Well I hope I didn't roll a little soon, but I feel good about the move.
I closed the AMZN 145 puts as they were only earning .085 for the rest of the month. I opened some CMG 185's that earn right at 3%
There is always a danger of rolling to soon but with only three weeks to go and 34 points of cushion I like the trade. A negative is this gives me two positions in CMG (180--185's)and one with NFLX (135's). I will let things shake out some after the first of the year and possibly make some more moves.
Happy New Year all, here's to a healthy and prosperous year ahead.
Thursday, December 30, 2010
Wednesday, December 29, 2010
When to close a winning position
Hi traders. there has been some good discussion and points in the comment sections regarding when some traders like to close their positions. I thought I would add my thoughts.
I won't get into when to close a losing position, other than to say my rule is if the premium doubles (usually the ask) , I usually immediately close.
So, when to close a winning position.
One of my basic guidelines is when the remaining amount left is not earning me more than 1% on my maintenance used. I generally close it.
But, when closing a winning position I have several other guidelines.
1. I only close if I have already found a better use for my maintenance. I don't want to have closed it and then go looking for a new position. Have a plan before making a move.
2. If there is only a few days left, unless you are going into the next weekly or moving into the nest month, it usually pays to let it just expire. This comes under the heading of 'You don't want to jeopardize a wining position for a more risky one that probably doesn't pay all that much more.
Some of these are of course not written in stone but basic guidelines. They fall under the adage of - let your winners run and cut your losses.
I won't get into when to close a losing position, other than to say my rule is if the premium doubles (usually the ask) , I usually immediately close.
So, when to close a winning position.
One of my basic guidelines is when the remaining amount left is not earning me more than 1% on my maintenance used. I generally close it.
But, when closing a winning position I have several other guidelines.
1. I only close if I have already found a better use for my maintenance. I don't want to have closed it and then go looking for a new position. Have a plan before making a move.
2. If there is only a few days left, unless you are going into the next weekly or moving into the nest month, it usually pays to let it just expire. This comes under the heading of 'You don't want to jeopardize a wining position for a more risky one that probably doesn't pay all that much more.
Some of these are of course not written in stone but basic guidelines. They fall under the adage of - let your winners run and cut your losses.
Tuesday, December 28, 2010
Commission cost
HI put sellers. A common question I am often asked is "Is the trade worth it when the commission cost are so high"
I, as well as most traders hate commission cost but it is past of doing business. I very seldom eliminate a trade because of the commission. Example; it is the last couple of days of a trading month and I see a trade that might make me 100 dollars. But the commission cost might 25 so I net only 75. Yes it is 25% of the trade but what are the options? I can say no thank you, and pass on the profit of 75 of bite the bullet and take in the $75. I certainly don't like it, but I am not going to pass on the the money to 'show the brokerage.' I also keep an ear out for any brokerage that offers better rates.
Otherwise, it is part of the cost of business.
Jerry
I, as well as most traders hate commission cost but it is past of doing business. I very seldom eliminate a trade because of the commission. Example; it is the last couple of days of a trading month and I see a trade that might make me 100 dollars. But the commission cost might 25 so I net only 75. Yes it is 25% of the trade but what are the options? I can say no thank you, and pass on the profit of 75 of bite the bullet and take in the $75. I certainly don't like it, but I am not going to pass on the the money to 'show the brokerage.' I also keep an ear out for any brokerage that offers better rates.
Otherwise, it is part of the cost of business.
Jerry
Sunday, December 26, 2010
A great holiday
HI all, my family had a great Christmas and I hope all of you enjoyed the holiday.
Regarding options, I am TRYING to follow my own advice and stick with my current positions. There is still 4 weeks left in this period so it is just to soon to roll up. All of them earned over 3% when I opened them so doing nothing for the whole month would not be all bad. However, within a week or two opportunities will show up and I will tweak 'em a little.
currently I have --
AMZN trading around 182.5 I have the 145 put
CMG 228 180
NFLX 185 135
These all seem pretty safe at this time but mutual funds and other ETFs might be adjusting their holding so there could be some shuffling.
Jerry
Regarding options, I am TRYING to follow my own advice and stick with my current positions. There is still 4 weeks left in this period so it is just to soon to roll up. All of them earned over 3% when I opened them so doing nothing for the whole month would not be all bad. However, within a week or two opportunities will show up and I will tweak 'em a little.
currently I have --
AMZN trading around 182.5 I have the 145 put
CMG 228 180
NFLX 185 135
These all seem pretty safe at this time but mutual funds and other ETFs might be adjusting their holding so there could be some shuffling.
Jerry
Monday, December 20, 2010
Rolling up questions
Hi traders. A common question that come up is regarding when and if to roll up to a higher strike. I mentioned some of these thoughts in the comment section so forgive me for repeating them.
1. Nearly all my losses come from either rolling up to soon, or to an incorrect strike... NEARLY ALWAYS!!!
Try to fight the feeling that it is always correct to roll up. Never forget that to roll up you use more maintenance. This is off-set some as you also get more premium. But, often it is a near wash and yet you have endangered what was probably a safe position. If you are working with limited available maintenance and assume you have 10 puts s with XYZ stock, now when you roll up you can only do maybe 8 at the higher strike. You hardly made money and yet you now have to sweat some.
2. Try to keep in mind when you opened the position you were a happy camper. Now you want to tweak it some? Be sure to think it thorough.
3. A lot of this gets us back to GREED. We all suffer with trying to make the most we can, but this can be a dangerous game so always use caution. I am very familiar with the problem.
4. I now have AMZN monthly puts that started out around 3.5% profit. They have dropped a bunch as AMZN has moved up today. Now only one day into the month and my maintenance is sitting there only earning me 1.5% So this is a definite candidate to roll up. I usually give serious thought to rolling when my maintenance starts only earning around 1%. If you opened the position earning 4% and now you are down to 3%, my advice, don't roll up yet.
1. Nearly all my losses come from either rolling up to soon, or to an incorrect strike... NEARLY ALWAYS!!!
Try to fight the feeling that it is always correct to roll up. Never forget that to roll up you use more maintenance. This is off-set some as you also get more premium. But, often it is a near wash and yet you have endangered what was probably a safe position. If you are working with limited available maintenance and assume you have 10 puts s with XYZ stock, now when you roll up you can only do maybe 8 at the higher strike. You hardly made money and yet you now have to sweat some.
2. Try to keep in mind when you opened the position you were a happy camper. Now you want to tweak it some? Be sure to think it thorough.
3. A lot of this gets us back to GREED. We all suffer with trying to make the most we can, but this can be a dangerous game so always use caution. I am very familiar with the problem.
