Comments on: Selling puts isn’t “money for nothing” http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/ Helping you invest and prosper Sat, 20 Mar 2010 15:59:30 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Dave http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-197427 Dave Sun, 09 Aug 2009 19:56:27 +0000 http://www.canadiancapitalist.com/?p=1872#comment-197427 Who is still buying Derek Foster's books? I guess there is truly a sucker born every min. To be fair I think Derek's first idea is still his best - Come up with some corny varation of a sound investment strategy, write a book about it, give the book a simple yet cleaver title and then watch the "income" roll in. When the strategy fails - reapeat the process. Why do I have a feeling Derek has his money in a well diversified portfolio, or, better yet - GICs. Can't wait for his next book - selling bridges in brookland. Who is still buying Derek Foster’s books? I guess there is truly a sucker born every min.

To be fair I think Derek’s first idea is still his best – Come up with some corny varation of a sound investment strategy, write a book about it, give the book a simple yet cleaver title and then watch the “income” roll in. When the strategy fails – reapeat the process.

Why do I have a feeling Derek has his money in a well diversified portfolio, or, better yet – GICs.

Can’t wait for his next book – selling bridges in brookland.

]]> By: stardawg http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-194600 stardawg Tue, 30 Jun 2009 08:26:04 +0000 http://www.canadiancapitalist.com/?p=1872#comment-194600 Hi Guys, Great board. Just wanted to say I think selling put options are fairly straight forward and not as 'risky' and foolish as the tone of this article and most the comments speak too. If one wants to buy the stock anyway and it's part of porfolio trading strategy, it is less risky to follow the autors suggestion, than simply buying the stock outright. A nightmare can come with any buy and hold strategy, leveraging Reits or simply doing nothing. The main 'catch' is if one cannot write a cheque to cover their put writing obligations and must buy the offsetting call option instead to clear the trade, is where the losses pile up quickly and how options get a bad name. Option losses are quickly made into coffee time banter and twisted into fear mongering. For me, ensuring you want the stock anyway, being able to write a cheque if you get called out as opposed to buying the call options to 'get out', and trading a stock that has both liquidity in its stock and underlying options chain is really a no brainer. Selling puts is not a get rich quick scheme, as you must be able to write the cheque if called out..... which presumes you have the cash to begin with :-) Hi Guys,

Great board. Just wanted to say I think selling put options are fairly straight forward and not as ‘risky’ and foolish as the tone of this article and most the comments speak too. If one wants to buy the stock anyway and it’s part of porfolio trading strategy, it is less risky to follow the autors suggestion, than simply buying the stock outright. A nightmare can come with any buy and hold strategy, leveraging Reits or simply doing nothing. The main ‘catch’ is if one cannot write a cheque to cover their put writing obligations and must buy the offsetting call option instead to clear the trade, is where the losses pile up quickly and how options get a bad name. Option losses are quickly made into coffee time banter and twisted into fear mongering. For me, ensuring you want the stock anyway, being able to write a cheque if you get called out as opposed to buying the call options to ‘get out’, and trading a stock that has both liquidity in its stock and underlying options chain is really a no brainer. Selling puts is not a get rich quick scheme, as you must be able to write the cheque if called out….. which presumes you have the cash to begin with :-)

]]> By: Selling Puts is NOT Free Money | OneMint http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-187395 Selling Puts is NOT Free Money | OneMint Tue, 31 Mar 2009 08:02:40 +0000 http://www.canadiancapitalist.com/?p=1872#comment-187395 [...] as collecting free money at quite a few places online. I first came across this concept when the Canadian Capitalist wrote about it — showing how wrong it [...] [...] as collecting free money at quite a few places online. I first came across this concept when the Canadian Capitalist wrote about it — showing how wrong it [...]

]]> By: Manshu http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-186957 Manshu Sat, 28 Mar 2009 02:50:02 +0000 http://www.canadiancapitalist.com/?p=1872#comment-186957 What is being promoted as money for nothing is really quite a dangerous game. I hope this book doesn't get too popular or a lot of people will lose a lot of money. What is being promoted as money for nothing is really quite a dangerous game. I hope this book doesn’t get too popular or a lot of people will lose a lot of money.

