30 results for tag: Delta


XLP, WMT, Jan 12

XLP was mostly unchanged today, so we did not try to add to this position. The 4 contracts in our small portfolio (under $4k account) are starting to earn a little profit. This is exactly what we expect for a vertical that is about 5 weeks from expiration. We are waiting patiently for time decay to work it's magic on this position. Patience Produces Profits. Our short WMT puts were expiring in a few days. We placed an order to close them at 5 cents, and it was filled. Entering a closing option order at 5 cents or less is commission-free at ThinkOrSwim. We originally sold the put contracts at an average price of 45 cents, closed them at 5 cents, ...

End of the week Jan 8

Our WalMart (WMT) trade worked well this week. We sold cash secured naked puts at an average price of 45 cents and they expired. We kept the entire profit on our 3 contracts, or $131 after commissions/fees. This is the best possible result for a weekly trade. It does not often happen so don't assume that you can do this week after week. Most trades need adjustments and rolling forward (more time) to work out profitably. Trading options is work that requires planning and patience. It is not gambling! We will watch WMT for a day when it is down at least 1% and then sell naked cash secure puts again. Subscribers get those trade alerts before they are ...

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 ...

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 ...

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 ...

WalMart is now paying us.

WalMart continues to work for us. We've made back our early losses and gained almost $2700 since February 10. We are now profitable by $165, and our daily time decay is paying us $30 a day with risk near zero (Beta-weighted to the DIA). We have continued to rebuild the position so the net position now is 700 shares long. This is created through a combination of short puts against our 300 short shares. The stock has reversed course and now appears to be in an extended bull market, rising steadily from the low 70's in early February. We could guess that better weather has begun to result in better sales for the company and is helping the stock to ...

WalMart – $2600 in profits since Feb 10!

We are now up over $2600 since the low of our position around February 10, when WMT closed at $73.76. It's stock price has moved up about $5 since then, and our ongoing position is making over $200 a week with a low-risk structure. Out Delta is kept near zero, today it is 10 (Beta Weighted to the DIA). Our daily time decay, or Theta, is $46 and the position consists of some short stock and a collection of short puts. The plan is to continue trading the position for income. Currently, we are short 300 shares as a result of selling some uncovered calls earlier. We are going to work today, Friday the 25th, to sell some ITM puts that will close that ...

Ending XLB

We are nearly out of XLB. The trade has gone very well, we are up $458 and now only short 2 May 46 puts. These 2 put contracts can be closed for about 20 cents, so we could potentially make another $40 or so, if we let them expire in 21 days. The risk reward is not in our favor now as the maximum we can make is $40 while our maximum loss is many times that. If, over the next 3 weeks, XLB drops to 43, we will see our short puts lose $300 for each contract, or $600. We don't like those numbers. If you have the potential to lose $600 or more, you must have enough compensation to make that risk worth holding. So, we will close the remainder of the ...

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 ...