WalMart profits continue to build
We are now up over $350 since the inception of this trade string. Our position is net 500 shares to the long side and the daily time decay (Theta) is $21 a day. Our Delta is near zero, so market risk is completely under control.
This trade took a long time to get to a profitable structure but now we only have to manage the position. There were six transactions in WMT this week, so let’s review: On Monday, we sold the Weekly 79 put for 36 cents. Later on Monday, we sold another for 42 cents. Then we sold the 80 put for 60 cents on Wednesday. Prices change every day, and this week the changes were in our favor. Today, we closed the two 79 puts for 5 cents, locking in profits of 34 cents for each contract. We also were able to close a 78 put (sold previous to this week) for 5 cents and locked in profits there. The 80 put we sold for 60 cents was going to close in the money, so we rolled it out to next week, taking in another 60 cents. So far, on this open short 80 put, we have taken in $1.20. All of those trades made for a good week.
This happens when we stick with a trade. When you consider the game theory paradox known as The Monty Hall Problem, you understand that when you are presented with 3 choices, your odds of winning are greatly improved after one door is revealed. With an options trade, a new position will either start to work, stay flat or lose money. Very soon after opening a position, your first door is opened and you have the opportunity to stay with the original choice or change. As we gained more information on our WalMart trade, we continued to change our response to the conditions that were newly evident. By doing that, we continually increased our odds of finally getting the trade “tuned in” and working properly. A working position can nearly always be created sooner or later by following proper money management rules and by letting the conditions instruct you.
Stay Optioned, My Friend!