18 results for tag: covered call


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 ...

Jan 13

After closing the WalMart puts for 5 cents, we waited until a day when WMT was down 1%. We got it Tue and Wed and have a new position that is short three 63 puts, expiring Friday. This position needs to be rolled now, on Thursday morning. We have placed an order to roll this out for one week at 48 cents and subscribers will be getting the price adjustments as we click them lower during the day. We like to try and roll weekly options on Thursday so we avoid getting pushed into the last few hours of a contract. The market makers know that you want/need to roll on that last day, so pricing deteriorates. Sometimes we end up rolling expiring weeklies on ...

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 ...

Out of Apple, Rolling WMT options to next week.

Our new website will be up soon, and at that time we will start accepting subscriptions again. Also, at that time, this WordPress blog will close and migrate to DeepPocketOptions.com. Please check back often and plan to subscribe when we open! ___________________________________________________________________ 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, ...

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 ...

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 ...

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 ...

What to do on a big down day?

Trade according to your plan. Ignore the noise. Know exactly how your account makes money, and keep doing it. You cannot see your account value increase every day, or every week, or every month. But, you can take correction periods like this one and do the things that set you up to make a lot of money when the selling ends, which it will. Look for opportunities. Today, we increased our new XLB position and it's now down $167. We adjusted our WalMart position by rolling all of our short puts out to the MAY2 weekly expiration. That position is now down $520 with continuing daily time decay of about $27. Please stay tuned for the lessons that will ...