I sold the Jan 2017 $20 put options earlier at $182 per contract.
I keep reducing my cost basis on my MU stock with the put option sales.
By the time I sell the stock, I may end up with a zero cost basis.
We cannot say for sure that those put were sold by MM's.
MM's would be put sellers at stock price lows like we have now.
They are also playing over multiple expiration's and not just the current month.
It is like this. If you make a million $ and lose $100,000 who cares. Your still $900,000 ahead.
If you understood how the MM's work the call and put options for their benefit it would not be a mystery.
You want to buy calls they make the market. You want to sell puts they make the market.
They do not lose when 90% of call and put option buyers lose money. The MM's make the market and can move it to maximize loss to the option buyers.
I am a put option trader and sell put options all the time and make really good money.
You have to know when to sell and when to close out the trade.
Your statements may just be that; chatter or speculation. Your statements may have some truth in them, until we can determine what is fact and what is fiction.
The other item left out of the equation is the future demand growth.
5/15/2015 11:08 am
Looks like the MM's have totally devalued the call options set to expire at close today.
Looks like they are also working on next week call options also.
They will flip the game and start selling put options before the stock price is run back up.
Don't you think it is strange that analysts downgraded MU on no news?
That is how the game is played.
I sell put options on various stocks that meet certain requirements. I look for stocks that have a high market cap and have pulled back in price to a 52 week low. ( I use a stock screener from Schwab for this). I prefer stocks that pay a dividend. I research the option pain price and prefer to sell put options on stocks trading under their OP price. I stay away from stocks that have High PE's (like TSLA) and very low priced stocks. I like stocks with free cash flow and moderate debt. I sell put options as far out as I can (Jan 2016) and at a price lower then the current price. Time decay of price and either a stagnate or rising price is my friend. Stocks with high institutional owners are a plus. Never sell puts naked! Always keep cash in your account to cover your positions.
Most of the time I will hold a put trade until I have captured at least 70% of the premium paid by the buyer.
1. Each of the above is a dividend paying stock which helps to limit downside.
2. Each of the stocks has had a pullback in price.
3. Each of the stocks are below the maximum option pain price.
4. Each of the stocks if put to you or me as the seller are stock that I would want to own at the above prices less the premium paid.
5. And each of the stocks would be paying a higher yield then they do now.
6. The premium paid to the seller decays with time allowing the seller to buy the put options back at a lower price.
7. Call and put option BUYERS lose their money 90% of the time.
5/13/2015 10:59 am
I believe that today's price run up is just a fake out before Friday's close.
If you check out June's options the call and put contracts are greatly diminished.
A close this Friday just under $27 still looks like what will happen.
90% of CALL and PUT options buyers lose money. I would never recommend buy either.
Conservative trades are safe trades. At a $1.95 premium per share the return is 1.95/18.05= 10.8033% for 632 days. However; my bet is that MU will rally in price and the option premium will drop and at a point much sooner can be bought back for pennies and will produce a higher rate of return. As additional options are put in place with longer expiration dates, most older options begin to degrade in value faster. XQ
5/12/2015 9:55 am
It is looking like $26.96 is where MU is headed for a Friday close.
I have placed a Sell to Open the Jan 2017 $20 put options at $195 per contract 5days ago.
At that price you would pay $18.05 per share if the stock were put to you.
The trade has plenty of downside protection built in.
Just so you know, i am a put option trader. I wait for a target stock to have an event (sell off) and then I will sell put options.
A long time ago I poster my trading prerequisites for selling puts. When I get time I will try to find it and bump it up. XQ
In one respect MM's are like the small investor. They do not know how the earnings report will play out. Once that is out they will be back to destroy the small option players who buy calls and puts. XQ