ES move is sort of concerning to me for an opex day.

$PHUN hitting $1.60 early premarket.

FJ, I can't express enough how impressed I am with your ability to get up so early.

59 South said:

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FJ, I can't express enough how impressed I am with your ability to get up so early.

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Morning! Still morning for you as well I think. I guess like anything you train yourself and it becomes the norm. There is just something to me being up in the morning for a while when its dark that is just flat motivating.

But many of y'all still have kids in the house and are managing all those aspects. Enjoy every single minute of that. It passes so quickly.

$PLTR up about $1.36 or 5.2% premarket. May she rise to the moon today.

Sorry not sorry for the long post, but since this thread moves so fast, and a lot of you are newer to the lingo and strategy talk, I'm sharing some of my learnings and process that I have documented. This allows for successful upside while managing risk. Remember, this strategy does carry risk of loss. Always consider all the scenarios that could play out. In my real life example below, what happens if WWR closes at $4.99 today and then a massive share offering is announced Monday morning dropping the share price to $3.xx? Hopefully some find this useful

Position sizing for 'Net Free' accumulation (for first 'net free' cycle, target is Tier 1 size net free at time of mass accumulation starting, example below):

• Tier 1: single position size <=10% of account value, do not sell these shares unless you are cutting bait altogether and moving on, occasionally sell far out of the money covered calls on half, rarely sell covered calls on all
• Tier 2: double position size, use this for swing trades and selling closer dated puts and/or covered calls with strikes closer to the share price to lower cost basis of core Tier 1
• Tier 3: very seldom used, call these high conviction very rarely used scalp opportunities to lower Tier 1 cost basis, very risky as you are exposing up to 30% of your account to a single stock
• Allow for half Tier sizing as well. For example, for speculative starter positions you can ease in to test the waters with 50% of your Tier 1 size

$WWR Example (this is what I started last week):

• Assume Tier 1 position size = $25k ($250k+ account), share price = $5 at time of accumulation start
• Buy 5000 shares at $5 = $25,000 (Tier 1)
• Sell 50 $5 puts out to next expiration date (Jan 15) at $.60 each = $3,000 in the bank ($25k - 3k = $22k cash to cover if exercised)
• Sell up to 50 more $5 puts right before expiration if convicted, example: 10 filled at $.20 = $200 in the bank ($5k - 200 = $4800 cash to cover if exercised)
• So after today, you'll end up in one of two situations:

1. If close is >$5: 5000 shares with $4.36 cost basis -or-
2. If close is <$5: 11,000 shares with $4.71 cost basis

Next Steps:

If 1) plays out, look to use Tier 2 strategy for another cycle by selling February $5 puts for $1+ or buying 5000 more shares and selling $5 February covered calls for $1+. You can even split that and sell 25 puts and buy 2500 shares to sell covered calls. your core Tier 1 position cost basis is then down to $4.36 - $1 = $3.36

If 2) plays out, look to unload the extra 1000 Tier 3 shares on any spike over $5 (look for $5.50+ to bank a $500 10% scalp lowering cost basis on Tier 1 another $.10). Sell covered calls on 5000 Tier 2 shares (you can get creative here and maybe split half and half between February $5 and March $7.50 calls these would average around $1 on any spike to $5.50-6.00) your core Tier 1 position cost basis is then down to $4.71 - .10 - $1 = $3.61

Rinse & repeat until your core Tier 1 position cost basis is $0.00. From there you can either just set notifications every $5 and forget about it -or- you can continue to add net free shares incrementally if you still think it's in accumulation mode (especially if you work net free sooner than expected). Once that tier 1 net free is established and you think you want more, it may make sense to try to add 1000 shares more net free at a time. For example, you buy 5000 shares again at $5, and then look to sell 4000 on a spike to previous resistance $6.25. Or you can sell calls out a month for $1 and use that capital to buy 1000 more shares. Viola, now you have 6000 net free shares.

Note you can scale this way down on lower priced stocks. For example, if your account is $10k, then your position size is 200 shares ($1k) and you can sell call and puts on 100 shares at a time.

Pointers/Lessons learned:

• Document your strategy and targets (I use OneNote)
• Make a spreadsheet and log every transaction
• Know your risk and don't over extend yourself
• Know what you're buying
• Don't panic and don't get euphoric
• Don't high five or chest bump anybody until after you realize the profits
• Laugh at your losers, and for the love of God, do not post sad face emojis every time the share price drops 1%
• Mind the signature below!

59 South said:

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Sorry not sorry for the long post, but since this thread moves so fast, and a lot of you are newer to the lingo and strategy talk, I'm sharing some of my learnings and process that I have documented. This allows for successful upside while managing risk. Remember, this strategy does carry risk of loss. Always consider all the scenarios that could play out. In my real life example below, what happens if WWR closes at $4.99 today and then a massive share offering is announced Monday morning dropping the share price to $3.xx? Hopefully some find this useful

Position sizing for 'Net Free' accumulation (for first 'net free' cycle, target is Tier 1 size net free at time of mass accumulation starting, example below):

• Tier 1: single position size <=10% of account value, do not sell these shares unless you are cutting bait altogether and moving on, occasionally sell far out of the money covered calls on half, rarely sell covered calls on all
• Tier 2: double position size, use this for swing trades and selling closer dated puts and/or covered calls with strikes closer to the share price to lower cost basis of core Tier 1
• Tier 3: very seldom used, call these high conviction very rarely used scalp opportunities to lower Tier 1 cost basis, very risky as you are exposing up to 30% of your account to a single stock
• Allow for half Tier sizing as well. For example, for speculative starter positions you can ease in to test the waters with 50% of your Tier 1 size

