Wednesday WalMart and new small portfolio trade
Walmart continues to outperform the market by showing great strength in a falling market. I’ve seen speculation in the financial press, but the truth is that we don’t know why this is happening & we don’t care. The stock is moving up so we notice it and go with it.
We sold some puts on Monday, and WMT has moved up since then. We have an order to close them at 5 cents, but that order has not been filled yet so we wait. We could close the position now for 10 cents, and you could choose to do that for your personal risk management plan. There is nothing wrong with taking the quickly earned profit at any time. At DPO, we place the order to close at 5 cents and tag it Good ‘Till Canceled and then leave it alone.
Yesterday, we were trying to open a new position in XLP. We chose XLP because it has the best relative strength in the group of ETF’s that we follow. An order was placed to sell the 50/48 XLP Put Vertical for Feburary at 60 cents. The order was placed as GTC, so it sat in the account overnight. At the open today, the order was filled. This is for the small portfolio and requires only $400 margin for each vertical. Max profit is 60 cents, max loss is $1.40. We will manage this position actively, planning to add to it over time. We placed another order today to sell the same vertical again at 72 cents. The price is not near 72 cents, so that does not look like it will fill today. Again, we will leave the order as GTC and see what happens tomorrow. More on the small portfolio tomorrow.
Ignore the noise of “Market Down 300!” and calmly trade using the plan you previously developed, when emotions were not so elevated. If it was a good plan then, it is now, too.
At DeepPocketOptions, we are about 50% in cash. Don’t be tempted to exceed this level at this time. It’s too dangerous and we could have more “Market Down 300!” days. Many more. Or maybe not……
Stay optioned, my friend!