The Money Tree

Safely Generating Income in Retirement

Deep OTM NP Strategy – FEB Week 4

Posted by mounddweller on January 23, 2011

Fellow Traders,

As promised here are the selections for FEB Week 4 of our Deep OTM NP Strategy.  This week we have 20 stocks that meet our criteria (17.5% DSP and PF >= 2.0).   There are no large-cap stocks in our list.   There are 4 mid-caps and 16 small-caps.

As you can see our list contains several repeats from last month.  These include LKD, MBI, ALJ, VRGY, and ZLC.  In looking through the list none of the selections jump out at me as being great individual trades.  However, that is part of the beauty of this strategy.  There is safety in numbers.  It would be hard to pick out the one or two that are destined to finish ITM and thus avoid them.  By allocating capital across all of them we greatly reduce the risk of being wrong and picking losers.

Best of luck in your upcoming trades.




3 Responses to “Deep OTM NP Strategy – FEB Week 4”

  1. eliran said

    I think that your terminology is wrong.
    Whenever the strike is lower than the actual stock price its called IN THE MONEY , and not out the money as you named it…..

    “Out of the money” refers to whenever the strike is higher than the stock price..

  2. mounddweller said


    You are correct if you’re talking about a call option. However, a put option is just the opposite. A put gives the buyer the option but not the obligation to sell the underlying stock at the specified stock price. If the stock price is higher than the strike price the buyer has no logical reason to sell the underlying stock at the strike price. Thus, the put option is considered to be out of the money (OTM).


  3. Tis is a great series of articles on selling OTM puts. I’ve shared this with the visitors of for their reading pleasure.

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