]]> By: DIY Haircut Pictures, Book Progress and More | Personal Finance Blog by Money Ning http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-186184 DIY Haircut Pictures, Book Progress and More | Personal Finance Blog by Money Ning Sun, 22 Mar 2009 13:01:20 +0000 http://www.canadiancapitalist.com/?p=1872#comment-186184 [...] Capitalist wrote an article that talks a little about options investing (in particular, about selling puts).  Definitely check it out if you want to learn about options [...] [...] Capitalist wrote an article that talks a little about options investing (in particular, about selling puts).  Definitely check it out if you want to learn about options [...]

]]> By: Another QuickTax Giveaway and Weekend Links | Income Trust | Personal Finance | Real Estate SEO http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-185978 Another QuickTax Giveaway and Weekend Links | Income Trust | Personal Finance | Real Estate SEO Sat, 21 Mar 2009 00:50:49 +0000 http://www.canadiancapitalist.com/?p=1872#comment-185978 [...] Canadian Capitalist has a great explanation about how selling puts isn’t “money for nothing”. [...] [...] Canadian Capitalist has a great explanation about how selling puts isn’t “money for nothing”. [...]

]]> By: kranitz http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-185971 kranitz Fri, 20 Mar 2009 23:38:21 +0000 http://www.canadiancapitalist.com/?p=1872#comment-185971 It's only one of a zillion half baked strategies out there with a zillion what ifs and you happened to come up with this one doomsday scenario. Even bonds are risky my friend. Do your homework before you invest in anything. It’s only one of a zillion half baked strategies out there with a zillion what ifs and you happened to come up with this one doomsday scenario. Even bonds are risky my friend. Do your homework before you invest in anything.

]]> By: gene http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-185931 gene Fri, 20 Mar 2009 17:50:01 +0000 http://www.canadiancapitalist.com/?p=1872#comment-185931 This is a really interesting discussion. I hadn't really considered how selling puts limits the upside if the stock (which you supposedly wouldn't mind owning) goes up in price. Some books I've read go as far as saying don't even bother with limit orders. If something looks good, don't worry about a nickel in spread, or wait for a slightly better price. Those books argue you might never actually acquire a position, as you watch the stock double or triple. Admittedly, these are pretty bullish books. This is a really interesting discussion. I hadn’t really considered how selling puts limits the upside if the stock (which you supposedly wouldn’t mind owning) goes up in price.

Some books I’ve read go as far as saying don’t even bother with limit orders. If something looks good, don’t worry about a nickel in spread, or wait for a slightly better price. Those books argue you might never actually acquire a position, as you watch the stock double or triple. Admittedly, these are pretty bullish books.

]]> By: Mark Wolfinger http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-185929 Mark Wolfinger Fri, 20 Mar 2009 17:27:39 +0000 http://www.canadiancapitalist.com/?p=1872#comment-185929 Selling puts is an okay strategy - but ONLY when your intention is to accumulate shares if the stock moves lower. Bullish investors can find much less risky option strategies (sell put spread, for example) if they merely want to earn a profit if the stock does not decline. Mark The Rookie's Guide to Options Selling puts is an okay strategy – but ONLY when your intention is to accumulate shares if the stock moves lower.

Bullish investors can find much less risky option strategies (sell put spread, for example) if they merely want to earn a profit if the stock does not decline.

Mark
The Rookie’s Guide to Options

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/selling-puts-isn%e2%80%99t-money-for-nothing/#comment-185909 Canadian Capitalist Fri, 20 Mar 2009 14:17:59 +0000 http://www.canadiancapitalist.com/?p=1872#comment-185909 Archanfel: There are two alternatives that are discussed to selling puts: (1) Buying a stock outright. (2) Wanting to buy a stock at a lesser price. Derek does have a bit of protection with (1) on the downside but no upside at all. Derek likes to say that (2) is "money for nothing". It isn't. You can change your mind about your intention to buy but Derek can't. He has already sold the put. Frankly, I don't care what Derek does with his money; selling this idea to others is irresponsible, IMO. Archanfel: There are two alternatives that are discussed to selling puts: (1) Buying a stock outright. (2) Wanting to buy a stock at a lesser price. Derek does have a bit of protection with (1) on the downside but no upside at all. Derek likes to say that (2) is “money for nothing”. It isn’t. You can change your mind about your intention to buy but Derek can’t. He has already sold the put. Frankly, I don’t care what Derek does with his money; selling this idea to others is irresponsible, IMO.

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