I’m an option seller, not a buyer. I do wheel trades on companies I want to own for the long term, using puts to reduce my cost basis on entry and calls to reduce my cost basis on exit. A big risk with this strategy is being assigned on a tranche of puts at a price that’s too high. If the trading price of the company drops through my put strike I can be assigned shares at a price that’s too high for selling covered calls. It’s easy to get buried on them if I’m too aggressive on the entry price.
I use the 13Fs to help identify the companies I want to trade. I created a list of the fund managers I like, and I look for funds building a position in a company over several quarters. When I see more than one of the fund managers buying the same company it bubbles up for me to do more research. I also look at transactions that are a larger percent of each individual fund manager’s portfolio. That gives me a short list of companies to review with other criteria. Here’s more detail on how I do this. And here’s my short list of duplicate buys for the most recent filings: CPRI, WSC, OXY and TSM.
Posted by mtrosejibber