The Adventures of MDawg (in progress)

[MDawg]

A stock trading friend of mine used to say that I "keep doing the same thing, risking partial fills, playing silly games" trying to get the absolute bottom (or top, on a short) for a 1000 share fill on a big stock like AMZN, but it would also save my ass sometimes from some less than high probability trades.

Eventually he had to concede that whatever I was doing, was working.

[House of Orange]

I missed an opp (no not because I was posting about PokerGrinder, this was much earlier in the morning) to jump on an AMZN trade at 1920. I was too cheap and put it in at 1919 and it didn't get quite exactly that low.

Grump says that we're in for two weeks of pain...stock market is down today. My long term AMZN is dragging me down today, but it could be worse, AMZN only down twenty at the moment. Why a mail order company even dropped so much during a time when mail order is key, doesn't entirely make sense.

Might be because of that fired employee the other day. VERY politically incorrect!

[dannyj]

Keep your bid in. It looks like she could test that area again.

My experience is that when/if it retests it drops even more. What do you think?

I could end up too cheap again and putting it in at 1917 will get me nada though, that's the other side of the coin.

Although I have been doing a fair amount of day trading recently I still consider myself to be a long term investor first. Depends on what your time horizon is whether or not that dollar or two is going to make much difference. I bought some AMZN in my wife’s IRA in Feb. 2017 at $810. We still own it. Will probably be one that after we’re gone our daughter will own.

There it goes, I just saw a 1915 handle.

[tableplay]

Those holding Amazon could write out-of-the-money covered calls against it.

[MDawg]

Covered calls are so...thirty years ago. We were laughing at the old school brokers who suggested them when I first started trading end of the '90s, and they are inappropriate today too. When a stock like AMZN starts running then a covered call just means that you sold your birthright for a bowl of cold porridge.

Anyway I just got shut out again I noticed it plummeted so I put in an order at 1903 when the bid was 1903 and change. Now it's 1907 and change. I shoulda gone in at the mid, 1904.

I don't like to stare at the ticker all day long. I just pop in every now and then, and see if what's there looks appetizing. I don't trade every day.

[MDawg]

I have my order in still at 1903, see what happens.

[MDawg]

It's 1911, no pointing leaving it up now. Cancelling, going to walk away.

[tableplay]

Covered calls are so...thirty years ago. We were laughing at the old school brokers who suggested them when I first started trading end of the '90s, and they are inappropriate today too. When a stock like AMZN starts running then a covered call just means that you sold your birthright for a bowl of cold porridge.

Anyway I just got shut out again I noticed it plummeted so I put in an order at 1903 when the bid was 1903 and change. Now it's 1907 and change. I shoulda gone in at the mid, 1904.

I don't like to stare at the ticker all day long. I just pop in every now and then, and see if what's there looks appetizing. I don't trade every day.

You can close them out and then sell new ones with higher strikes on the way up. That's why I specified out of the money.

[MDawg]

Maybe, but wouldn't you agree that they are better for a stock where watching its price is more like watching paint dry? which, there actually aren't too many stocks like that these days, volatility has been extreme for many years now.

[dannyj]

Maybe, but wouldn't you agree that they are better for a stock where watching its price is more like watching paint dry? which, there actually aren't too many stocks like that these days, volatility has been extreme for many years now.

I have three long term holds in the green today that possibly used to fit that bill. (CLX, PG, & WMT )

[MDawg]

I think I can get it for 1903 now but it's so close to the bell. Pretty low probability trade in my book.

[tableplay]

Maybe, but wouldn't you agree that they are better for a stock where watching its price is more like watching paint dry? which, there actually aren't too many stocks like that these days, volatility has been extreme for many years now.

It depends on the individual. You'll collect less premiums on sold covered calls for less volatile stocks of course, but people use that strategy to enhance their dividends on these buy and hold type stocks. Obviously for volatile stocks the covered calls require continuous monitoring so that they can be rolled off on dips and rolled out in time to capture more premium when they get near expiration.

[MDawg]

Before I ever got involved with stocks, I remember my Dad's broker telling him, "Time to buy QCOM." "Time to sell QCOM." I guess at that time, it was a cyclical stock that cycled between two very narrow numbers. Not very long at all after that I started my own stock trading and investing and of course by then QCOM was the one that MSNBC was shouting about every day QCOM! QCOM! QCOM! as it marched STRAIGHT up until December 1999 when it started to fade, along with most everything else. So, you just never know, anyone who had been booking covered calls on that stock back then would have missed out on a fortune.

