Roll Call: Bringing in the Big Guns

Our guest today is Jim Bittman, Senior Instructor at The Options Institute.

He discusses:

• What sort of content/classes our listeners can access at The Options Institute
• What the number one options question is that he receives from students
• What is the number one options mistake and/or misperception students may have about the options market?
• What changes did he make in your recent renovation at The Options Institute, and what can our listeners expect from your new facilities?

Mail Call: Listener questions and comments

• Question from Kevin Duggan - Hi Mark, Great show! I have been listening to episodes for months but it was only recently that I saw Dan’s picture- shocking! In my mind I have always pictured Walter White, as they sound exactly alike and, you always refer to his black hat. You can imagine my surprise when I saw Dan’s pretty face and those curly brown locks. Shave that bean, Heisenberg! Re: short puts (I'm already long calls) If I am certain the stock will move higher fairly quickly, wouldn't it be best to sell the big, meaty, long term puts? If I sell a weekly for .45 and then close it at .20, where's the fun? How do you balance term and premium in naked shorts? Thanks, Kev
• Question from Josh Norell - Hello everyone, enjoy the show, I am trying to work out the details with a diagonal collar, and its adjustments. I want to buy a stock, buy an OTM put several months out, and sell weekly OTM calls against it. If the stock rises, I get called away, all is well and good, and I can just buy the stock back next week and do it again. Where I am confused is when the stock drops below my put strike. What do I do? Because of the puts lower delta, for every dollar I lose on the stock, I am gaining less than 1 dollar on the put. So do I exercise the put and lose all its extrinsic value? Do I roll it down and hope for a retracement? Do I just blast out more calls? A little help, please. Josh
• Question from INC429 - VXX or VIX options? Which is the better hedge for a broad based equity portfolio?
• Question from Buckeye -I enjoyed the discussion about the percentage of a portfolio one should devote to hedging on the last episode. I do have a question about the 1.5%-2% figure discussed on the program. If that was for a three-month put, then you are talking about 6-8% on an annualized basis. Given that most funds only return about 7% a year, will that not eat up all of the profits in your portfolio? Or am I missing something? Thanks again for this excellent program. It truly is a unique source of options education. It makes my long train ride much more bearable.