19 results for tag: volatility


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 ...

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...

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 ...

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 ...

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 ...