4. I now have AMZN monthly puts that started out around 3.5% profit. They have dropped a bunch as AMZN has moved up today. Now only one day into the month and my maintenance is sitting there only earning me 1.5% So this is a definite candidate to roll up. I usually give serious thought to rolling when my maintenance starts only earning around 1%. If you opened the position earning 4% and now you are down to 3%, my advice, don't roll up yet.
Dropping stock - dropping premium
Hi Traders, one nice feeling you get when trading with lots of cushion is the way a stock can fall in price and yet your premium is also dropping.
EX: CMG / I have the Jan 180 and on Friday the stock was trading around 238. today the stock dropped around 3 pts and yet the premium had dropped from .60 / .80 to .55 /80. This lets you close or continue to watch the positions at a possible break even level. Where put sellers get a bad name or in trouble is when they go for the big bucks and use a close strike price. After the opening this morning they are already underwater and struggling. This is especially true in the longer options months such as this current month.
Use caution, use cushion and avoid reaching to far on the opening of a position.
Good trading
Jerry
EX: CMG / I have the Jan 180 and on Friday the stock was trading around 238. today the stock dropped around 3 pts and yet the premium had dropped from .60 / .80 to .55 /80. This lets you close or continue to watch the positions at a possible break even level. Where put sellers get a bad name or in trouble is when they go for the big bucks and use a close strike price. After the opening this morning they are already underwater and struggling. This is especially true in the longer options months such as this current month.
Use caution, use cushion and avoid reaching to far on the opening of a position.
Good trading
Jerry
Sunday, December 19, 2010
Use caution with new positions
Hi traders. As I mentioned in one of the comments sections, I advise all to use caution with the coming January positions. Not to scare you or say the sky is falling etc. Just a note of caution as the mkt has come a lone way with the NASDAQ at or near highs not seen in a long time. The DOW has also had a good run. The VIX (volatility index) is low and that usually means traders are comfortable and complacent. That is usually when Ca Ca hits the fan. The Santa Claus rally might be over soon. Also mutual funds adjust their positions for tax reasons and normal adjustments to their portfolio.
So the advice I offer is for you to take lots of cushion and settle for smaller returns until we get a better picture of the market.
I am not opening any positions where I get more than 3% ROI on maintenance.
There Is 5 weeks for this options period so plenty of time to roll up as the month progresses. Don't rush things.
Good trading all and prosperous and hapy year ahead.
So the advice I offer is for you to take lots of cushion and settle for smaller returns until we get a better picture of the market.
I am not opening any positions where I get more than 3% ROI on maintenance.
There Is 5 weeks for this options period so plenty of time to roll up as the month progresses. Don't rush things.
Good trading all and prosperous and hapy year ahead.
Friday, December 17, 2010
Some new puts
A lot of talk regarding CMG. I looked around and decide I like it also. Sold the 180 strike with CMG trading around 239. That is nearly 60 points of cush and you can still get over 3%. The spread is pretty wide at .60 x .80 but you can probably get in around .65 or maybe .70.
My plan on a play like this is to let it ride for a week or two and then roll into a higher strike. If CMG stays near it present price i would only roll up to the 190 at most but then in another week in the 200 etc. Never get to anxious and roll to fast. Nearly all my losses come from rolling to high and to soon. Think tortoise rather than rabbit.
Jerry
My plan on a play like this is to let it ride for a week or two and then roll into a higher strike. If CMG stays near it present price i would only roll up to the 190 at most but then in another week in the 200 etc. Never get to anxious and roll to fast. Nearly all my losses come from rolling to high and to soon. Think tortoise rather than rabbit.
Jerry
Thursday, December 16, 2010
The week ending
Several things come to mind as the week is ending. One of the most painful is being stopped out of the nflx puts earlier this week. I had some 175 strike and it ended up being safe but the big drop in nflx caused a big jump in the premiums and stopped me out for a loss. It happens, but is always discouraging. You have to trade these with discipline. Sometimes it hurts but more often it will save major losses and keep you in the game.
Next week we will have to open new position in both monthly and weeklies. A concern is to be sure and not miss the coming earning reports. Many major companies will report in Jan. Even if your stock is not reporting, it might follow the trend of the market. So do not always figure that you are safe right up until your particular stock reports. Use caution, leave lots of cushion and follow your rules.
There is plenty of money to be made, but use caution as the market has come a long way in a short time.
Good trading and enjoy the holidays.
Next week we will have to open new position in both monthly and weeklies. A concern is to be sure and not miss the coming earning reports. Many major companies will report in Jan. Even if your stock is not reporting, it might follow the trend of the market. So do not always figure that you are safe right up until your particular stock reports. Use caution, leave lots of cushion and follow your rules.
There is plenty of money to be made, but use caution as the market has come a long way in a short time.
Good trading and enjoy the holidays.
Wednesday, December 15, 2010
position update
At this time I have puts with AMZN that expire on Friday. I have some 165 and 170's. Both look pretty good at this time with AMZN trading around 174 this morning.
But that NFLX stock has been pretty erratic. Maybe the profit taking is over and it can settle down some. I have some of the Jan monthly puts at the 135 strike.
All traders should be aware that in Jan we have a pretty full month of earnings reports. so use caution and make sure you are aware when your stock reports.
Weeklies come on line tomorrow so there might be some good plays coming up.
Jerry
But that NFLX stock has been pretty erratic. Maybe the profit taking is over and it can settle down some. I have some of the Jan monthly puts at the 135 strike.
All traders should be aware that in Jan we have a pretty full month of earnings reports. so use caution and make sure you are aware when your stock reports.
Weeklies come on line tomorrow so there might be some good plays coming up.
Jerry
Tuesday, December 14, 2010
Some AMZN puts
I opened some puts to catch the last of the Dec prem's.
I have a few 170 and 165's with AMZN, So if we can get AMZN to do a little better than nflx it will all work out.
I have a few 170 and 165's with AMZN, So if we can get AMZN to do a little better than nflx it will all work out.
NFLX,,,Grrr
Well, I was stopped out of the NFLX puts and lost a little. I think I will get out of nflx for awhile and let the water settle down. I might jump on AMZN or some of the other stocks that are performing better. So now, with the freed up maintenance I will go hunting for a good play.
Monday, December 13, 2010
A quick trade this morning
I had a little extra maintenance funds this morning so I sold some NFLX 170 puts for this last few days of Dec. This gives me only a little less than 5 days for the stock to drop over 22 pts. The return was 1.36%, so not bad for a 5 day trade with plenty of cushion. I seem to be stuck in the NFLX mode. The premiums are the best I can find at this time, but I still don't like having all my eggs in one basket. I will be looking hard for some other ideas for the coming Jan puts.
