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Author: TheLudicFallacy Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41594  
Subject: Re: request for SBUX graph Date: 1/10/2008 1:07 PM
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Denny,
Thanks, I agree with your conclusion in your review. I would say that Taleb's writings were of benefit to me personally because they helped me with perspective. I don't think I could ever adopt his option trading approach though. I rarely trade options anymore, which has proved to increase my success rate with them. Did a synthetic long on NFLX when it was down @ $17 and sold at $27 so I could use the money for another investment. I don't look for them but if the trade is already there on one of the companies I am following I might add it. I like to sell a put and buy a long position if the situation is right (which is rare). Gives me a short obligation with an expiration date that is not to far off in exchange for a long position in the stock with no expiration date. Out of the 5 trades I did last year, two lost. But the profit I made on the 3 winners well exceeded the losers so I guess I did ok. At this time I would have a hard time justifying just buying a leap. If I was to buy a leap that was 10% OTM for a premium that represented 20% of the current stock price I would have to make 30% return just to break even and lose 100% if the stock did not advance more than 10% prior to the expiration date. Plus there is that nasty expiration date thing to deal with. Were I to use the same proceeds to just purchase the underlying the company would have to go under for me to lose 100% and all the advancement would be profit regardless of the amount. And no expiration date. That is the price you pay for leverage I guess. I suppose you could do some ITM stuff but most of the premiums I see are prohibitive.
Thanks again for the feed back, I will continue to follow your BMW method on the side. Still working on my HG stuff and trying to understand valuation and what not.
Mike
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