33 results for tag: market


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 ...

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, ...

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...

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 ...

The small portfolio

I have an IRA account with about $3400 in it. Many of the trades here at DPO require a six-figure account. We understand that many people need to learn the business of options in little steps. If you want to develop your skills properly - one small step at a time - then please start small. I'm using this IRA for our Small Portfolio.  We have analyzed XLP, which is the Select Sector SPDR Consumer Staples ETF. It is traded in very large volume and has enough option open interest for our purposes. It has the strongest relative strength of the major SPDR funds and that's why we are focusing on this one for now. The other day, we sold a Feb 50/48 put ...

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 ...

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 ...