Trading WalMart ongoing

So far this year, our profit on the WalMart trade is up about $400. We have an open option position, so it changes all the time. The current plan is to let the short options expire this week, as we are not close to being ITM (in the money). We’ve placed a GTC (good till canceled) order to buy them back at 5 cents, which is commission-free at our broker, ThinkOrSwim. If WMT should drop back to our strike tomorrow or Thursday, we will immediately cancel the GTC order and place a new order to roll the options out to next week.

We are looking for consistent cash flow, not new trades. We like to take a position and use options to continually trade that position for cash flow. Our daily goal is to generate new cash of 0.001% from the entire portfolio every day, without adding new positions at this time. The recent market drop has caused many of our short puts to get exercised so that our account cash is around 30%. We won’t let that drop any lower. It’s always good to have cash available for unseen needs. Unlike so many other trading education web sites, we can’t tell the future here at DPO. I think the warranty ran out on our crystal ball…..

In our portfolio, we have positions in BA (Boeing) and also in AAPL (Apple). Both of them reported earnings that are less than expected and the stocks have had large drops today. We were long shares and short covered calls going into earnings. All of the short calls were closed today for 5 cents, and now we will sell new calls at the lower prices. Again, the point is cash flow for the options-trading business. The portfolio is run like a small insurance company i.e., We get paid to accept a defined amount of risk for a defined time period. Every day, we generate our cash goal and analyze our current P&L year to date. We also note our available cash and our portfolio weighted Delta and our portfolio Theta.  

We can look back at any date in the history of our trading and see our yearly P&L, our daily cash flow, our P&L for that date and the Delta and Theta of the portfolio. Our trading is not one isolated trade (or idea) after another. Instead it is a business that is run by a written business plan.

How do you trade?

Stay optioned, my friends!


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