Friday, December 10, 2010
Final positions for the weekend
Well after opening and closing all kinds of NFLX position during the last 10 days, things have settled down to just two remaining positions.
Today I opened 30 for the Dec/17 strike of 175 received 1387.
I also opened 30 of the Jan 135 strike and received 1352.
--------
The plan is if NFLX stays up in the 190's or higher, next week I will roll the Dec 175's into a better strike and try to take in some extra $$
I will also roll the Jan 135 when the time is right into a better paying strike price.
Good trading all and I hope the coming holidays are happy and prosperous for all.
Today I opened 30 for the Dec/17 strike of 175 received 1387.
I also opened 30 of the Jan 135 strike and received 1352.
--------
The plan is if NFLX stays up in the 190's or higher, next week I will roll the Dec 175's into a better strike and try to take in some extra $$
I will also roll the Jan 135 when the time is right into a better paying strike price.
Good trading all and I hope the coming holidays are happy and prosperous for all.
Some new trades
Hi traders, I made a few moves this morning with my NFLX and FSLR positions.
I closed the 30 FSLR Dec 95 puts for 237 - this made a nice profit of 725
I also closed 10 NFLX puts at the 180 strike for 32. for a nice profit of
406 in one day
I opened some longer running Jan 135 puts with NFLX. With NFLX trading around 195, I opened 30 of these and it gives me 60 points of cushion with 6 weeks to go. The maintenance for this trades is 42,900 and i took in 1380. So a return of 3.2%. If NFLX continues to either go higher or stay around the same area i anticipate that i will be rolling these up in a couple of weeks to 'boost' the return a little. This continues my general plan of opening a monthly position with a return of around 3%. If all goes as planned it usually lets me tweak it some to get a little better return by months end. As I plod along, 3% each month does not sound all that spatacular but it adds up to an annual return of around 42%..
I closed the 30 FSLR Dec 95 puts for 237 - this made a nice profit of 725
I also closed 10 NFLX puts at the 180 strike for 32. for a nice profit of
406 in one day
I opened some longer running Jan 135 puts with NFLX. With NFLX trading around 195, I opened 30 of these and it gives me 60 points of cushion with 6 weeks to go. The maintenance for this trades is 42,900 and i took in 1380. So a return of 3.2%. If NFLX continues to either go higher or stay around the same area i anticipate that i will be rolling these up in a couple of weeks to 'boost' the return a little. This continues my general plan of opening a monthly position with a return of around 3%. If all goes as planned it usually lets me tweak it some to get a little better return by months end. As I plod along, 3% each month does not sound all that spatacular but it adds up to an annual return of around 42%..
Thursday, December 9, 2010
Not giving up on NFLX
This morning I sold 10 of the 180 weekly puts for NFLX and made right at 450. I could now close them at a cost of 150 for a 3 hour profit of around 300 but I will wait until tomorrow morning and close these and sell some other puts that expire later the same day.
I have been trying to close the FSLR puts that I have. I have 30 of the monthly ones that expire next week. They are the 95's and FSLR is trading around 132.6 I have tried to buy them to close for .05 but no takers? Maybe tomorrow and then i can use that maintenance for other trades. I hate to sit on over 28K of maintenance for a week and only make 250 or so. But that is part of trading.
I have been trying to close the FSLR puts that I have. I have 30 of the monthly ones that expire next week. They are the 95's and FSLR is trading around 132.6 I have tried to buy them to close for .05 but no takers? Maybe tomorrow and then i can use that maintenance for other trades. I hate to sit on over 28K of maintenance for a week and only make 250 or so. But that is part of trading.
Wednesday, December 8, 2010
An expensive golf round
Well, this morning with Nflx trading up and down around 184 and me sitting with only 6 puts at the 185 strike a problem arose. I had a Tee time at 10 am and NFLX was showing no sign of going up. I decide to close the position and bite the bullet. I did not want to come home and find it trading around 180 etc. So I closed for a loss of 1400 on the NFLX position. If I had stayed home and watched the mkt, I would have seen that the stock came all the way back to the 188 position...Grrr... But that is trading, some moves you are a genius and some you are ..wrong.
But this freed up a lot of maintenance funds so tomorrow I will make some moves to recoup the lost money of today. If NFLX is trading level I will probably jump back in and do even more of the 185's? About eight years ago I learned to do the best you can, think it out do what is right at the time and then you can't look back. You can certainly learn from the move but you can't go back. Even with the loss today on that position, I would do the same again under the same situation. I am still up a little over 2% for the month and will make it up in the last 7 days of trading.
But this freed up a lot of maintenance funds so tomorrow I will make some moves to recoup the lost money of today. If NFLX is trading level I will probably jump back in and do even more of the 185's? About eight years ago I learned to do the best you can, think it out do what is right at the time and then you can't look back. You can certainly learn from the move but you can't go back. Even with the loss today on that position, I would do the same again under the same situation. I am still up a little over 2% for the month and will make it up in the last 7 days of trading.
NFLX...Yikes
Well, rolling up with only three days left sounded like a good idea! With the news of a departing CFO, NFLX took it on the chin this morning. It seems to be coming back a little at a time. I will watch today and not hesitate to close the position if necessary. Sorry to say this options game is not a sure thing and every now and then you have to take your lumps.
I will keep you posted on what moves I make and the reasons behind them.
I will keep you posted on what moves I make and the reasons behind them.
Tuesday, December 7, 2010
Rolling up the NFLX puts
This morning after the opening I bought to close the puts I sold yesterday. I then sold the next strike up. I did these in what is called a vertical spread. But the basic result is that I bought 6 to close and sold 6 to open. Here are the results.
Thee are both WEEKLYS...
Yesterday sold the nflx 180 put = +602
bought today to close for . ...... -297
sold today to open, the 185 put.. +571
total return ................... = +876
The idea behind the trade is that I now have the same cushion as I had yesterday but there is one day less for NFLX to drop the 11 - 12 points and I made 274 more with the same cushion.
I am looking at the 30 165 puts that I have, and thinking of doing the same. Those have 8.5 days left so I might wait a day or two before rolling them up.
Good trading all.
Thee are both WEEKLYS...
Yesterday sold the nflx 180 put = +602
bought today to close for . ...... -297
sold today to open, the 185 put.. +571
total return ................... = +876
The idea behind the trade is that I now have the same cushion as I had yesterday but there is one day less for NFLX to drop the 11 - 12 points and I made 274 more with the same cushion.
I am looking at the 30 165 puts that I have, and thinking of doing the same. Those have 8.5 days left so I might wait a day or two before rolling them up.
Good trading all.
