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Motley Fool Pro / Pro: Catch-Up Trades


Subject:  Re: buy/write to catch up? Date:  1/30/2014  12:44 PM
Author:  SilverHawk27 Number:  552 of 830

Hi Frank,

Connie made some very good points.

My strategy is that I purchase some shares to get some skin in the game. Often I have seen the stock take off, and had I never purchased the partial allocation, I would have never gotten shares. This also limits the risk if the stock should drop. Recently I purchased a partial position in PRXL (slightly above the recommended limit), and have been trying to get the remainder of my shares via puts. The way PRXL is running, it may never happen, but then I have the income from the puts, and I have a partial allocation.

As for writing in the money calls, these are really the same (almost) as writing puts. I would generally write puts about 3 months out to get the remainder of my allocation. This method does not always work because of the individual stock price may make the allocation too large. ORLY may be one such stock depending on the size of your portfolio.

A long time ago I was having problems getting my broker to allow writing puts in my IRA, so I was doing in the money calls. But I prefer to write puts.

Hope this helps,
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