22 results for month: 04/2014


WalMart is now paying us.

WalMart continues to work for us. We've made back our early losses and gained almost $2700 since February 10. We are now profitable by $165, and our daily time decay is paying us $30 a day with risk near zero (Beta-weighted to the DIA). We have continued to rebuild the position so the net position now is 700 shares long. This is created through a combination of short puts against our 300 short shares. The stock has reversed course and now appears to be in an extended bull market, rising steadily from the low 70's in early February. We could guess that better weather has begun to result in better sales for the company and is helping the stock to ...

WalMart – $2600 in profits since Feb 10!

We are now up over $2600 since the low of our position around February 10, when WMT closed at $73.76. It's stock price has moved up about $5 since then, and our ongoing position is making over $200 a week with a low-risk structure. Out Delta is kept near zero, today it is 10 (Beta Weighted to the DIA). Our daily time decay, or Theta, is $46 and the position consists of some short stock and a collection of short puts. The plan is to continue trading the position for income. Currently, we are short 300 shares as a result of selling some uncovered calls earlier. We are going to work today, Friday the 25th, to sell some ITM puts that will close that ...

Ending XLB

We are nearly out of XLB. The trade has gone very well, we are up $458 and now only short 2 May 46 puts. These 2 put contracts can be closed for about 20 cents, so we could potentially make another $40 or so, if we let them expire in 21 days. The risk reward is not in our favor now as the maximum we can make is $40 while our maximum loss is many times that. If, over the next 3 weeks, XLB drops to 43, we will see our short puts lose $300 for each contract, or $600. We don't like those numbers. If you have the potential to lose $600 or more, you must have enough compensation to make that risk worth holding. So, we will close the remainder of the ...

Our WalMart trade is now working

We track our Profits and Losses on a weekly basis. Every Monday, we fill out our form and take a detailed look at each position. There is NO reason to hold any position that is not making you any money if you have built an options portfolio. The point is income, options decay over time, and should be paying you every single day for the risk you have accepted. Stock ownership does not do this. Over the last 10 weeks, we have averaged about $250 a week on this position. In order to get to this status, we had to work on correcting a losing position for the first 5 weeks. A beginning trader would look at that period and have a hard time dealing with the ...

WalMart goes profitable.

When we started trading Walmart on January 6, we did not know how things would work out. We had a thesis, and it turned out to be quite wrong. In fact, it would have been hard to have been more wrong than we were. Within the first week, WalMart changed from a Bull trend to a Bear trend and we were down over $1500. That is not how we like to start out trading a new symbol, but the reality is that sometimes it happens. Anyone who tells you they can trade without working through losses of this type, is not being truthful. The critical thing is to have a plan from the start and to work through events as they unfold.   And they DID unfold in the worst ...

XLB #2

Last time, we looked at our actual trades for XLB. On April 10, we opened the position by selling three 47 puts (expiring in 7days) for about 51 cents each. As we have discussed, they expired and we kept all the money. There were some other trades, too. On April 11, we sold one 46 put for 45 cents, taking in about $45. Again, this contract expired at the end of last week, and we kept the $45. Another great result. On April 15, we sold three 46.5 puts, expiring 2 days out, for an average price of 39 cents. We took in about $120, and again, they expired at the end of last week. We kept the money! Also on April 15, we sold two May 46 puts for 97.5 ...

XLB #1

It's time to update the XLB trade once again. To summarize, we are in this trade because the charts tell us that is where we should be. Here at Deep Pocket Options, we like to use ETF's for many reasons: They are made up of a basket of stocks in one "sector", and sectors tend to trend very strongly over extended time frames, we don't have the risk of owning single companies (ANY company can have news that causes violent moves in the stock's price), the SPDR ETF's are very heavily traded along with their options in volume, etc. We have discussed the reasons in previous blog posts so if you are interested, please look them up. As I wrote last week, the ...

Position changes.

Today, our XLB position ended the day up $388. Most of our short puts expire tomorrow and they are out of the money tonight. It will be interesting to see what happens tomorrow. We probably should have closed 7 contracts today, all profitable. Their value has dropped down to a few cents. Sometimes, you get busy and miss opportunities. Focus on the task at hand in order to maximize the profitability of every position. Tomorrow, we will definitely close any OTM position and roll any ITM. The out of the money positions tonight can easily be in the money tomorrow. You can't predict the future and it seems that nearly always it is a mistake to wait for ...

Now trading XLB

XLB is in the same relative strength position as when we opened this trade. On ETFScreen.com  the XLB is second, after the SPDR Utilities fund, XLU. XLU has again spiked to the top as a result of the recent market volatility and investor's run towards stability of yield. This will subside and XLU will quickly fall away from the top spot, leaving XLB in charge. XLB is the Select Sector SPDR Materials fund. Top five holdings inside XLB are Du Pont, Monsanto, Dow Chemical, Praxair, and LyondellBasell. Just the fact that XLB is so strong is telling us that there is huge money flow into these companies, and they are not high-tech companies with quickly ...

Updating the WalMart trade – now almost profitable.

When we last left our WalMart trade, it was down $520 (last week). Yesterday, we closed down $155. We collected Theta over the weekend and then the position improved by $300 today. Our Delta is near zero and Theta is about $32.50 a day. Remember, we were sitting on a -$2500 position on February 10, when Walmart closed at $73.76. Today, the close was $77.38. With our program of option selling around the core position, sometimes selling calls and sometimes puts, we have the same gain we could have made by owning 700 shares. That was done without actually purchasing the shares. We don't own any shares right now, we are only short options, some puts and ...