Monday, December 6, 2010
Opening some more NFLX puts
I just opened some WEEKLY puts for NFLX. With NFLX trading up around 193.3 today, I opened the weekly puts at the strike of 180. This netted 602 using the freed up maintenance from the closed Rimm puts.
The thought is With Rimm trading up today this leaves only 4 days of trading during the rest of this week for it to average over 3pts of stock drop daily. This trade netted a little over 200 above my Rimm puts, but it is only one week instead of two and no major news coming (earnings.)
The thought is With Rimm trading up today this leaves only 4 days of trading during the rest of this week for it to average over 3pts of stock drop daily. This trade netted a little over 200 above my Rimm puts, but it is only one week instead of two and no major news coming (earnings.)
closing the Rimm puts
G'morning, A few minutes ago I closed my RIMM puts. I had 30 of the 150 strike price. With Rimm trading around 162 this morning I decided to close for several reasons.
Opened +752
closed -388
net +364
1. The old (but true) saying, You are never wrong to take profits.
2. With earnings coming, I don't want to watch my earnings disappear on a bad report or some analyst negative report.
I can now use the maintenance funds that are freed up for a 'safer' position.
Opened +752
closed -388
net +364
1. The old (but true) saying, You are never wrong to take profits.
2. With earnings coming, I don't want to watch my earnings disappear on a bad report or some analyst negative report.
I can now use the maintenance funds that are freed up for a 'safer' position.
Friday, December 3, 2010
Some cautions
HI traders, I have been reading the post and comments and some thoughts come to mind. I get nervous for investors that like selling puts but are making moves sometimes based on factors out of their control. So if any of this stays in your brains for the future then one of my goals has been reached. Hopefully these points will separate you from the average trader (who usually loses in the end)
* Whenever you are looking for a stock and decent prem, and you get the AHA moment, 'here is a great one..wow.' Folks, step back and reevaluate. The trader on the other side is not a fool. He will not give away money unless he feels he can make some. He probably has more experience than you and probably thinks you are the sucker. (he may be right) If the trade is out of proportion, you are in the wrong!
*Do not out guess the earning season. It is dangerous. Dangerous means one really bad report can wipe you out. It can ruin your investing career and sometimes more. This is simple investing, but to separate yourself from the pack you must have discipline and smarts.
*the bad reports that might come from a stock regarding earnings may come days or even a week before the scheduled earnings report. Do not think you can go right up to the day before etc. It is called earning season, which can be more than any special DAY.
*Do not get greedy. Greedy is a word that always means the other guy. When you are opening a position and it is two weeks in to the trading month and you are getting 5% or so... you are getting greedy. Meaning you are pushing the envelope way to far. Again, the guy on the other side is just hoping you take the bait. Do not forget, he is no fool, he knows just what he is doing. You be the trader that drops back one strike and makes 2% and smiles and sleeps. Let it be him that takes the bait. There is always someone that knows something. When they give away money, a thought that has saved me many times is, Jerry, be very careful and think this out, something is a little off here.
Well enough preaching here. Just be a smart trader not just an average trader. Average traders get their lunch eaten everytime.
* Whenever you are looking for a stock and decent prem, and you get the AHA moment, 'here is a great one..wow.' Folks, step back and reevaluate. The trader on the other side is not a fool. He will not give away money unless he feels he can make some. He probably has more experience than you and probably thinks you are the sucker. (he may be right) If the trade is out of proportion, you are in the wrong!
*Do not out guess the earning season. It is dangerous. Dangerous means one really bad report can wipe you out. It can ruin your investing career and sometimes more. This is simple investing, but to separate yourself from the pack you must have discipline and smarts.
*the bad reports that might come from a stock regarding earnings may come days or even a week before the scheduled earnings report. Do not think you can go right up to the day before etc. It is called earning season, which can be more than any special DAY.
*Do not get greedy. Greedy is a word that always means the other guy. When you are opening a position and it is two weeks in to the trading month and you are getting 5% or so... you are getting greedy. Meaning you are pushing the envelope way to far. Again, the guy on the other side is just hoping you take the bait. Do not forget, he is no fool, he knows just what he is doing. You be the trader that drops back one strike and makes 2% and smiles and sleeps. Let it be him that takes the bait. There is always someone that knows something. When they give away money, a thought that has saved me many times is, Jerry, be very careful and think this out, something is a little off here.
Well enough preaching here. Just be a smart trader not just an average trader. Average traders get their lunch eaten everytime.
Position update
With two weeks left in the option month, this is where I usually review my positions and start looking for ways to upgrade my returns.
Positions I now have are---
FSLR 30 OF THE 95 STRIKE
LVS 40............39
NFLX 30...........165
RIMM 30............50
I have taken in $4,639. with these positions. All of the stocks are preforming as expected. None of the puts have fallen enough in value for me to start looking at rolling up. So I will sit on these and by Wednesday of next week maybe the time value will start eating at the premium.
I also have to keep in mind that RIMM reports earnings on the 16th of Dec. This will be about 3 days before the end of this option month. It is always something to be aware of. An earnings report is probably the biggest factor in my option trading. It can never be underestimated. As all of you that have read my book know, Unless I have a very VERY big cushion I avoid holding over an earnings.
I received a note asking that I make sure that in the future I will make sure that I differentiate between when I have a weekly vs monthly position. I will certainly try to keep that in mind.
Also today in the news is the jobs report. Many PUT traders try to out-guess these reports. For me, I just go through my list of stocks and filters and pick as well as possible and 'sell the put'. I don't want to have paralysis by analysis, by worrying about every report coming down the pike. Everyday there is another 'report' of some kind coming. Always a future possible market turner. So keep your eyes and ears open, but don't over worry about each report coming.
In my 13 years of trading I have seen these reports come and go ( how about Y2K) I have learned to relax and go with the flow.
good trading all.
Jerry
Positions I now have are---
FSLR 30 OF THE 95 STRIKE
LVS 40............39
NFLX 30...........165
RIMM 30............50
I have taken in $4,639. with these positions. All of the stocks are preforming as expected. None of the puts have fallen enough in value for me to start looking at rolling up. So I will sit on these and by Wednesday of next week maybe the time value will start eating at the premium.
I also have to keep in mind that RIMM reports earnings on the 16th of Dec. This will be about 3 days before the end of this option month. It is always something to be aware of. An earnings report is probably the biggest factor in my option trading. It can never be underestimated. As all of you that have read my book know, Unless I have a very VERY big cushion I avoid holding over an earnings.
I received a note asking that I make sure that in the future I will make sure that I differentiate between when I have a weekly vs monthly position. I will certainly try to keep that in mind.
