Replies to post #43619 on A.I.M. Users Bulletin Board (AIMUSERS)

[AIMStudent]

Thanks Tom and SFSecurity.

While I think OTM put selling can be a useful entry strategy, the fear is chasing the stock higher and never getting assigned. When the goal is to get into a position with the trepidation that if things go south I would quickly deplete the cash position.

Assuming a new position with an initial commitment of $20K (per SFSecurity's comment) and 67% allocation of stock/cash, it would mean only being able to get into stocks priced at $134 or lower on a one contract basis. If limited to 100 shares initially (per a single contract), then it potentially skews the stock/cash percentage further to the cash side. And if the stock continues to grind higher it may be some time until I actually get assigned and take possession.

Also, as stocks grind higher the low IV on OTM puts make the income from the premium negligible, especially on a single contract basis. I suppose I could write ITM, but still against lower premiums, the 100 share per contract limitation, and a market grinding higher.

Perhaps just entering and using the 10% Buy SAFE/0% Sell SAFE with either the +5% to Buy SAFE on each subsequent buy or the Half Way to the Wall strategy makes the most sense here. Was just wondering if there are other things I should consider.

Thanks again for your input.