Put it this way - of ALL the stocks I have held long term the ONLY one that would have worked for a covered call would have been T. Other than dividends that stock has rarely popped its head above even what I paid for it.

Otherwise, for the most part, covered calls have been scoffed at during any periods of bull runs, which we just came off an almost twelve year one, no? If they have worked for you, that's good.

[tableplay]

Before I ever got involved with stocks, I remember my Dad's broker telling him, "Time to buy QCOM." "Time to sell QCOM." I guess at that time, it was a cyclical stock that cycled between two very narrow numbers. Not very long at all after that I started my own stock trading and investing and of course by then QCOM was the one that MSNBC was shouting about every day QCOM! QCOM! QCOM! as it marched STRAIGHT up until December 1999 when it started to fade, along with most everything else. So, you just never know, anyone who had been booking covered calls on that stock back then would have missed out on a fortune.

Put it this way - of ALL the stocks I have held long term the ONLY one that would have worked for a covered call would have been T. Other than dividends that stock has rarely popped its head above even what I paid for it.

Otherwise, for the most part, covered calls have been scoffed at during any periods of bull runs, which we just came off an almost twelve year one, no? If they have worked for you, that's good.

My portfolio is 100% preferred stocks (fixed income) which are all virtually non-optionable (a couple of the adr preferreds that I own are or were optionable, but I am fine with the fixed dividend payments), so I don't use this strategy. When I used to buy the commons, the covered calls worked since they were low volatility dividend payers. However covered calls will work on volatile stocks and there are ETFs,hedge funds and mutual funds that actually use covered calls on volatile stocks as part of the investment strategy/total return. IIRC, the well known and highly-regarded Hussman Fund (https://www.hussmanfunds.com/strategic-growth-fund/) uses this strategy.

[MDawg]

Hussman funds doesn't seem to be doing too well:
Average annual total returns for periods ended 02/28/20
1 Year -10.54% that's MINUS ten percent
3 Year -5.01% MINUS five percent
5 Year -7.78% MINUS seven percent
10 Year -6.99% MINUS six percent
Since Inception (07/24/00) 0.11%

Did you know that they've almost never booked a profit, or do you just like to copy paste stuff without knowing what it is, such as you did with your gambling statistics analysis? (Sorry I couldn't help making that crack, forgive me.)

In any case, let's talk real world. Just one stock for example. I've owned NFLX continuously since 2010. The first year I owned it, it dropped something like 50%. I held on, actually bought more to average in. It's been a meteoric rise ever since. You're talking "theory" again about being able to use covered calls on volatile stocks. The real world, is that even on many average days I'd wake up to find that NFLX had gapped up ridiculously, before the market even opened, let alone on the days when splits were announced, and it would gap up even more ridiculously - all in the pre-market. So your "theory" of "continuous monitoring so that they can be rolled off on dips" doesn't work if a stock gaps up a hundred points in the pre- - you can't even deal with options in the extended hours, even if it were possible to deal with a gap up before it happened, which it would not be. Not to mention all the earnings days when the stock jumped up crazily exactly five minutes after the bell.

I don't mean to sound disparaging, but when it comes to either Baccarat or stocks, I talk only about that with which I have personal experience. I actually have written some calls on AAPL and some other stocks many years ago, and it worked, but I was just lucky that I didn't get sold out. I'd just think that if anyone is going to go on and on about something, that it would have to be something with which he has intense, or at least some, personal experience, and now you're telling me that you've never even written a covered call.

Unfortunately, at these internet forums, the loudest mouthed ones (and I am not talking about you, but some of the others), are the ones who talk the most about things with which they have ABSOLUTELY no personal experience.

And again, I completely encourage this covered call discussion and it is a worthwhile one, but when you've never even written any calls yourself how can you tell me about theories that indicate that they might work on the volatile stocks of today?

How about the Wizard himself?
Here's the post from the Wizard
https://wizardofvegas.com/forum/gamb...ts/#post625263
where he didn't know that the players deal the cards at a Big Baccarat table <<a dealer still deals the cards at the big table. I think it is in the James Bond movies where the player does it>> and confessed that <<I have played almost no baccarat at all.>>
Well anyway, as they say, like father, like son, so no wonder so many at WOV are so quick to spout theories about things with which they have zero personal experience. Theory will only get you so far.

There are more things in stocks and Baccarat, than are dreamt of in your philosophy, TablePlayer.

[tableplay]

Hussman funds doesn't seem to be doing too well:
Average annual total returns for periods ended 02/28/20
1 Year -10.54% that's MINUS ten percent
3 Year -5.01% MINUS five percent
5 Year -7.78% MINUS seven percent
10 Year -6.99% MINUS six percent
Since Inception (07/24/00) 0.11%

Did you know that they've almost never booked a profit, or do you just like to copy paste stuff without knowing what it is, such as you did with your gambling statistics analysis? (Sorry I couldn't help making that crack, forgive me.)

