25 results for tag: calls


1/3 chance

Today the market was weak again for most of the day. We took advantage of that weakness to increase our short cash covered put vertical on XLP. We sold another single contract spread, so our position is now "short four XLP 50/48 Feb Put Verticals". We have sold them at an average price of .675 and the price to buy the vertical back is now at .625. The position has begun to go profitable as time decay increases a little bit every day. If XLP is weak again tomorrow, we would place orders to increase it to 5 contracts. The trade is working and XLP continues to remain at the top of our relative strength ratings. It's OK to buy on any weakness.  Rem...

WalMart Time Decay is not enough now…

We've been talking about our WalMart trade and I've been explaining how we had created a very nice income position. Today, we are down about $1000 since inception of the trade string going back through 2014. Our market risk ( DIA Beta Weighted Delta) is about 180, and the position has no Theta. Yes, that's right, no Theta. We had sold calls against our long 900 shares, but with the drop in the price they were closed or expired on Friday. We will plan to sell new calls next week and bring in some money. This is a beginner's lesson in time decay generated by the selling of short options:: When we started trading WalMart in January 2014, it ...

Expiration Friday

We have a number of positions that need adjustment today. No Apple. We are out for now. WalMart - WMT continues to be sold heavily, but the chart tells a different story. Walmart is in a strong bull market so we let the chart, NOT the market, tell us what to do. Today we buy. (Subscribers get trade details as the orders are entered). We also need to roll our short puts that expire today. We are rolling the 84 puts, the 85 puts, and maybe the 86 puts. Both the 84 and 85 are close enough to the current price of $83.82 that we can roll for enough money to meet our criteria. The 86 strike - maybe not. We may let those shares be put to us and sell ...

Market Movement

We were in and out of Apple again. The portfolio has no position today, yearly profits in AAPL are now $12,594. We had sold some weekly 110 puts and yesterday we bought them for 5 cents each to close the position. Now, we wait for a day when Apple is down a few dollars. At that time. we will look for a high-probability strike and sell some puts. Until that happens, we stay out of this symbol. As a broker friend of mine once said "Patience produces profits". He was right, The WalMart position has taken a hit as WMT has moved lower over the past few days. Our charting system shows Walmart to be in a strong Bull market - so down days are welcome ...

XLE – Oil price drop

XLE has been something of a problem with the rapid decline of oil prices. We are down over $4100 on the year - but we were down $6200 on Friday after XLE's price collapsed. At DPO we have traded the XLE for a very long time and we have learned that it will, at times, swing wildly while moving way too high and way too low. It's now clearly in a bear market but last Friday's move was one of those exaggerated ETF swings that sometimes happen  - and it was multiplied by the holiday schedule and lack of liquidity. We fully expect XLE to settle down quickly and then slowly recover to some higher level -  while we are trying to stay net-short because of ...

Updating WalMart and Apple

After moving, I got busy and was not able to continue writing for DeepPocketOtions. That project is now under control and there are many trades to talk about since October. Starting with WalMart - our profit for the year was $1130 on October 3rd.  We continued to trade the options, moving in and out of various put, call and stock positions over the last two months. Our profit today stands at $2001 for the year, so it's earning about $350 a month now.  That's a respectable income created from simply selling a few put positions on days when WalMart happens to be down. The current position is short 1 weekly 84 put and short two 86 puts - all expiring ...

Resolution

Yesterday, we talked about the Apple and WalMart positions. Today, we have resolution of those two positions. The three short WMT 76 puts will be allowed to expire so that we will keep the entire $72 that we took in when they were sold. As I write this, there is one half hour left to the market close. WalMart is trading around 77.40 so we are nowhere near the $76 strike price. Yes, we could buy them back now for a penny or two and remove all risk. There is nothing wrong with taking that path and many traders would have rules in place that require the closing of the position. We are sitting on  plenty of cash, so the tiny risk of assignment (if the ...

Finally able to write again….

It's hard to believe that my last post was 5 months ago, but it was! My wife and I were building a house and it became crunch time. If you've never built a custom home - there is only one way to do it. You just have to be there -- as much as possible. The house is done and we are living in it now. My new office is still a pile of boxes, but I have a temporary desk that is workable enough to get me back to work -- because in the world of options, there is always money to be made! Somehow, even though I wasn't able to write, I was able to make time for trading. My Apple options trades continued, and I'm now up about $10,000 on AAPL for the year and up ...

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 ...

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 ...