AAII New England Chapter

Why the Past 10 Years of American Life Have Been Uniquely Stupid by Jonathan Haidt

Interesting

Tesla still the top EV brand in the U.S., but its lead is shrinking Despite Tesla sitting atop the EV leaderboard in the U.S., new data shows competitors are chipping away at its lead.

I would like to welcome Sally Dogon to our group. Unlike most people here, I have known Sally personally for 20 years. We were in a face to face investment group together.

Perfect for that studio apartment with GFI.

Kitchen Retro. Combo sink/stove/fridge.

All successful people are good at this.

I am the first one to admit, I am a beginner in options. I have however come up with some ideas that I would like to share. Note, that my strategy is different than the usual one. It is to own the stock, and make 4% plus dividends, plus appreciation on it per year by selling monthly OTM calls.
I have come up with some rules for covered calls.
1. You should have a plan about what you will do, no matter what the stock does before you write the call. You should not be thinking what do I do now, because the stock did this.
2. In general being assigned for this return approach is a good thing. I just sold a CC on Schwab. If I get assigned, it will mean I made about 7% in a month. That is not a bad thing.
3. If I am going to roll, I have two thoughts about it.
a. The stock appreciation plus the credit > the debit
b. The debit should be = to the credit, or maybe even a little > the credit. The reason is that when the stock does not go ITM, you will make a credit, so will come out on top over all. Say it is does not go ITM 4 times, and one time the debit is a little greater than the credit. You will be way ahead.

I realize a and b contradict each other, so that is unfortunately a judgement call, but I prefer a.

This is a challenging post for me, because I am only now learning this. It is possible to use volatility in both options and stock trading.
Vix is the volatility index. When Vix is very high, the market tends to be oversold, so it is a good buy signal, although it should be followed up with a stop loss order in case Vix goes still higher.
Vix is also useful as a trend indicator. If vix is trending down, the market is trending up, and vice versa.

Vix actually is not a good predictor of future volatility. It usually predicts higher volatility than happens. At times selling OTP puts is a good strategy when the vix is high.

Another strategy that has worked in backtest is to continually buy out of the money one month vix calls. Buying calls that exceed the price of vix futures by 3 strike prices works best. This works because when severe market crashes, vix can spike up by more than 200%. That will make up for all the time that Vix calls expire worthless.

In no other security can you make money by continually buying calls on it.

A final way that vix options can protect you is by using them as a hedge. It is the same method mentioned above. You only need to buy options on 10 - 15% of the notional value of your portfolio to protect against crashes. In times of extreme uncertainty, the vix will spike so much that you will make back the money lost on your portfolio. Even if the strategy above ends up not working in the future, this will protect you against disaster.
I read about this in the book Options for Volatile Markets. I don’t feel I understand it enough to use, so I would recommend further study before using it.

If anyone has used this strategy, I would love to hear your opinions.

I primarily use fundamental analysis because when I started investing technical analysis was considered like astrology. Also, for me, fundamental analysis is more intuitive to me. Increasing earnings is more intuitive than a cup and handle.
That being said, here are some reasons that technical analysis has some utility.
Fundamental analysis tells you about the past for the most part. Financial statements are backwards looking. Technical analysis tells you how people feel now. It reflects the emotions in the market.
Another reason it works is that it can be a self fulfilling prophesy. If enough people believe that a stock will jump when it hits its resistance point, it will jump, since they will buy based on that.
Also, before the financial statements come out, the employees, the customers, and the suppliers know how a company is doing. The institutions can figure things out from that, and that will show up in the charts.
There are some examples of technical analysis really outperforming fundamental analysis. There was a company called Enron which was committing massive fraud, but the financial statements did not show it. Somehow the market found out, and the price was a falling knife, and the company soon folded.

This is just an opinion, but I think technical analysis works best when only a few indicators are used. 4 at the most. More than that, and I think the indicators will contradict each other, and your brain will be in a fog.

I don’t think it should be used in a vacuum, but should be combined with fundamental analysis, and also and understanding of the business.

For me it is useful as a check. If the fundamentals are sound, and the product seems good, but the stock is doing badly, maybe I missed something, or maybe something is going on, that has not made the financial statements or news yet, but that the market knows about.