Jeff Fischer

Investor, writer, eco-conscious worrier. Pull up a chair for the stock and options ideas.

[Jeff Fischer @OptionWell]

Thoughts I've shared with new investors:

1. View the stock market as a savings account that you keep adding to. Regularly invest money you don't foresee needing for at least 3 years, and ideally that you'll keep invested for much longer.

[Jeff Fischer @OptionWell]

You could choose to be an optimist about the stock market your entire life, remove all the hardship of worry and angst, and you will very likely prove 100% right in the end — and usually along the way, too. It’s what index investors do.

[Peter Mallouk @PeterMallouk]

From its inception in 1957 through today, the S&P 500 has hit 1,328 all-time highs, hitting a new high once every 19 days on average.

[Jeff Fischer @OptionWell]

More interesting than accumulating money is what you decide to do with it at some point.

[Jeff Fischer @OptionWell]

On SpaceX: so far, $TSLA has shown us how willing investors are to believe in Musk’s long-term ambitions. Tesla’s stock wouldn’t glide through such a steep decline in sales growth otherwise. Why expect different treatment for $SPCX?

[Jeff Fischer @OptionWell]

Wrote (sold to open) $400 puts on $DELL after such a surprising quarter, with a still reasonable valuation. As an aside, we will likely see more Dell stock upgrades on Monday.

Short (sold to open) puts on $CLS and $MSFT were ending as full income today, and were rolled forward to new puts at $365 and $435, respectively.

[Jeff Fischer @OptionWell]

Two key things to consider when investing in a company:

1) How well does it control its own fate? Including: how diverse is its customer base? And how strong are its financials?

2) Which factors from your research will make you hold on during steep stock declines? If you don't internalize what is giving you lasting confidence in the company, you'll likely struggle to hold it during turbulence. And that's a losing outcome.

[Jeff Fischer @OptionWell]

Even after investing for more than 30 years, I'm still learning all the time, still make mistakes, and still invest far from optimally. Yet it's rewarding just the same.

[Jeff Fischer @OptionWell]

The solutions to the world’s largest problems are quite simple, but we don’t have the resolve to do it quickly (or maybe not at all). So now we hope the machines will find another way.

[Jeff Fischer @OptionWell]

With covered calls (or short puts) that you'd rather not have exercised or need to roll, I tend to aim for a 0.35 or lower delta, so the odds of being exercised are not more than a third or so (35%).

The minimum yield I always seek is (conservatively) at least 12% annualized. This old rule, started when only monthly options and LEAPs existed, still works for weeklies or dailies, of course. At any rate, for example, with $META at $611 now, the 5/29 $620 calls have a 0.34 delta and pay a 0.63% yield in three days ($3.90 on the $611 share price). Checks both boxes.

If I'm fine actively rolling some covered calls or puts (and I usually am, unless I'm preoccupied in life), I'll accept a higher delta (higher odds of ending in-the-money) and higher yield, and then roll if need be.

[Jeff Fischer @OptionWell]

With covered calls (or short puts) that you'd rather not have exercised or need to roll, I tend to aim for a 0.35 or lower delta, so the odds of being exercised are not more than a third or so (35%).

The minimum yield I always seek is (conservatively) at least 12% annualized. This old rule, started when only monthly options and LEAPs existed, still works for weeklies or dailies, of course. At any rate, for example, with $META at $611 now, the 5/29 $620 calls have a 0.34 delta and pay a 0.63% yield in three days ($3.90 on the $611 share price). Checks both boxes.

If I'm fine actively rolling some covered calls or puts (and I usually am, unless I'm preoccupied in life), I'll accept a higher delta (higher odds of ending in-the-money) and higher yield, and then roll if need be.

[Jeff Fischer @OptionWell]

Despite the market hitting new highs, it’s been an agreeable year for covered call income on many companies. Expiring today:

$MA $525 calls
$TTD $23 calls
$NLFX $94 calls
$META $620 calls

Puts are currently written on $ADI, $FIGR, $CLS, $MSFT, $LMND, $APP, $TSM, $SPX.

[Jeff Fischer @OptionWell]

When multiple parties are rushing to spend — to build something new — the odds of eventual overspending appear to be high. You’re TRYING to get ahead of demand by many measures, which means at some point you likely will. Especially when it’s a competitive race rather than one rational party.

[Jeff Fischer @OptionWell]

Three ways I like to look at risk: personally, on an individual level; competition and execution risk, on a company's level; and externally, on the macro/narrative/price level.

Personally, investing a large percentage of capital in any single asset is of course risky, but investing a very small amount anywhere, no matter how risky the asset is, is not. Personal risk is largely allocation risk -- alongside your ability to choose smartly overall, so that overall you win.

On a company's level, to grossly simplify, the main risks are execution missteps and competitive pressures.

