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 cents each. This is our current position, the previous 7 contracts expired out of the money. You might wonder how we decide when to sell new contracts and at what price? This is the specific trading information that subscribers get in real time, as we place the trades. There is a system that we use to spread out our purchases in a way that uses the movement of the market to tell us when – and when not to trade.
Our plan remains in place. We will sell new XLB puts next week when the price of XLB is down for the day. We built the position up to 9 short contracts and now it has expired down to the 2 contracts that remain. We can work to move it back up towards 10 contracts over time, and see what happens. We will either be right and make money, wrong and lose money, or neither and the position stays flat. As we get more information and time passes, we look for ways to adjust the trade. Options are all about risk management, and the risk of any position can be adjusted to any level, or even no level. Yes, you can have a riskless position in the options market, and just collect time decay for income. The problem with a riskless position, or one with no Delta, is that the market is dynamic and is constantly moving. A zero-Delta position is not very long-lived. As prices move, the value changes, and the same thing happens with time. As time passes, the Delta changes. As volatility changes, Delta changes. A good understanding of the factors involved in options pricing is critical to making money in this business.
Stay Optioned, My Friend!