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RE: TIB: Today I Bought (and Sold) - An Investors Journal #448 - Rare Earths, Semiconductors, Marijuana, Healthcare, payments, Gold Mining, South Africa, Interest Rates, Corn, Bitcoin
I still think volatility is cheap and needs to be reset to a higher base but still unsure how to play it which is why I remain on the sidelines. Puts seem to be the first to reprice making them expensive quickly.
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I am still on a steep learning curve on how to get best results trading short. I am certainly noticing that winning put trades do less well than winning call trades. Maybe it is time to go back to basics and focus on implied volatility data at trade set up time - especially time decay. The biggest challenge I find is choosing time frames. In The Second Leg Down, Hari Krishnaian favours using weekly options. There may be merit in that approach. I am currently going out two months at a time - do not have time to do weekly. Maybe the spread model is to sell the closer in puts and buy the further out puts.
In the portfolio, that I cannot hold short positions what is working quite well is buying Inverse ETF's (like SQQQ) and then writing covered calls against that - say 10 or even 20% out-the-money. By their nature, those are short term in nature - so one is actively wanting those sold calls to be assigned
Ultimately what is working best right now is call options on Gold and Silver ETFs (GDX and SLV are what I am holding)