Short Puts Screening

Selling high-priced near-term OOM Puts, possible short OOM Calls

RAX:

Lower bound 30 (aggr: 35), upper bound 60 (aggr: 55)

Earnings call: May 2

RVBD:

Lower bound 30 (35 ok), upper bound 55

Earnings call: Apr 25

WTW:

Recently gapped up; pass

OPEN:

Lower bound 80 (aggr: 90), upper bound 120

Earnings call: May 4

AMZN:

Lower bound 160

Earnings call Apr-end, Analyst downgrade

Strategy: Short Expensive Near-term OOM Puts

Next plan: sell near-term Puts that are way out of the money, yet expensive.

Filter for finding candidate Puts:

1. Underlying is on a long-term uptrend (or at least steady). Wouldn't mind owning underlying at a fundamental level.
2. Underlying price, between 20-80.
3. Near-term put, 1-2 months out and comfortably out of the money, priced > $1.00
4. Ideally strike price is below significant support level.
5. Check for announcement dates of financial results.
6. Reduce collateral requirements by buying Puts that are further OOM (buy extra).

Results: Long LEAP Calls to anticipate Market turnaround

The experiment to go long on LEAP Calls for good stocks in anticipation of an overall market turnaround, has failed.

Bought 1-yr and 2-yr LEAP Calls at the beginning of 2010, assuming that the overall market was bound to turn around. Only one did really well (SLE), the others (BSX, INTC, MOT, YHOO, C) all lost money.