Sold OHI short put 42 DTE, Nov 19, 28 strike 5.72% from underlying price, 15.52% AROI Assignment yield at strike is 9.57%, so I'd be happy with that.
Price is reacting to a zone where buyers have rallied from before. So I'm just at the Nov 2020 lows on strike.
I think about if I would've just bought OHI last Halloween and held it for 10% cash payout. I'd be right back to par today on capital value, but 10% more cash. UGH, I regret not being more aggressive last year.
If OHI doesn't stick the landing below 28, then I'm happy with 15% AROI also and an extra 5% Already have a bag of OHI in the Rollover IRA, but this is a taxable trade. I like the high dividend yield, but with the whole Evergrande bullshit and Debt ceiling FUD, I am reluctant to take outright long positions, as is probably every fund manager in the world.
Overall, I think it's an asymmetric trade to the upside where I'm being paid 5% extra AROI to bid.
On nov 4 I was looking at this put and it had prior lows of 0.10 back on Oct 5, which is when I should've just closed it, but at the time it was looking really bullish. Well I held it and put out a bid for 0.10. On the open at 9:32 nov 5 someone sold all 10 contracts to me for the 0.10. So that's a close of 80% max profit of $400 in 83% of days since the open position. About parity. Could've closed the damn thing 30 DAYS EARLIER!!!! and found another trade. Sheesh. Anyway, it was lucky buy back exit, because since then price has just collapsed and premiums are way back up.
claypuzzle
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@wuweiparis Thanks, I was actually thinking to buy this short put back. It's got 69% of time remaining today and marked at 0.125 with 75% of max profit potential, but I doubt I could get .125, more like paying .15. But I'm researching some other stuff also and don't have the time to search for another good trade. Plus I think the S@P is rallying, so it will be harder to find something ending a downtrend into demand. Probably everything is in a rally and I've gotta sell puts very close to ATM so I don't have any other good use for the cash right now. So I think I'll just keep the trade on and run it out to expiry for now unless a rally really causes delta to collapse.
I think REITs are just part of the passive ETF universe like everything else. Just watch the US10Y rate. Resistance at 2.0 and then again at 2.8 if it makes it that high. Equities could top out at those levels. Then Fed comes in and buys bonds, pushes rates lower to save the day. Same as the past 40 years.
wuweiparis
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@claypuzzle, thanks. Ok, hold OHI to 37 level in my case. I found other REITS in the same situation chart wise. Start going back uptrend. If I may, from your experience the coming raising interests rate issue could make REITS stocks to drop? I haven't found any evidence.
claypuzzle
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@wuweiparis, REITs are one of the only place to get yield on rent seeking cash that funds are borrowing at 0%. IMO they rally again, but yes, they are sensitive to US bond yield hikes. But realistically, how is the Fed going to let Treasury rates rise? They do that and the US govt defaults on the interest payments that are now 111% of the payments do today. So if rates rise, then the gov't defaults on bonds. If they default on bonds, then they can't pay Social Security or fund the US Military which is the largest navy in the world, and the only thing stopping Russia from invading, or China taking over Taiwan and Korea.
What they need to do is get the US bond interest lower than 100% of tax receipts. Then they can raise rates again. The only way to raise taxes is to increase tax % for Americans by making the numbers bigger. And that's inflation. They need toothpaste to be $20 a tube so they can charge Colgate more taxes and reduce the Treasury payments. But to create that kind of inflation they need to say inflation is 5% while the real inflation is 15% or they will cause a massive supply panic and hyper inflation. Which is exactly why J.Powell gets on TV every month and says inflation is only 5%. He wouldn't say it unless he needed to. He would just say nothing.
So until we see bond interest payments below tax receipts, they're not raising rates in any way that will crash anything. But once they do, because of runaway consumer inflation, or the US bond situation improving, watch out because money will exit all equities and gold and bonds into cash, and crash everything.
wuweiparis
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@claypuzzle, excellent, I agree on most of your assertions. Interest hike early next year, maybe :)
claypuzzle
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@wuweiparis, OHI to 26 is possible in this downtrend. Weekly and Daily momentum are absolutely DOWN. Lower lows and lower highs. Price is inside a weekly demand area, but momentum is still down and the behavior on the 4h or daily chart is still selling, not buying or overcoming the last wave of sellers. Sellers are still refreshing and defending their positions. That's why I thought playing a long bias as a short Put was better than outright buying OHI long. If OHI tests below 27, maybe I sell 25 or 24 puts for Dec. At 25 OHI is yielding closer to that 8% and looking better. Until then, getting 15% cash to bid for the stock under previous demand is a better deal.
wuweiparis
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@claypuzzle, actually, I sold, it has touched my stop loss. Lost on commission, I was tempted to buy back at 29.50 yesterday, I thought given the situation, it probably will make a test to see whereabout the lower low again. at the same time the chart shows a W...
wuweiparis
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@wuweiparis, One of my concentration right now is to seek high RENT (dividend). OHI is in fact not a perfect at this moment, but the price is fairly valued. I have few other including IVR and ORC, right risk HAHAHA
claypuzzle
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@wuweiparis, You, me, and every other market participant in the world is seeking rent. The Fed has created an impossible position by keeping the Treasury 10Y hurdle rate below 2. Stocks only need to yield 2% and they're amazing!!! It will continue until inflation creates enough tax receipts to make the bond interest payments monthly or China resumes Treasury buying which is unlikely. I'm looking at high yield ETN's and equity funds and bond funds. I bought some USA and PCI. Was going for NUSI but it never dropped into 26.70 where I wanted it. If I was Powell, I'd cause a market crash down 30% and I'd buy QQQX by the truckload. Just about the only thing that is low is Gold. So maybe the gold mining and royalty stocks can pay a dividend. GLDI and SLVO for the 1-2 year swing play for a rally.
wuweiparis
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@claypuzzle, lol, I am already in GOLD silver oil and bitcoin hahaha
Well I held it and put out a bid for 0.10.
On the open at 9:32 nov 5 someone sold all 10 contracts to me for the 0.10.
So that's a close of 80% max profit of $400 in 83% of days since the open position.
About parity.
Could've closed the damn thing 30 DAYS EARLIER!!!! and found another trade.
Sheesh.
Anyway, it was lucky buy back exit, because since then price has just collapsed and premiums are way back up.