15 results for tag: business plan


Jan 20 <> Down 400 again…….

In my options portfolio, I track the available cash by subtracting the value of all the short puts (as if they were exercised - because they might be) from my cash. Today, that leaves me about 25% in cash. I don't want to go any lower, so I will only be selling premium (calls) against the portfolio until cash is back closer to 50%. I never use margin, I'm not smart enough for that. My account value is down about 5% since Jan 1, while the S&P is down 9.4%. If I was a mutual fund I would run an advertisement trying to convince you that is good performance. I'm not going to convince anyone that a 5% drawdown is good. I don't like to see it, but it ...

One-tenth of one percent a day

.....in new cash. That is the goal of my options portfolio, which is run like a very tiny insurance company. I get paid to accept a defined amount of risk for a defined period of time, exactly like State Farm. Learn to run your portfolio properly, and it will be a small business with cash flow. You do not have to predict the future, just manage it. Today, the market is down again. Nothing new and I don't care. I care about just one thing - Can I create my cash flow goal for the day? I'm 2/3 of the way there and working on rolling a Facebook option position. That roll is a few cents away from being filled, so it will happen and I will be done for ...

Jan 15. Down 500.

Years ago I resisted the Dot Com stock boom. I knew that stocks were being valued in crazy ways, I knew it had no fundamental basis. Eventually, I joined the party and played the game. I lost a whole lot of money and suffered an extended medical depression. The mental anguish was absolutely terrible. At one point, a person who was helping me through it all told me that he thought I would trade again. It took me a long time to get back in the waters, but I did - with a horrifically painful lesson learned. That lesson? :: Markets can move farther and faster than you ever dreamed. Ever since then I've kept this lesson first and foremost in mind ...

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 ...

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 ...

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 ...