Finally, to the point: there's macro and narrative risk, which includes valuation and inflows to an asset. If nobody wants to buy your shares, they're going to languish, of course, even if the company is considered a safe compounder. Buybacks only go so far. Or, if the stock is priced so richly that it won't appreciate for more than five years, and especially when the macro is lining up against up the company, it's a "risky" investment as well (especially compared to better choices), even if the company just sells laundry detergent. All a long way of saying there's no perennial low-risk stock. There are stocks that are low risk at some times but not at others.

[Jeff Fischer @OptionWell]

@BioCompounding The delta of an option roughly equates to the odds that the option will end in-the-money. So, an option with a 0.5 delta has 50% estimated odds of ending in-the-money. (And will also move 50 cents for every $1 the underlying moves.)

[Jeff Fischer @OptionWell]

I target monthly to weekly to lately a few days with Meta, depending on if I’m traveling, writing, etc. So, it just depends how much I want to focus on options at the time. Selling calls I focus on yield and delta — delta in relation to odds of going ITM and needing attention. But it varies per position.

[Todd Wenning @ToddWenning]

Enjoyed having @JRogrow on the Flyover Stocks podcast. We discussed a lot in our conversation, including position sizing, $APH and $NVDA's relationship, and pattern recognition.

John's answer to my first closing question is worth sticking around for, as well.

[Todd Wenning @ToddWenning]

Earlier this week, @morganhousel and I talked about money in our 40s for the Flyover Stocks podcast. The hour conversation flew by and we covered a lot of ground, including housing, spending on kids, and the art of writing.

You can listen/watch the podcast wherever you get your podcasts or via Flyover Stocks.

[The Kobeissi Letter @KobeissiLetter]

Bond markets are flashing red.

Today, the US 30Y Note Yield officially hit its highest level since July 2007, at 5.19%.

This will soon become Americans’ biggest problem, yet the vast majority do not even know it is happening.

What is happening? Let us explain.

(a thread)

[Jeff Fischer @OptionWell]

Short Option Update

Call and put options have been generous for sellers even with the VIX drifting back below 18. Despite the indexes reaching new highs (not really because of it), I've continued to write more calls than puts this year, doing what seems comfortable.

Puts written for income have included:

$FIGR $35 and $45 (rolled the $45 puts again, to June; earning partial gains each roll)

$CLS $350, $365

$MSFT $400, $410

And I'm writing bull put spreads on $SPX, largely for the favorable tax treatment (60% of gains are treated as long term), and because steady demand for SPX hedges keeps prices decent.

I wrote June 17 6660 puts on SPX, and bought 5660 puts (unnecessary unless things truly get crazy, but discipline is discipline). The 6660 puts were purposely 10% out-of-the money when written, and still pay enough to make it very worthwhile at scale.

If you're systematically writing puts on SPX targeting income, whether using bull put spreads to cap exposure or not, consider setting a monthly income goal (relative to your conservative exposure limits), and then legging into the position in four parts, once a week, for a month, to set up the whole position at slightly different strikes each week, with laddered expirations (typically 30-45 days out).

It means once a week you have a new spread to set up if you want to, or one to roll if things fall a lot. So, you could go biweekly instead, and just do two a month -- if you're really feeling lazy. Benefits of SPX options include much better tax treatment, no early assignment, and cash settlements. Plus, no single-stock risk.

I'm generally writing these puts about 10% OTM expiring around 40 days.

Covered calls I've been writing lately have mainly been on $META, $V, $MA, $NFLX and $TTD (wow). I aim to continue these for now.

META now has options that expire near daily, so it's very amenable to rolling if you need to. Of course, META can suddenly soar, so cover shares bought for income purposes, not long-term shares.

With the credit card giants, you need to be mindful of the card rail legislation likely coming to the floor this summer, which has a 50/50 chance of passing, and to which the stocks will likely react strongly either way.

The long-term bull put spreads I have are on $TSM, $APP, $LMND, $MSFT. They're shared in earlier posts. The first two are green, the second two are not yet.

The market as a whole: the most sense I can make of it is investors are very optimistic on what AI will do for profit margins, if not the economy; the prospect of much more efficient companies is probably the largest bullish argument in the face of higher inflation. AI should someday be deflationary. And, of course, earnings growth, led by tech, is healthy -- but so are the prices people are paying for stocks.

Bigger picture, the finances of the U.S. are not confidence building, so there is long-term tail risk that confidence in the dollar continues to deflate. Adding to that, the U.S. is poorly run in many regards. It's a dog-eat-dog society, with rising social problems. Will that affect the stock market someday? I don't know.

Today, it's business as usual on Wall Street, where profits reign supreme. With some giant IPOs in the wings, and momentum carrying leaders higher (while plenty of other stocks hit new lows), it's an interesting time to be a long-term investor. And writing options is always an enjoyable second engine to the portfolio.