6 results for month: 05/2014


WalMart dividend

Tomorrow is WalMart's Ex-Dividend date. We were short some shares and did not want to pay the dividend. (Yes, if you are short - you pay the dividend!). There are many strategies to handle this, including just paying it. We decided to buy some shares and sell calls, setting up a covered call to end the day with only option positions. No shares owned, no shares short. It's paying us about $60 a day with little Delta risk. Our profit since inception is about $360. This concept of the Ex-dividend date is very important to understand. WalMart goes Ex-dividend on May 7. Anyone who owns shares prior to that date will become eligible for the dividend. (It ...

Our Green Apple.

On April 4, AAPL had moved down more than 10 dollars from it's high just two days earlier. After being out of this symbol for a couple of months, I decided to get back in. I sold the 530 put for $5. Apple continued to move down over the next few days, and on April 8 I sold the 520 put for $5. Three days later, on expiration Friday, I rolled the 520 for one week collecting $5 and rolled the 530 for 2 weeks, collecting $9. At this point, for these two contracts and the subsequent rolls, I had taken in $2400. Now the patience came into play. I had to leave these two position alone and wait, but not all that long. One week later, on the 17th of April, I ...

An Apple a Day?

Last time, we started talking about a simple method for trading Apple. We had closed all of our open positions and ended up out of the position. After closing the 535 put for 5 cents on January 17, I opened a new position. AAPL was down about $15 from the previous day, so it was within the rules of our simple trade. On that date, a 540 put was sold for $5. This was closed on the 22nd for 50 cents, resulting in another profit of $450. Why close it for 50 cents? This was a weekly option that was opened on a Friday. The next Wednesday our $5 position had dropped to 50 cents with 2 days left and it didn't seem worth 50 cents risk to the end. We had made ...

Made any money trading Apple options?

It's not easy. Apple gets so much media attention that it will really mess with your thinking. One talking head loves it and is buying it, another thinks the company is dead and slowly going away. As each one of them is interviewed on TV, the price jumps up or falls down, and the casual trader gets whipsawed. It took me a long time to figure out how to trade Apple and I've made $6000 so far this year by using a very simple system. "Patience produces profits" - wise words of a stockbroker friend of mine years ago. I apply those words to trading Apple. I've tried many techniques to trade the moves, and have decided that, for most people, it's just not ...

The 3 Choices

Buy, sell, hold. As a trader, these are your only 3 choices, all the time, for every position. There are 3 possible results, too. You profit, you lose, you break even. The number 3 is the single most important number for a trader. The Monty Hall Problem refers to the game show, Let's Make A Deal. In the game, you are confronted with 3 doors. You have one opened for you - and then you can keep what's inside or give that prize back and switch to another door. Your hope is to improve your position with the second choice. The Monty Hall problem proves, mathematically, that your chances of success are increased when you switch doors after the first ...

WalMart profits continue to build

We are now up over $350 since the inception of this trade string. Our position is net 500 shares to the long side and the daily time decay (Theta) is $21 a day. Our Delta is near zero, so market risk is completely under control. This trade took a long time to get to a profitable structure but now we only have to manage the position. There were six transactions in WMT this week, so let's review: On Monday, we sold the Weekly 79 put for 36 cents. Later on Monday, we sold another for 42 cents. Then we sold the 80 put for 60 cents on Wednesday. Prices change every day, and this week the changes were in our favor. Today, we closed the two 79 puts for 5 ...