26 results for tag: position


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 ...

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 ...

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 ...

Our Green Apple.

On April 4, AAPL had moved down more than 10 dollars from it's high just two days earlier. After being out of this symbol for a couple of months, I decided to get back in. I sold the 530 put for $5. Apple continued to move down over the next few days, and on April 8 I sold the 520 put for $5. Three days later, on expiration Friday, I rolled the 520 for one week collecting $5 and rolled the 530 for 2 weeks, collecting $9. At this point, for these two contracts and the subsequent rolls, I had taken in $2400. Now the patience came into play. I had to leave these two position alone and wait, but not all that long. One week later, on the 17th of April, I ...

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 ...

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 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 ...