In any case, let's talk real world. Just one stock for example. I've owned NFLX continuously since 2010. The first year I owned it, it dropped something like 50%. I held on, actually bought more to average in. It's been a meteoric rise ever since. You're talking "theory" again about being able to use covered calls on volatile stocks. The real world, is that even on many average days I'd wake up to find that NFLX had gapped up ridiculously, before the market even opened, let alone on the days when splits were announced, and it would gap up even more ridiculously - all in the pre-market. So your "theory" of "continuous monitoring so that they can be rolled off on dips" doesn't work if a stock gaps up a hundred points in the pre- - you can't even deal with options in the extended hours, even if it were possible to deal with a gap up before it happened, which it would not be. Not to mention all the earnings days when the stock jumped up crazily exactly five minutes after the bell.

I don't mean to sound disparaging, but when it comes to either Baccarat or stocks, I talk only about that with which I have personal experience. I actually have written some calls on AAPL and some other stocks many years ago, and it worked, but I was just lucky that I didn't get sold out. I'd just think that if anyone is going to go on and on about something, that it would have to be something with which he has intense, or at least some, personal experience, and now you're telling me that you've never even written a covered call.

Unfortunately, at these internet forums, the loudest mouthed ones (and I am not talking about you, but some of the others), are the ones who talk the most about things with which they have ABSOLUTELY no personal experience.

And again, I completely encourage this covered call discussion and it is a worthwhile one, but when you've never even written any calls yourself how can you tell me about theories that indicate that they might work on the volatile stocks of today?

How about the Wizard himself?
Here's the post from the Wizard
https://wizardofvegas.com/forum/gamb...ts/#post625263
where he didn't know that the players deal the cards at a Big Baccarat table <<a dealer still deals the cards at the big table. I think it is in the James Bond movies where the player does it>> and confessed that <<I have played almost no baccarat at all.>>
Well anyway, as they say, like father, like son, so no wonder so many at WOV are so quick to spout theories about things with which they have zero personal experience. Theory will only get you so far.

There are more things in stocks and Baccarat, than are dreamt of in your philosophy, TablePlayer.

I already wrote in an earlier post that I have written covered calls on dividend paying stocks and it worked out well. I am older now and so I just buy preferred stocks below par and hold them which is a much more hands off approach. There are literally hundreds of hedge funds that employ the strategy of writing covered calls on volatile stocks. Generally these are written far out of the money. Yes if the stock goes through the strike then it will get called, but that's why they are written far out of the money so that the stock participates in the high degree of capital gain. Furthermore, a hedge fund manager isn't going to wait until option expiration so that an in the money stock gets called, these get rolled once the stock gets close to the strike. As for my statistics, I didn't cut and paste anything. I used the data that Half Smoke provided and used probability (the binomial pdf) to get the chance of the event occurring based on the data. I also calculated the variance and showed that you would need a 1000 standard deviation event to get ahead if a million hands are played on a game with a house edge like Baccarat. I'd love to see the analytics that went behind the garbage 7% calculation on WOV - maybe it was just for a small number of hands (even then 7% is not a very good chance of observing the results you post). If you actually believe that finishing ahead in 12 sessions out of 12 sessions of a low probability event wouldn't yield a probability of virtually zero that's your problem. You are raising something to the 12th power and that something is an event that only has a small chance of occurring. Finally, if you vary your bet sizes on a given number of hands and then you repeat this process over and over again, your higher bets will eventually converge on 49.3% winning bets weather they started out below this or above this as you claim. I don't see any of your proponents racing over to Atlantic City or Vegas to try this out (back when the casinos were open at least).

[MDawg]

What am I supposed to think? You copy/paste some stuff calculating an irrelevant STATIC statistic that doesn't take into account any variance? You copy/paste a link to a fund that has been LOSING money every year as an example of actuation of a successful covered call strategy? It would seem that you don't even read what you spew out very closely before launching it. I have a series 65 license but that doesn't mean a thing - what does is that at one point I was trading a half percent of all of the shares of GOOGL in one day, trading 1000 share blocks 5 times. What this means is that if there were 200 people in the world trading as I was trading on GOOGL, that would comprise ALL of the day's trading volume! How many people can say THAT?

