26 results for tag: Portfolio


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 ...

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 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 ...

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 ...

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 ...