Also today in the news is the jobs report. Many PUT traders try to out-guess these reports. For me, I just go through my list of stocks and filters and pick as well as possible and 'sell the put'. I don't want to have paralysis by analysis, by worrying about every report coming down the pike. Everyday there is another 'report' of some kind coming. Always a future possible market turner. So keep your eyes and ears open, but don't over worry about each report coming.
In my 13 years of trading I have seen these reports come and go ( how about Y2K) I have learned to relax and go with the flow.
good trading all.
Jerry
Thursday, December 2, 2010
NFLX, a troubling position
This week I opened 30 puts in NFLX. Nflx was trading around 200. I opened the 165 strike and received .65 in premium. Nflx had continued its upward journey and then topped out and has fell for two straight days. The stock is now trading around 197. the premium has risen to around 1.10.
So my question is, do I close the position and take a loss of around 1,000. or wait. My decision is based on the following. (but could change in a heartbeat)
PRO'S
1. Nflx is not that far from where it was when i opened the position.
2. The business is booming.
3. (and the main positive point) Time is on my side. I still have over 30 of cushion. 30 points is a lot to fall with a stock that is doing this well. The first few days of dropping can be called..profit taking.. removing the fluff.. etc. But at some point resistance to dropping should kick in and level off the stock or even take off upward again.
4. The rising of the premium hasn't yet reached by line in the sand (doubled)
CON'S
1. Everyone hates to take a loss, don't let this feeling obscure your view of the facts
2. There is no rule that the stock can not keep falling
3. It is getting close to a double and an automatic 'close.'
So today i will watch it and bail if I have to.
Decisions decisions..
So my question is, do I close the position and take a loss of around 1,000. or wait. My decision is based on the following. (but could change in a heartbeat)
PRO'S
1. Nflx is not that far from where it was when i opened the position.
2. The business is booming.
3. (and the main positive point) Time is on my side. I still have over 30 of cushion. 30 points is a lot to fall with a stock that is doing this well. The first few days of dropping can be called..profit taking.. removing the fluff.. etc. But at some point resistance to dropping should kick in and level off the stock or even take off upward again.
4. The rising of the premium hasn't yet reached by line in the sand (doubled)
CON'S
1. Everyone hates to take a loss, don't let this feeling obscure your view of the facts
2. There is no rule that the stock can not keep falling
3. It is getting close to a double and an automatic 'close.'
So today i will watch it and bail if I have to.
Decisions decisions..
Wednesday, December 1, 2010
Regarding market fears.
All my positions are looking good this morning so I thought I would pass on some thoughts regarding comments and questions I get. One that come up often from traders like us to friends on the golf course etc.
"Aren't you worried that the market is ready for a pull-back". Another is "Aren't you afraid of another market melt-down day"
Quite frankly NO. I certainly don't have my head in the sand, nor do I ignore the news of the day. But and it is a big Butt.. You can't trade in a fear mentality. It is that simple. You can trade in an aware mentality, but not in fear. This boils down to what has carried me through some tough times and proven to be correct often enough.
Pick a good successful stock that has a somewhat reasonable PE, give lots of cushion and sell some puts. To judge a stock that fits that criteria I use the guidelines in my book and common sense.
This is one reason I avoid stocks with a pending FDA report. I don't want to live in fear of losing a lot of hard earned gains on the chance it fails and opens that morning off 15 points etc. Let the other traders make the big gamble.. Don't get caught up in trying to catch the golden ring. Just plod along like the tortoise. You will end up wealthy and happier.
Good trading all and I hope you enjoy exchanging ideas and trades.
Jerry
"Aren't you worried that the market is ready for a pull-back". Another is "Aren't you afraid of another market melt-down day"
Quite frankly NO. I certainly don't have my head in the sand, nor do I ignore the news of the day. But and it is a big Butt.. You can't trade in a fear mentality. It is that simple. You can trade in an aware mentality, but not in fear. This boils down to what has carried me through some tough times and proven to be correct often enough.
Pick a good successful stock that has a somewhat reasonable PE, give lots of cushion and sell some puts. To judge a stock that fits that criteria I use the guidelines in my book and common sense.
This is one reason I avoid stocks with a pending FDA report. I don't want to live in fear of losing a lot of hard earned gains on the chance it fails and opens that morning off 15 points etc. Let the other traders make the big gamble.. Don't get caught up in trying to catch the golden ring. Just plod along like the tortoise. You will end up wealthy and happier.
Good trading all and I hope you enjoy exchanging ideas and trades.
Jerry
Tuesday, November 30, 2010
Some last minute puts
I just sold another 15 of the NFLX puts at the strike of 165.
NFLX is trading around 206 I received another 806 for a total of 1960 in all. This position requires 52140 in maint So the monthly return is 3.7. This is with 71 points of cushion for 2.5 weeks.
NFLX is trading around 206 I received another 806 for a total of 1960 in all. This position requires 52140 in maint So the monthly return is 3.7. This is with 71 points of cushion for 2.5 weeks.
mis-print on RIMM trade
Earlier I said I opened the RIMM trade while it traded around 179 or so. Actually the stock traded around 62.5. (not enough coffee yet)
Most of today's trades are around 20% below the current stock price. With a little over 2.5 weeks to go I feel pretty good. The closing of my LVS position and the associated CC's was probably premature but I didn't like the direction the stock was taking and as you have probably seen with some of my trades, if not comfortable with a position I don't hesitate to make a move. My thinking is you can't be the deer in the headlights.. Make a decision..The decision might be to do nothing and that is valid. I advise traders to not get 'stuck'. Oh-oh should i sell.. or keep or do nothing etc. The pressure builds and 'STUCK' builds. One of my ways of looking at a position when worried is "Would I open this position at this point?" If the answer is NO-WAY! To me that is a good time to close it now. I don't waver of waffle, I close it.
Most of today's trades are around 20% below the current stock price. With a little over 2.5 weeks to go I feel pretty good. The closing of my LVS position and the associated CC's was probably premature but I didn't like the direction the stock was taking and as you have probably seen with some of my trades, if not comfortable with a position I don't hesitate to make a move. My thinking is you can't be the deer in the headlights.. Make a decision..The decision might be to do nothing and that is valid. I advise traders to not get 'stuck'. Oh-oh should i sell.. or keep or do nothing etc. The pressure builds and 'STUCK' builds. One of my ways of looking at a position when worried is "Would I open this position at this point?" If the answer is NO-WAY! To me that is a good time to close it now. I don't waver of waffle, I close it.