So get out of here with your "theories" until you've done it. You've never sold a covered call on a volatile stock, which any decent stock worth owning for a decade or two now, is a volatile stock. I was not sure what you meant by "I am older now" - for some reason I assumed that you're a relatively young guy like me, but then I suppose now that I think about it, pinball hasn't been in fashion for a some time? In any case, if you are buying "preferred stocks below par and hold[ing] them" that sounds like someone who is near retirement if not past retirement?

My Dad has friends who are pushing eighty that trade, just to feel relevant. They have a lot of money, but they're also willing to risk a lot of it daily.

If we decide to buy bonds, or buy stocks that never move, we'll give you a call. I could put you in touch with a dozen of my friends who invest in the stock market, many of them with a ton more money than I have. If you tried to sell any one of them on the idea of selling a covered call on most of the stocks they own they would show you door. I just indulged the argument for a minute to see if you knew what you were talking about, and all you're doing, yet again, is presenting some theory that you've never even done yourself.

Just like I said with the gambling calculation, I won't be responding to that, and as far as your stock suggestions, no one here is going to be responding to any of that either - until you come up with something worth responding to. Thank you for sharing.

Hey dannyj, what do you think? Should we take this guy up on his idea to sell covered calls on our high flying stocks, or ignore him, until he comes up with something better? You tell me.

[MDawg]

Anything might happen by morning, but at the moment, we're looking not too very shabby.

[tableplay]

What am I supposed to think? You copy/paste some stuff calculating an irrelevant STATIC statistic that doesn't take into account any variance? You copy/paste a link to a fund that has been LOSING money every year as an example of actuation of a successful covered call strategy? It would seem that you don't even read what you spew out very closely before launching it. I have a series 65 license but that doesn't mean a thing - what does is that at one point I was trading a half percent of all of the shares of GOOGL in one day, trading 1000 share blocks 5 times. What this means is that if there were 200 people in the world trading as I was trading on GOOGL, that would comprise ALL of the day's trading volume! How many people can say THAT?

So get out of here with your "theories" until you've done it. You've never sold a covered call on a volatile stock, which any decent stock worth owning for a decade or two now, is a volatile stock. I was not sure what you meant by "I am older now" - for some reason I assumed that you're a relatively young guy like me, but then I suppose now that I think about it, pinball hasn't been in fashion for a some time? In any case, if you are buying "preferred stocks below par and hold[ing] them" that sounds like someone who is near retirement if not past retirement?

My Dad has friends who are pushing eighty that trade, just to feel relevant. They have a lot of money, but they're also willing to risk a lot of it daily.

If we decide to buy bonds, or buy stocks that never move, we'll give you a call. I could put you in touch with a dozen of my friends who invest in the stock market, many of them with a ton more money than I have. If you tried to sell any one of them on the idea of selling a covered call on most of the stocks they own they would show you door. I just indulged the argument for a minute to see if you knew what you were talking about, and all you're doing, yet again, is presenting some theory that you've never even done yourself.

Just like I said with the gambling calculation, I won't be responding to that, and as far as your stock suggestions, no one here is going to be responding to any of that either - until you come up with something worth responding to. Thank you for sharing.

Hey dannyj, what do you think? Should we take this guy up on his idea to sell covered calls on our high flying stocks, or ignore him, until he comes up with something better? You tell me.

If it weren't for government stimulus your portfolio would be decimated. The market crashed - the plunge protection team had to step in to buy things up, or right now, things would be in ashes. Amazing that you think a 1000 standard deviation event, which, by definition, does take into account variance is a believable outcome. You think EMR, which hasn't missed raising a dividend in decades year over year is a volatile stock and isn't worth owning ? Since Amazon is extremely volatile, you could collect a very healthy premium on call that is way out of the money. For example, in the screen shot below, you will see that Amazon calls that expire this Friday are 90 dollars out of the money and are bidding for over $100 an option.
I could care less what you or your friends or your dad's friends invest in. I'm not trying to sell anyone anything. I like collecting a fixed amount of income every month on instruments that are usually only sensitive to interest rate changes. Actually I love the illiquid preferred utilities like AILLL that I own. I bought some CNTHP (6.56% Connecticut Light and Power Company) at its redemption price ($51.44) on March 24th. During the dot bomb era, when I was probably close to your age, I did write covered calls against hyper-volatile stocks like Broadcom and then when the market settled down I stopped.

[MDawg]

Go back to pencil pushing you're on Ignore until you come up with something worth commenting on, that isn't based on theory. But I guess I won't know when you come up with anything other than theory anyway since I won't see it.


Was trying to get AMZN too far below 1900, wasn't really happening so I went TSLA instead, 468 to 472. Cha'ching! (Those are real dollars, not theoretical.)