you need to have a good timing on the market movement! You need to act (sell) before the correction comes, you also need to act (buy back) as soon as the correction ends.
However, timing the market is hard, if not impossible. Then how to overcome this ?
My solution is: when feeling the correction is coming, just take profits and sell half of the positions ! If your timing is wrong, you still have half positions to ride with the run up wave ! If your timing is correct, then wait to buy back the positions you sold at a much lower price and reduce your cost for the whole holdings!!
I have tried this method over and over ! It's just wonderful ! See my previous post on this as well.
Remember:
- the top only forms in the bullish up !
- the bottom only forms in the bearish down !
great. thanks.
ReplyDelete根据基本面分析看好某只股票，买进它的长线call，很多时候是一两年之后到期的。长期期权的时间价值很大，premium相对比较高，但比直接买进股票仍然便宜很多，因此在每月不断卖出股票现价上方的近月call之后，降低成本的速度比covered call快的多。在长线期权到期前就把成本降到了0，持有一份免费的看涨期权。成为ITM，赢利就非常可观。
ReplyDeleteAlso 购买近月的PUT对LEAPS保险，从而降低投资风险。若遇股市调整PUT盈利，若股市走高，最多损失一点“保险费”。
Dear friend, can you post in English ?
ReplyDeleteSelling covered calls may let you miss the massive run up, which is not good at all !
For example, I sold covered calls on BAC before so I missed the massive run up to $15. Otherwise, I may still hole BAC for free.
Tiger