$WWR Example (this is what I started last week):

• Assume Tier 1 position size = $25k ($250k+ account), share price = $5 at time of accumulation start
• Buy 5000 shares at $5 = $25,000 (Tier 1)
• Sell 50 $5 puts out to next expiration date (Jan 15) at $.60 each = $3,000 in the bank ($25k - 3k = $22k cash to cover if exercised)
• Sell up to 50 more $5 puts right before expiration if convicted, example: 10 filled at $.20 = $200 in the bank ($5k - 200 = $4800 cash to cover if exercised)
• So after today, you'll end up in one of two situations:

1. If close is >$5: 5000 shares with $4.36 cost basis -or-
2. If close is <$5: 11,000 shares with $4.71 cost basis

Next Steps:

If 1) plays out, look to use Tier 2 strategy for another cycle by selling February $5 puts for $1+ or buying 5000 more shares and selling $5 February covered calls for $1+. You can even split that and sell 25 puts and buy 2500 shares to sell covered calls. your core Tier 1 position cost basis is then down to $4.36 - $1 = $3.36

If 2) plays out, look to unload the extra 1000 Tier 3 shares on any spike over $5 (look for $5.50+ to bank a $500 10% scalp lowering cost basis on Tier 1 another $.10). Sell covered calls on 5000 Tier 2 shares (you can get creative here and maybe split half and half between February $5 and March $7.50 calls these would average around $1 on any spike to $5.50-6.00) your core Tier 1 position cost basis is then down to $4.71 - .10 - $1 = $3.61

Rinse & repeat until your core Tier 1 position cost basis is $0.00. From there you can either just set notifications every $5 and forget about it -or- you can continue to add net free shares incrementally if you still think it's in accumulation mode (especially if you work net free sooner than expected). Once that tier 1 net free is established and you think you want more, it may make sense to try to add 1000 shares more net free at a time. For example, you buy 5000 shares again at $5, and then look to sell 4000 on a spike to previous resistance $6.25. Or you can sell calls out a month for $1 and use that capital to buy 1000 more shares. Viola, now you have 6000 net free shares.

Note you can scale this way down on lower priced stocks. For example, if your account is $10k, then your position size is 200 shares ($1k) and you can sell call and puts on 100 shares at a time.

Pointers/Lessons learned:

• Document your strategy and targets (I use OneNote)
• Make a spreadsheet and log every transaction
• Know your risk and don't over extend yourself
• Know what you're buying
• Don't panic and don't get euphoric
• Don't high five or chest bump anybody until after you realize the profits
• Laugh at your losers, and for the love of God, do not post sad face emojis every time the share price drops 1%
• Mind the signature below!

---

Great post 59 and exactly why I hope so many come here. I know I do to gain knowledge, understanding and surround myself with guys like you that share their wisdom. Thanks for taking the time to lay that all out!. Copy/pasted and saved for future referral back to it!

Good post! Could have used a few more chaps or govna's to help me read it in Mary Poppins chimney sweep voice.

Did you use this process on some of your big trades this year like ROKU and BA?

Bob Knights Liver said:

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Good post! Could have used a few more chaps or govna's to help me read it in Mary Poppins chimney sweep voice.

Did you use this process on some of your big trades this year like ROKU and BA?

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Ha!

I'm just now starting to get more into involved accumulations like this. WWR will be my first fully pre-planned out one per the posted process. I've bought and held and then sold a % to go net free a few times, but never fully implemented the repeated selling puts and covered calls strategies due to not having enough time to manage it all. I can't handle more than one or two of these at a time. Right now, I'm taking a less involved approach to CWH and FUBO. Something between buy and hold for doubles+ and posted process.

In the last couple of years, I've done more buying lots cost averaging in and waiting for big winners to just sell a portion to go net free. This has mostly been in accounts that don't have options (401k). I've done it with NIO, ROKU, SQ, JD, MGNI (I got greedy and lost all my net free shares selling $20 calls) and almost AMD (when it gets to 110). I'm pretty darn simple and can't handle more than about 10 stocks at a time. Right now I only own:

AMZN (first and longest term hold)
NIO (net free 12x)
ROKU (net free 9x)
SQ (net free 4x)
JD (net free 3x)
AMD (almost net free 2x from 54 cost basis)
CWH (29 cost basis)
WWR
FUBO (30 cost basis)
MBIO (small half position cost basis 3.50)

I do some really small options trades as well for fun (position size is about .25% of total account)

FJ43 said:

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59 South said:

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FJ43 said:

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FJ43 said:

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$PLTR up about $1.36 or 5.2% premarket. May she rise to the moon today.

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Now at $26.85 or 7.75% up.

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Call me crazy, but if this thing really breaks out (clears 28-30 range with some volume), it could easily be 40 within a couple weeks. It's a trendy retail stock right now that can get silly.

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It made #8 of the top 20 most trending stocks on social media on my evening report but wasn't even there on the 2:00 report. It has buzz at the moment.

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Behold the power and new found cult status of Cathie Wood and ARK!

cgh1999 said:

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Rumor mentioned on CNBC just now that Biden administration would cancel the PLTR contract for operation warp speed.

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That sounds about right. Let's derail everything possible as quick as possible. His tweets and statements going forward may move markets more than Trump near term.

FJ43 said:

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cgh1999 said:

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Rumor mentioned on CNBC just now that Biden administration would cancel the PLTR contract for operation warp speed.

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That sounds about right. Let's derail everything possible as quick as possible. His tweets and statements going forward may move markets more than Trump near term.

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Yup, either hunter was short or hunter is looking for a dip to buy into. Welcome to the citron White House.