It’s that time of the month again.
No, I’m not being visited by Aunt Flo, as the euphamism would go, if indeed it were germane.
No, it’s the end of yet another options cycle in just a few short days. Time to see if there are any crumbs left out there just waiting to be taken. And you do have to act quickly, because before you know it those crumbs get smaller and smaller, before they disappear entirely.
I suppose that since I now try to find as many weekly options opportunities as possible, that third Friday of each month has lost a bit of its significance. Now its more or less like any other Friday.
I’ve never had a visit from Aunt Flo, but I can’t imagine that her dropping by on a weekly basis would be very good.
In a way, I guess that’s as sad as when you know that Aunt Flo won’t be visiitng anymore. Fortunately, that single long hair on my chin that popped up after Flo disappeared is obscured by my full beard.
By the same token, most people I know no longer deal in euphamisms, anyway. They get right down to brass tacks, no sense beating around the bloody bush.
Hmm, now I’m not certain if the preceding itself was a euphamism for something, but no matter, I just like using uniquely British adjectives.
Since options premiums keep me afloat, I have a need to trade, but times like these offer the biggest dilemmas. Those times are when I have shares that are at a paper loss and haven’t had option premiums written on them for the most recent cycle, whether weekly or monthly.
Holding on to so many positions that are significantly below their purchase prices, it’s hard to justify trying to optimize options premiums by writng near the money contracts when their assignment would result in meaningful capital losses.
Although I always check my spreadsheets to see how much in accumulated premiums each position has captured, I still have a reluctance to take the loss by selling a near the money option, even when it is mitigated or even fully offset by those premiums.
I’m not beyond rationalizing my actions, though.
But when you see the clock ticking away on the one hand, you also see the possibility of that silver lining in depressed stock prices, or at the very least the lack of support in silver prices, as I sometimes own unhedged shares of an UltraShort Silver ETF.
Will there be some good news coming out of the European Union sending our markets for a nice climb? I sure wouldn’t want to miss out on recouping some of those paper losses, but those crumbs, those 0.5% options premiums, do I really want to leave those on the table?
The answer to those questions are “who knows” and “not really”
The full answer to the latter question is actually “not really, but I don’t want to feel like a schmuck”.
But you do have to eat, you can’t really let pride get in the way. As small as they may be, those crumbs can add up.
And so, in a measured reaction to a meandering day, I often take the opportunity to scrape some last remaining crumbs, by seling options with just a day or two left until their expiration.
I want those premiums, even if their just a matter of pennies.
The risk you take when taking crumbs, trying to milk every last penny out of an under-performing position is that there will be a wild, completely unexpected explosion to the upside in the hours that remain on the contract.
Opportunities potentially lost. That ends up being the performance metric, but since I don’t harbor regrets, I also rarely learn lessons. You can fool me over and over again as long as those premiums add up and losses have some strategic value in reducing tax liability.
When I did add the crumbs up it was worth the risk, given the reward and the need to be able to feed Laszlo the Dog.
It’s either crumbs or go back to work, not to mention the shriveled carcass of a wiener dog.
Hmmm. Weiner dog.
If anyone reading this is old enough to remember Bob Denver’s character, Maynard G. Krebs, you would know my reaction to the very thought of “work”.
So wherever and whenever you can get those crumbs, get them.
Tomorrow? Who knows what tomorrow brings. New rumors, maybe some actual news, maybe not.
No matter. The week always ends in a few days and a whole new world of opportunities comes along.
And with each week you can hope for the whole loaf and gladly take the crumbs, too.
Click here for reuse options!
Copyright 2012 TheAcsMan