7 results for tag: xlb


Ending XLB

We are nearly out of XLB. The trade has gone very well, we are up $458 and now only short 2 May 46 puts. These 2 put contracts can be closed for about 20 cents, so we could potentially make another $40 or so, if we let them expire in 21 days. The risk reward is not in our favor now as the maximum we can make is $40 while our maximum loss is many times that. If, over the next 3 weeks, XLB drops to 43, we will see our short puts lose $300 for each contract, or $600. We don't like those numbers. If you have the potential to lose $600 or more, you must have enough compensation to make that risk worth holding. So, we will close the remainder of the ...

XLB #2

Last time, we looked at our actual trades for XLB. On April 10, we opened the position by selling three 47 puts (expiring in 7days) for about 51 cents each. As we have discussed, they expired and we kept all the money. There were some other trades, too. On April 11, we sold one 46 put for 45 cents, taking in about $45. Again, this contract expired at the end of last week, and we kept the $45. Another great result. On April 15, we sold three 46.5 puts, expiring 2 days out, for an average price of 39 cents. We took in about $120, and again, they expired at the end of last week. We kept the money! Also on April 15, we sold two May 46 puts for 97.5 ...

XLB #1

It's time to update the XLB trade once again. To summarize, we are in this trade because the charts tell us that is where we should be. Here at Deep Pocket Options, we like to use ETF's for many reasons: They are made up of a basket of stocks in one "sector", and sectors tend to trend very strongly over extended time frames, we don't have the risk of owning single companies (ANY company can have news that causes violent moves in the stock's price), the SPDR ETF's are very heavily traded along with their options in volume, etc. We have discussed the reasons in previous blog posts so if you are interested, please look them up. As I wrote last week, the ...

Position changes.

Today, our XLB position ended the day up $388. Most of our short puts expire tomorrow and they are out of the money tonight. It will be interesting to see what happens tomorrow. We probably should have closed 7 contracts today, all profitable. Their value has dropped down to a few cents. Sometimes, you get busy and miss opportunities. Focus on the task at hand in order to maximize the profitability of every position. Tomorrow, we will definitely close any OTM position and roll any ITM. The out of the money positions tonight can easily be in the money tomorrow. You can't predict the future and it seems that nearly always it is a mistake to wait for ...

Now trading XLB

XLB is in the same relative strength position as when we opened this trade. On ETFScreen.com  the XLB is second, after the SPDR Utilities fund, XLU. XLU has again spiked to the top as a result of the recent market volatility and investor's run towards stability of yield. This will subside and XLU will quickly fall away from the top spot, leaving XLB in charge. XLB is the Select Sector SPDR Materials fund. Top five holdings inside XLB are Du Pont, Monsanto, Dow Chemical, Praxair, and LyondellBasell. Just the fact that XLB is so strong is telling us that there is huge money flow into these companies, and they are not high-tech companies with quickly ...

What to do on a big down day?

Trade according to your plan. Ignore the noise. Know exactly how your account makes money, and keep doing it. You cannot see your account value increase every day, or every week, or every month. But, you can take correction periods like this one and do the things that set you up to make a lot of money when the selling ends, which it will. Look for opportunities. Today, we increased our new XLB position and it's now down $167. We adjusted our WalMart position by rolling all of our short puts out to the MAY2 weekly expiration. That position is now down $520 with continuing daily time decay of about $27. Please stay tuned for the lessons that will ...

New trade opened today.

We look for things that are obvious, without listening to all the talking heads. It's so easy to be distracted by the noise on the TV and in the financial press, and you can miss things that are staring you right in the face. Today was a nasty day with the DOW down 1.6% and the NASDAQ down double that, or 3.1%. It would seem that the train has come off the tracks. However, when we look at the relative strength of the Select Sector SPDR's, we see an interesting dichotomy. Outside of the XLU, which has the best relative strength due to the selling (and the flip-side buying of yield) we notice a different picture. The XLB (materials) and the XLI ...