As far as getting back in to investing, viewing the CBOE archived footage has definitely excited me and opened up some new avenues to pursue further. But I had no shortage of those to begin with, which brings me to my conundrum. After years of a steady game plan of selling covered calls and just being long stock, I went to 50% cash before the financial crisis in anticipation or a recession and possibly wanting to have a large cash deposit on a condo, then the financial crisis hit and I ended up going to an all trading account and 90% cash at some point. I'm ready to devise a portfolio for the purpose of income generation but haven't come up with a good construction yet. I think I'm going to stick with what I know best which is covered calls on dividend paying stocks and cash secured puts to produce the income, then slowly add some other types of plays like spreads and flat out speculations as I get comfortable.
I'm still interested in furthering my options education arsenal and for me that means learning the relationships of delta, gamma, theta, and vega to the point where they feel as comfortable as a covered call is to me now. I want to spend some more time with the futures as well, but that is where I start getting overwhelmed. I feel it's important to stick to a few core vehicles or strategies just to keep things simple. There are so many things that can be watched and I don't have the time or interest to do them all. Stocks, ETFs, bonds, options, financial futures, commodity futures, fundamental analysis, technical analysis, gut instinct, a million different indicators, unlimited sources of trade ideas (TV, print, websites, blogs), unlimited trading tools. I mean where does it end? How much is too much? So for simplicity and to get me back in the game I think I'll scout out a few long-term covered calls that I think are attractive income generators, then as time permits continue to try and educate myself in other areas and then add things as I become comfortable with them.
My current plan is to spend 5 hours a day M-F on CFA prep and 3 hours on investments education/portfolio management. As far as the daily sources to follow for idea generation I like Fast Money, Barron's, Wall Street Journal, Interactive Broker's Options Intelligence Report, CBOE video news content, and Yahoo Finance. I had planned to add ONN.tv to this list. What are some of the staples for idea generation that you guys are currently using and what do you like about them? I don't want to limit myself to the same old sources but there isn't an unlimited amount of time to pursue everything either. Let me know what you guys think I should check out. For me this is where the blog has been helpful. Both of you guys have turned me on to things I hadn't heard about or just hadn't come across yet on my own. I'm definitely excited to be where I'm at right now. My anxiety and stress levels are almost non-existent and that is a welcomed change from the last few years. I'll keep you posted of my education findings and and portfolio construction. Let me know what kind of ideas you guys have for me. Thanks.
Well first let me say, Welcome back. It sounds like you have laid a pretty solid game plan down between now and June.
ReplyDeleteI am like you have have kind of stuck to the same strategies that have made me money. But as I dive deeper into other ways to make money with options, I see there is a whole new world of opportunities. I guess that I always new this and this is why I was drawn to options because you can more oftens than not make adjustments to you trades or have a contigency plan. And you can make money in any scenario imagined. Where compared with stocks you have to pick a direction, either the stock goes up and you make money or it goes down and you lose money (unles you are short of course and it is the reverse).
I plan to spend the next 6 months educating myself further with the greeks, the option pricing model, and other possible strategies to employ in my account. In this market I am more inclined to sell puts, but would like to reserve 10-20% of my portfolio to try other stratigies as well.
I think as a trader you learn to do something very well and with a high success rate before you add a new tool/strategy to your game book. As I read and we all know, sometimes you try to be a jack of all trades and master of none and it doesn't for the most part turn out to be very profitable. You really have to come up with a trading SYSTEM, and I emphasize system because in my opinion you need to be consistent on you approach to the market. Otherwise it will be immpossible to analyze your trading results if you are changing your paramerter every trade you make.
For example, I have been succesful in options by blending a fundemental approach with some basic technicals. I am not technically driven, but there are some basice indicators that I like to look at. But don't get me wrong if the fundementals are strong and the chart is week, in my system the fundemntals win in most cases.
As far as the tools I use: IBD, Onn.tv, Investingwithoptions.com, Schaeffers Research, Livevol blog,T3 live website and blog, TraderFeed blog, Daily Options Report Blog, Free Stock Charts, TradeMonster.com. Yahoo and Google Finance.
These are the main things that I look at on a daily basis. I am to the point though where I will look at other sources but and I may bookmark them but I am trying to hone in on what I think is most important. Like you said there is not unlimited time.
Hope that helps. Look foward to much callaberation.
Hey Jason,
ReplyDeleteSounds like a solid guide plan with a lot of flexibility. I'm still looking for an opportune time in the next 5 years to move to Chicago too. I'm really looking outside CA now for investment opportunities especially real estate. Both Chi-town & Texas are at the top of my list.
As far as tools and/or resources go I'd probably recommend freestockcharts.com as a free charting software, let me know if you need any good technical analysis books especially candlestick books. I just got this great one about candlesticks and pivot points. Ummm... as far as options go as you've witnessed today Dom would have better suggestions.
Hope that helps. We should def all get together right after the new year and touch base.