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COMMENT
You recommended selling the $360 Dec. 2018 put on Netflix, but I'm now under water with Netflix under $270: What to do now? Close and take the loss, or rollover to a later date? Roll it. The FAAANGs turned first and that took the NASDAQ down, starting in September. The FAANGs got ahead of themselves. Take a 6-month put further out to $280 and you'll likely get $40.
Technology
COMMENT
ZDV vs. ZWC Both hold similar stocks. If they're high-dividend payers, the yields will support the stock price. BMO will write covered calls against 40-60% of the dividend-paying stock in a portfolio. Normally, a high-dividend stock is not so volatile, so the premiums aren't that high. ZDV, you're not capping your upside. ZWC will provide more income. Both are good.
E.T.F.'s
COMMENT
If I purchase a put option with a stock at $20 and you buy the option at $1 with a $20 strike price, if the stock decreases to $15 and the option rose to $5 and you let the option expire, what happens? You own the option, so you decide whether to exercise it or not. If the option expires in the money, it will be exercised on your behalf by the broker. When you're buying a put option, you're making a bet that the stock will decline in price. It's like a short without the unlimited risk that the stock can shoot up to infinity; the most you lose is the cost of the put. But if you let it expire, then you'll be short the next morning--and you don't want that. Don't let the put expire--sell it.
HOLD
You need geographic diversification in a portfolio, but ZWE and Europe are in a tough space, so hold. Also, this is a covered call and hedged to the Canadian dollar. It depends on how large your position of ZWE is in your portfolio. Europe has problems short-term with the ECB with a $5.3 trillion balance sheet and are exiting quantitative easing. There are some real issues there. He wouldn't bet on Europe.
E.T.F.'s
PAST TOP PICK
(A Top Pick May 14/18, Up 8%) A Sept. $300 put. This option wouldn't have been assigned, because it expired Sept. 21. He was obligated to buy it at $300 and put up $30,000 to secure it with cash. You'd have that $30K sitting in a treasury bill until the option expires, then base your return on having that money at play here.
Technology
PAST TOP PICK
(A Top Pick May 14/18, Down 18%) An October $185 put. He was obligated to buy after he took the premium. His net cost was $175. It's $144 now. If you'd bought the stock, you would've bought it $10 higher; but if the stock had run, you would've done better. He was selling puts at that point, because he felt FB had had a good run and would have deceased (though not a much as happened). He'd sell a covered call against it now.
Technology
COMMENT
What ETF will hold capital over the next 12 months to buy for a RRSP account with USD? A USD GIC or a money market funder if you don't want to lose any money. At best, the market will offer single-digit returns. Look at the Spiders (ETFs), the grandddaddy of them all, or TLT. Do a 50/50 split.
E.T.F.'s
COMMENT
If you sold a call and the stock decreased, and the price of the option has fallen to 10% of its original value, should I buy a call (believing the stock will rise and the call you bought gains in value)? First, buy the call back (if the option has declined more than 50% of its value). If you're very bullish and nothing fundamental has changed in the company and you see great potential in the stock, then buy a call. If not, buy another call option.
COMMENT
Are we entering or in a bear market and when would you jump into the market? Great question. Most metrics indicate that now, but he is not sure that earnings will contract next year. We're not through this malaise; it will last at least another quarter. Look at the VIX, which was 25 today (high, much higher than its 17 average). When the VIX rises above 30, he'll jump in.