OK, todays trades
This morning I sold puts as follows REC maint return
30 RIMM 179.5 -sold the 50 strike and 752 16440 4.57
30 FSLR 122.5 95 962 29670 3.2
15 nflx 202.5 165 1154 26070 4.4
Those are today's trades. I have some maint. left so I will continue on looking for a safe looking trade or two to finish some maintenance. So far with all of the up and downs with the stock and covered calls, I am around 4% for the month if all expire as planned. I will enter all on my excel sheets and get an exact number later today.
30 RIMM 179.5 -sold the 50 strike and 752 16440 4.57
30 FSLR 122.5 95 962 29670 3.2
15 nflx 202.5 165 1154 26070 4.4
Those are today's trades. I have some maint. left so I will continue on looking for a safe looking trade or two to finish some maintenance. So far with all of the up and downs with the stock and covered calls, I am around 4% for the month if all expire as planned. I will enter all on my excel sheets and get an exact number later today.
I'm home again
Hi traders, I returned home late last night, I was away for a few days and only had a chance to make one quick trade on Monday morning. I sold my LVS stock and closed the cc's for the 50 strike. I will relay all the info on the trades a little later today. Right now I have some trading to catch up on. I will try to not get off course and do any CC etc for awhile. Of course all of these method work and it isn't bad to input a few different plays now and then but generally it is best to specialize. For me that is puts! So back to the screen to see if I can find any weeklys or others that fit my way of trading. I hope to have my plays and the results posted by 8:30
Jerry
Jerry
Wednesday, November 24, 2010
Mental gymnastics
Well, I made some moves this morning regarding the LVS CC's.
I bought the Nov 26 50 strike CC's, a -1216 loss.
I sold the Dec 3 CC's for +6572 gain
So when the dust settles, if LVS stays above 50 for another week I will net
3395 for two weeks trading. This will lower my cost basis for the LVS to around 48.85. Dang, this is more work than I wanted when I entered this trade! Jerry, get back to puts and 'easy money'!!!
I bought the Nov 26 50 strike CC's, a -1216 loss.
I sold the Dec 3 CC's for +6572 gain
So when the dust settles, if LVS stays above 50 for another week I will net
3395 for two weeks trading. This will lower my cost basis for the LVS to around 48.85. Dang, this is more work than I wanted when I entered this trade! Jerry, get back to puts and 'easy money'!!!
Trade trigger activated
Ok,I now own 3000 shares of LVS... This is a classic case of being 'whipped-sawed' My shares were bought at a cost of 150,240. So it seems if the stock stays above 50 I will make around 600. Yikes, a lot of work for 600 bucks! All of this started with a simple trade that was to last about 4 days and one of those were a holiday.. Now I remember why I mainly stick to naked puts! As the Eagles said in one of their songs
" The lure of easy money has a very strong appeal"... How true.
" The lure of easy money has a very strong appeal"... How true.
Tuesday, November 23, 2010
Hmm, this covered call didn't work out like it could/should
Yesterday I bought 1000 shrs of LVS and sold the CC's (covered calls) at the 50 strike. buying the stock cost 50.585. sold it today for 48864 for a net loss of 1721. But the CC's made 1407. So I then had 10 naked calls with a potential loss on the position of -314.
This morning after closing the stock position I then sold 20 more naked calls for LVS at the 50 strike. I took in another 1155. I put in an order to buy the 3000 shrs of LVS if it crossed the 50.02 mark.(making these now CC's)
So when the dust settles..Whew.. I could net all of 841 for all this hopping around.
Was it worth it? NO, I don't do CC's often and this is one reason. I could have just held the position and assuming LVS stayed around the 49 point i could have sold next weeks 50 strike again and the same the following week etc. But I don't want to go for coffee and then come back and find the stock trading around 46 etc. So the lesson for me and hopefully you. Don't let your losses mount. Take a loss if you have to and then move on. 10 years ago there were days when i loss 25,000. all because I couldn't pull the trigger when the losses started to mount.
This morning after closing the stock position I then sold 20 more naked calls for LVS at the 50 strike. I took in another 1155. I put in an order to buy the 3000 shrs of LVS if it crossed the 50.02 mark.(making these now CC's)
So when the dust settles..Whew.. I could net all of 841 for all this hopping around.
Was it worth it? NO, I don't do CC's often and this is one reason. I could have just held the position and assuming LVS stayed around the 49 point i could have sold next weeks 50 strike again and the same the following week etc. But I don't want to go for coffee and then come back and find the stock trading around 46 etc. So the lesson for me and hopefully you. Don't let your losses mount. Take a loss if you have to and then move on. 10 years ago there were days when i loss 25,000. all because I couldn't pull the trigger when the losses started to mount.
Monday, November 22, 2010
Snow is falling
Wow, the Seattle area is getting snow and cold weather. It has already set the record for this area and this date. It is around 20 deg and traffic is a mess.
How nice it is to work from home. Now If i can only keep the cable and power going I am ok..I still have lots of trades to make tomorrow, lol.
How nice it is to work from home. Now If i can only keep the cable and power going I am ok..I still have lots of trades to make tomorrow, lol.
What me selling a Covered Call..yep
HI all. I can't find many trades that i like while trying to use weeklys.
I decided I will sell some covered calls with LVS
If you put 3 traders in a room and ask how they figure their returns, you would probably get 3 different ways.. So what I did this morning and profits are as follow (how I figure them)
I bought 1000 shr's of LVS paid 58,585
I sold the CC's at the 50 strike (covered calls) for 1,420
The CC's are for weeklys So only 4 days to go.
Here is how i figure the results...
received 1420 for the cc
but will sell the stocks for 50. even though I bought it for 50.58 So this is a loss on the stock for 580 [1000 x .58]
So..(keep track now..lol) 1420-580= 840 net if the stock stays over 50
As I only needed 14,817 maintenance this pencils out to 840 div by 14,817= 5.66% return for a weeks work.
I don't do many CC's anymore as you have to put out money while buying the stock. I much prefer to have money coming my way !!! But you must stay flexible in this options field.
I will keep you posted on the results of this play.
I decided I will sell some covered calls with LVS
If you put 3 traders in a room and ask how they figure their returns, you would probably get 3 different ways.. So what I did this morning and profits are as follow (how I figure them)
I bought 1000 shr's of LVS paid 58,585
I sold the CC's at the 50 strike (covered calls) for 1,420
The CC's are for weeklys So only 4 days to go.
Here is how i figure the results...
received 1420 for the cc
but will sell the stocks for 50. even though I bought it for 50.58 So this is a loss on the stock for 580 [1000 x .58]
So..(keep track now..lol) 1420-580= 840 net if the stock stays over 50
As I only needed 14,817 maintenance this pencils out to 840 div by 14,817= 5.66% return for a weeks work.
