7 results for tag: profit


The WalMart position shrinks

I thought it best to update the WalMart trade one more time this week, as things changed a little bit today. We were able to close our short 76 weekly puts (expiring tomorrow) for 5 cents yesterday. Our broker, ThinkOrSwim, has a special feature that you may not know about, but it's something you should nearly always take advantage of. They encourage you to close any open short option position when it decays to 5 cents by giving you a commission free transaction. That's right. You can close any quantity of short options for 5 cents or less - for free. There is a very important concept behind this - let me give you an example. Our 76 puts were sold on ...

WalMart Bear Market Ends

We analyze our positions weekly to determine their trend. The Walmart trade turned against us soon after we opened the position, as our position was based on the current trend when we started, which was a bull. Within 2 weeks, bull turned to bear. There are some obvious choices when this happens. You can close the trade and get out, which would have worked well. You can just stop adding to your position and let some time pass. Or, you can continue adding in a very cautious way as you determine if the new bear will be short lived. We chose the latter, and the bear market continued to work against us, lasting about 9 weeks. We use a position size limit ...

The WalMart Trade continues to cook…….

We opened the WalMart trade early this year. Details are provided in previous blog posts. Today, on April 2, 2014, this is the status: Our Delta on the position is right at zero, so very little market risk. As readers know, this is always a temporary situation, but it is what we strive to achieve. Our daily time decay, or Theta, is about $27. We are collecting about $27 a day on this trade. Our profit on WMT since we started this trade string is now -$290. We have lost a little money, but at the current rate of time decay, we should go profitable in about 10 days. Remember, when trading options, we are talking about calendar days, not just days ...

Staring down dragons…..

I like to use the Deep Pocket Options blog to teach a little bit about how traders think. The market has been down in a somewhat disorderly way since the third week in January. There has definitely been some panic selling in certain symbols and sectors. Retail is down big (we trade the XRT), Boeing has been sold off savagely, just to give a couple of quick examples. Downturns like this one, where there is no clear reason for the fear but many cloudy speculations about the future, are usually great opportunities. There is an old Chinese proverb that goes something like this: "When you see 10 dragons coming down the road, 9 of them will never get to ...

The WalMart Options trade continues….

Today, I sold 3 more Jan2 14 78 Puts. One at 39 cents, the second at 42 cents, and the third at 45 cents. The 7 contract position now has an average price of about 38 cents each. The contract is trading at 44 cents, for a 6 cent loss. If closed today, the entire position would lose $42. This is a small and manageable loss. The sales process, where I opened the position at 30 cents and continued to sell all the way to 45 cents today, works well as a risk management tool. When I originally started this trade, if I would have sold the same 7 contracts at 30 cents, I would be down $98. This position has two days left to expiration but WalMart is now ...

GE Update, trading Gold?

Today, our 500 share GE covered call position is showing a profit YTD of $782. We are enjoying a daily time decay (theta) income of $4.20. We decided to try and add to our position today by selling another put. That order is still open and has not filled. Subscribers get the details of this trade. What about Gold? There is huge trading volume in the GLD, which tracks the actual price of gold.  We also find large volume in the GDX, which is the gold miner's ETF. Options volume is very high in both of these names. It seems that there would be great opportunities to trade these symbols and their options. We haven't found it to be profitable - and we ...

GE rockets higher, 14% profit!

Today, the Fed shocked the market with it's "no taper" announcement. I think they are trapped. The economy is not good enough for them to taper the purchases, but what if these purchases are partly the cause? What if the economy can't get better until they stop the insanity? I think they want to stop the insanity, but now they are trapped into a box of their own creation. To follow up on our GE trade string: Today's large market move has resulted in a large move upward for GE, now trading at 24.83. Yesterday, we did go ahead and sell another Oct 24 call at 65 cents, and then sold another earlier today for 75 cents. The current position is long 500 ...