Out of Apple, Rolling WMT options to next week.
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No Apple position. We are out for now.
Today, we closed our 2 short 123 weekly puts for 5 cents.
Our total profit for AAPL year to date is $3263.
We have done this entirely by selling put contracts, one contract at a time.
There have been 43 different orders placed since the start of the year. We have never owned
a single share of AAPL, we have only been short the puts off and on, over and over.This takes patience. There are many days where we have done nothing. Our basic strategy is this:
Wait for a day when AAPL is down at least one percent. Place an order to sell a put and see if it
fills. If it does, then place another order at a higher price. We have never been short more
than 6 contracts at a time. A complete review will be forthcoming next week, so stay tuned!Walmart – WMT has been a struggle so far this year. The stock has been in a rather nasty bear
market, moving down from 90 to 78. Today, we are down $1625 (YTD) with a dividend of $441 received
for a total loss of $1184 since Jan 1. Our daily time decay (income) is about $60. Our current position is
long 900 shares and short nine $48 calls, expiring tomorrow. Right now, we have an order to roll those short
calls out to next week for 81 cents (later lowered and filled at 75 cents). This will be about a 1% return for the week.
When we can get that kind of money, we want to take it.
There is another choice which makes great sense here. With WMT trading at $78.34 right now, we could
choose to wait and see if it drops today and/or tomorrow and falls back to under $78. If that happens, our
short $78 calls would expire worthless and we would keep the entire 66 cents that we took in when selling these calls earlier this week – totaling $594. At the present time, our 900 shares of WMT (which have lost $1200 this year) are generating income of around $700 a week. This is the number one reason why we try NOT to constantly start new positions.
When you do that, you are attempting to predict the future and you will fail most of the time.
You will also be starting new positions that always have about a 66% of chance of being losers at the start.
(More on that in a later post but the short version is this: A new position will either go up, down, or
break even. You only get one out of three possible results.)
Instead, learn how to trade through your losses and eventually you will turn a losing position into an income generating investment using options. Our 900 shares of WMT were bought at $86 each. This is a loss of $6940 for the person who only buys and sells stock without incorporating an option income stream. Our option trades have made back about $5700 and our position has now become an at-the-money covered call generating about $60 a day. It will soon go profitable.
Would you spend $1200 to own an investment that would throw off $60 a day? Of course you would!
Stay optioned my friend!