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New Cash into the PP with a VP Twist
Posted: Wed May 15, 2013 10:02 am
by Bean
So I have been using a system of each month buying all my assets back up to 25% and anything over 25% just letting them be. However, I have part of me wants to go back to my speculative roots and start selling puts on the assets I want to buy. Has anybody tried this?
Summary of what I intend to do.
1) Add to my cash position each month
2) Identify Asset Classes in my PP below 25%
3) Sell 1-2% ~90-120 Day OTM Cash Secured Puts for the appropriate amount to get me back around 25%
4) Rinse and Repeat for my accumulation phase.
Part of me thinks this is just a "fancy" limit order for what I am doing already and pays me for theta while I wait.
Re: New Cash into the PP with a VP Twist
Posted: Wed May 15, 2013 2:46 pm
by AdamA
Bean wrote:
So I have been using a system of each month buying all my assets back up to 25% and anything over 25% just letting them be. However, I have part of me wants to go back to my speculative roots and start selling puts on the assets I want to buy. Has anybody tried this?
Summary of what I intend to do.
1) Add to my cash position each month
2) Identify Asset Classes in my PP below 25%
3) Sell 1-2% ~90-120 Day OTM Cash Secured Puts for the appropriate amount to get me back around 25%
4) Rinse and Repeat for my accumulation phase.
Part of me thinks this is just a "fancy" limit order for what I am doing already and pays me for theta while I wait.
It all depend on what happens in that 90-120 days.
Re: New Cash into the PP with a VP Twist
Posted: Wed May 15, 2013 4:22 pm
by Bean
AdamA wrote:
It all depend on what happens in that 90-120 days.
My justification to squeeze the theta premium out of this is I was going to buy the underlying asset anyways with a limit order. The risk is I could lose out on upside, but I hate chasing a price up with constantly adjusted limit orders, it makes me feel like I am getting mugged.
Re: New Cash into the PP with a VP Twist
Posted: Wed May 15, 2013 4:29 pm
by Xan
Am I being hopelessly naive when I trade my PP securities with market orders?
Re: New Cash into the PP with a VP Twist
Posted: Wed May 15, 2013 5:41 pm
by Bean
Xan wrote:
Am I being hopelessly naive when I trade my PP securities with market orders?
I always use them, even when am ok with the market price, I just set the limit to slightly higher than the current ask.
Using market orders put you at the complete whim of the market makers or a violent market move. Why do that when you can limit your risk at no additional cost?