I don't do many CC's anymore as you have to put out money while buying the stock. I much prefer to have money coming my way !!! But you must stay flexible in this options field.
I will keep you posted on the results of this play.
A short week
Hi friends,
It is hard to find any good weekly positions with Thanksgiving making for a short week. I will go with mostly monthlies at the open this morning.
Maybe DECK.. trading around 68+ I have an order in to sell the 56.67 put for .30 (monthlies) The reason for such an odd strike is because of the split the stock recently had. A 3-1 on July 6th.
If it doesn't go through soon I will lower my bid to .25
Well 20 went through at .30 and now I have changed the order to 20 more at .25
the ones that went through at .30 netted 580 and required 12,234 maint. this is a return of 4.7%
I just opened some LVS puts for the monthlies. With LVS trading around 50, I sold 40 of the 39 strike. received 965 and maintenance needed is 17360. so this is a return of 5.5%.. You gotta love that.
It is hard to find any good weekly positions with Thanksgiving making for a short week. I will go with mostly monthlies at the open this morning.
Maybe DECK.. trading around 68+ I have an order in to sell the 56.67 put for .30 (monthlies) The reason for such an odd strike is because of the split the stock recently had. A 3-1 on July 6th.
If it doesn't go through soon I will lower my bid to .25
Well 20 went through at .30 and now I have changed the order to 20 more at .25
the ones that went through at .30 netted 580 and required 12,234 maint. this is a return of 4.7%
I just opened some LVS puts for the monthlies. With LVS trading around 50, I sold 40 of the 39 strike. received 965 and maintenance needed is 17360. so this is a return of 5.5%.. You gotta love that.
Saturday, November 20, 2010
November results
Hi Traders
Well my Nov. results suffered some due to my leaving town for 12 days in the middle of this option period.
With a couple of naked calls to spice things up I netted 5164 for the month. Not super, but being cautious and being gone for some time it is acceptable.
I hope all of you that are trading are having success. Keep the comments coming as I learn from each and enjoy reading of the success of other traders.
Get ready December, here we come.
Keep your fingers crossed for a Santa Claus rally.
Jerry
Well my Nov. results suffered some due to my leaving town for 12 days in the middle of this option period.
With a couple of naked calls to spice things up I netted 5164 for the month. Not super, but being cautious and being gone for some time it is acceptable.
I hope all of you that are trading are having success. Keep the comments coming as I learn from each and enjoy reading of the success of other traders.
Get ready December, here we come.
Keep your fingers crossed for a Santa Claus rally.
Jerry
Friday, November 19, 2010
Closed the LVS puts
Well I closed the LVS puts. I had 30 of them and for reasons listed in the comments part of the previous post i decided to close. I made 155 in an hour so it was a good trade.
good luck all..I'm going golfing, keep the market under control while I'm out.
good luck all..I'm going golfing, keep the market under control while I'm out.
A quick last day profit
Hi all, I just sold the 165 strike puts for NFLX for expiration at the close today.
NFLX is trading around 171.5. I sold 28 puts at .04 I received $86. so just a closing sell to pocket some money on the last day of trading. As I will be away later i will put in a BUY TO CLOSE order with a trigger of 166. this is just a little protection to let me relax while away for the screen. Just a few more crumbs!
NFLX is trading around 171.5. I sold 28 puts at .04 I received $86. so just a closing sell to pocket some money on the last day of trading. As I will be away later i will put in a BUY TO CLOSE order with a trigger of 166. this is just a little protection to let me relax while away for the screen. Just a few more crumbs!
Las Vegas Sands? might as well gamble
First trade this morning
I sold 30 puts with LVS. Lvs is trading around 47.5 and I sold the 38 strike price. These sold for a net of .34. The maintenance required is 12,660. so I netted 1,022 for a return of a little over 8%
To me, whenever I open a position and I make over 6%, as a rule I get nervous. Over 6% is a red flag that I am pushing the limit on the strike I have chosen. I will ride this position for awhile for several reasons.
1. the picture for Las Vegas in general is getting better
2. I have over 10 points of cushion
3. the last earnings report beat expectations.
This is the first time I have used LVS. If it works out I will leave it on my 'CHECK CLOSE EACH MONTH' list.
------
At this time I am watching my roll-up with AMZN. I am not comfortable with AMZN dropping some this morning. I break even roughly if I get out at .15
I now have an order in to buy to close the position for .14 I will see how it goes and keep you informed. As I am away from the computer after 9am (Tee time)I don't want to let my profits erode to far.
This demonstrates that option trading is a business. You can not just open a position and not monitor it.
Ooop's I just received notice that my trade went through regarding the closing of my AMZN position.
Here are those results.
first opened at 1557
closed for 224
opened the roll-up for 774
closed the roll up for 521
Net result for the whole position....
I could have made 1557 but I tweaked it some and made and extra whopping $29 profit for a net of $1586. But 29 extra is not a bad profit, just not fantastic. That is trading. The goal is to make money...crumb by crumb.
I sold 30 puts with LVS. Lvs is trading around 47.5 and I sold the 38 strike price. These sold for a net of .34. The maintenance required is 12,660. so I netted 1,022 for a return of a little over 8%
To me, whenever I open a position and I make over 6%, as a rule I get nervous. Over 6% is a red flag that I am pushing the limit on the strike I have chosen. I will ride this position for awhile for several reasons.
1. the picture for Las Vegas in general is getting better
2. I have over 10 points of cushion
3. the last earnings report beat expectations.
This is the first time I have used LVS. If it works out I will leave it on my 'CHECK CLOSE EACH MONTH' list.
------
At this time I am watching my roll-up with AMZN. I am not comfortable with AMZN dropping some this morning. I break even roughly if I get out at .15
I now have an order in to buy to close the position for .14 I will see how it goes and keep you informed. As I am away from the computer after 9am (Tee time)I don't want to let my profits erode to far.
This demonstrates that option trading is a business. You can not just open a position and not monitor it.
Ooop's I just received notice that my trade went through regarding the closing of my AMZN position.
Here are those results.
first opened at 1557
closed for 224
opened the roll-up for 774
closed the roll up for 521
Net result for the whole position....
I could have made 1557 but I tweaked it some and made and extra whopping $29 profit for a net of $1586. But 29 extra is not a bad profit, just not fantastic. That is trading. The goal is to make money...crumb by crumb.
Thursday, November 18, 2010
A different Roll-up
HI all, After AMZN jumped so much and with only one day left in trading, I rolled my 150 puts into the 160 puts.
Here are the numbers. I did less of the 160's as the maintenance is more.
