Friday, December 27, 2013

Weekly recap: sell puts on BRKB and V

My schedule is going to get better for blogging. However, I am toying with the idea of weekly updates, instead of reporting each trade in near real time. This week I held my nose and sold puts on V Visa and BRKB Berkshire Hathway. Yes, the stock market is extended on the upside, but what is a person to do? Keep waiting? Hedge? I choose to hold my nose and buy a little.

Again for the new readers, selling puts means I am bullish on a stock. Selling out of the money puts is a low risk, low reward, high probability strategy. Again, do not be excited by the high percentage of winners. Those are the approximate odds of profit going in. The person buying the puts is hoping for a 5-to-1 or 10-to-1 payoff, with a small chance of getting paid. I am taking the opposite side, selling the put with a 80% to 90% of winning, but getting paid very little for taking that side of the trade.
Net long SPY
Net short APC

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