So, it was buy stock and sell call for the stock you want to sell. Sell high (you think) and buy it low (or even by $0) is what I am looking for. To be more concentrate, it is wise not to follow so many stocks, but take action on them when needed. My dad has a phrase which is quite true, not every is good for stock. For some uncles and aunties, stock trading is everyday’s activities. For me, as I am lack of sleep for months, I only do when necessary; esp. market opens when everyone is sleeping in my home. When necessary… I mean when they move.

“Sell call when you want to sell the stock”, because you can sell the stock at the price you want, plus the time value, plus the less service charge when call option calls the stock (because normally brokerage firm takes it as option settlement instead of requested stock selling, hence no service charge)… The same thing can apply to put.

“Sell put when you want to buy the stock”, because you can buy the stock you want, minus the time value. Or in many cases, you don’t even need to buy the stock~! However, I strongly encourage you do that to the stock you think worth holding, else it more or less still can burn your back yard. I call it iPut (sound effect please… :P), though it was significant on some of my holdings, it is interesting to see it on Apple (AAPL).

Since mid Sept 09, AAPL hovers about the $180 level and does not land, and recently it goes to record high with 20% over the level. Before the news of iPad launch date release, there was a point (last week) which people worry iPad would suffer delay, hence the stock was below $200. The Mar $185 put was more than $1 (now $0.09). Therefore I continued to sell another Put for APPLE, which I called iPut… I did it over and over on APPLE, from it announced iPad and then it was criticized; then news about its 4:1 split… To contrast with Call option, put is best sell when the stock falls, and as people expect it will fall further and harder; the time of which would sometime become irrational. Furthermore, if stock like APPLE really falls to $185, it is a bad idea to own it.

There you go for other stocks as well, whenever you want to buy a stock at a certain price, you can simple sell the put for it. I did it for something like PBR and ADBE along with the complicated combinations for my solar spaghetti. Same thing, if you want to join Warren Buffet (Berkshire Hathaway Inc B $82.47), you can sell the Put of Apr $80 now, which is $1.4, if it is not falling under $78.6, you still earn something by doing so. Of course, if it really falls lower than then you have already saved ($82.47 - $78.6) $3.87 or 5% by not buying the stock fresh from the market.

With all the combinations and extension from it, things can go more complicated, for the Put which you sell got more expensive than the time you sell it, there is always another month to cover, because time value is always positive, next month’s Put is always more expensive than the this month’s Put. Therefore, as long as the underlying could meet your strike price one day, you still can always take your time value month after month. Of course, be careful not to go too wild or your broker will liquidate your short options.

Finally, this year, I have opened another trading account in InteractiveBrokers, sorry for the advertisement, but its handling fee is only 10% of what I thought the cheapest. That is amazing and for HK people, you can register online before going there in person for signature, took me 10mins there only. Good luck~