Sold the 150's for $1557 Wednesday. Bought to close on Thursday for $224 =
1334 profit in a day
Sold the 160 put for 774 Thursday and if it expires worthless tomorrow I will net 2107 rather than the original 1557. So I bumped the profits by 550 by rolling into the 160's.
For protection I put an order in to close the position (the 160 puts) if the stock dropped to 161.25. It is now trading above 164. I will be away from the computer after 9am, so this give me some protection. Hopefully I will know by then which way the wind is blowing with AMZN.
Just tweaking and picking up crumbs.
Good trading all.
Here are the numbers. I did less of the 160's as the maintenance is more.
Sold the 150's for $1557 Wednesday. Bought to close on Thursday for $224 =
1334 profit in a day
Sold the 160 put for 774 Thursday and if it expires worthless tomorrow I will net 2107 rather than the original 1557. So I bumped the profits by 550 by rolling into the 160's.
For protection I put an order in to close the position (the 160 puts) if the stock dropped to 161.25. It is now trading above 164. I will be away from the computer after 9am, so this give me some protection. Hopefully I will know by then which way the wind is blowing with AMZN.
Just tweaking and picking up crumbs.
Good trading all.
Rolling up-- maybe
HI all. Well today I am trying to roll up from the NOV 150 amzn put to the 155 nov, amzn put. If it works it will be a credit of .08 when the dust settles. The order is in and now waiting for results.
The idea and reason behind is that with around 162+ this still will give me me over 7 pts of cushion and only one day left. I have 46 of these so the bump up is only 350 or so. But these crumbs just keep adding up. I also am never one to refuse 350 for a two day profit. I will keep you posted if it all works.
ps; when doing these trades I always put the trade as AON. This is a all-or-none trade. It instructs the brokerage to do AON as i do not want just 3 or 4 to go through and then you lose some with the cost of trading figured in.
The idea and reason behind is that with around 162+ this still will give me me over 7 pts of cushion and only one day left. I have 46 of these so the bump up is only 350 or so. But these crumbs just keep adding up. I also am never one to refuse 350 for a two day profit. I will keep you posted if it all works.
ps; when doing these trades I always put the trade as AON. This is a all-or-none trade. It instructs the brokerage to do AON as i do not want just 3 or 4 to go through and then you lose some with the cost of trading figured in.
Wednesday, November 17, 2010
todays results
Well, as I said, I put in an order before the opening for .40 for the AMZN puts. The order was ignored...lol. The premium was dropping fast as AMZN was ticking up. So instead of chasing the premium and always being behind the curve, I just put in an order for At The Market. These went through at .27. These puts need approximately 25.02 each for maintenance. This equals a profit of a tad over 1% for three days.
*A quick perspective on profits.
I am on a BOD for a home owners association. We have extra funds in our reserve account that require safety and this results in us depositing our funds in MMKT accounts. While searching for some rates with local banks yesterday, I found that a common rate is .9% for a year. So with my private account when i can get over 1% in three days, you've gotta like that.
I am often asked, how I can be happy getting only premiums such as today's .27. I try to keep the perspective that end results are what count.
If I can trade and maintain around 3% MONTHLY, I am a happy camper. As I say in my book, "I just continue to pick up the crumbs around the table."
Good trading all.
*A quick perspective on profits.
I am on a BOD for a home owners association. We have extra funds in our reserve account that require safety and this results in us depositing our funds in MMKT accounts. While searching for some rates with local banks yesterday, I found that a common rate is .9% for a year. So with my private account when i can get over 1% in three days, you've gotta like that.
I am often asked, how I can be happy getting only premiums such as today's .27. I try to keep the perspective that end results are what count.
If I can trade and maintain around 3% MONTHLY, I am a happy camper. As I say in my book, "I just continue to pick up the crumbs around the table."
Good trading all.
I'm back
Hi all, well I'm back and diving in. With a week to go I still like using the last of the Nov puts.
I am selling AMZN puts.
With AMZN selling around 158.3, I'm selling the 150 put.
I anticipate that they will sell for somewhere around .40 at the
opening. With only 3 days of trading left and one of those is starting
off with AMZN heading up at the opening, things look good. The return is around 1.5%. As this is for three days I like it.
If you are thinking of doing any of these (or other NOV) puts. I advise you to jump in early as the time decay will be quick.
Thursday more puts will come on line for all weeklies.
Hope all of you have made some money while I was away.
It is good to be back!
I am selling AMZN puts.
With AMZN selling around 158.3, I'm selling the 150 put.
I anticipate that they will sell for somewhere around .40 at the
opening. With only 3 days of trading left and one of those is starting
off with AMZN heading up at the opening, things look good. The return is around 1.5%. As this is for three days I like it.
If you are thinking of doing any of these (or other NOV) puts. I advise you to jump in early as the time decay will be quick.
Thursday more puts will come on line for all weeklies.
Hope all of you have made some money while I was away.
It is good to be back!
Wednesday, November 3, 2010
Leave of absence
Hi Traders, I will be out of town until the 14th of Nov. I am letting my GOOG puts run as I like them and there is plenty of time.
I think the elections will be good for business. The mkt had already figured in the results so not much action today in the big market. More important news coming during this week. So keep your powder dry, and make careful trades.
See ya in 10 days.
I think the elections will be good for business. The mkt had already figured in the results so not much action today in the big market. More important news coming during this week. So keep your powder dry, and make careful trades.
See ya in 10 days.
Tuesday, November 2, 2010
OK, I changed my mind
Hi Traders. Yesterday I opened the naked calls with NFLX trading around 167. I sold the naked calls for .73 net or $737.
Today i closed the position for two main reasons.
1. NFLX is heading up over 5 pts so far. This isn't a real problem as
I had a buy order in for the stock if it crossed 184.
2. I am leaving town for 10 days tomorrow and will be out of all contact.
No TV, cell or any other means of finding out what is going on in the
financial world. I could just leave and let the position do what ever it wants, but it is just something that i do not want on my mind while I am gone. If NFLX had gone down some this morning I would probably have left it open as it would have seemed even more safe. It now is possible for NFLX to 'maybe' make it to 185 or above. Not likely butttt....
3. I closed the position for $592 so i made some money in one day -145 when the dust settled.
The interesting part is how even though NFLX went up over 5 dollars the naked call went down. That is a classic example of premium being eaten up by the TIME factor.
As you can see by my trading style, if something goes different than I expected I do not hesitate to pull the trigger. To me that is an important part of trading. You can not be the deer in the headlights and just stare at the monitor wondering ..What's gonna happen next. You have to be decisive. You will be wrong often but hopefully you make profits and sleep better. As I've said in the past, I had those months where I tossed and turned all night. Those days are in the past for me. I will open a position for a specific reason and if it does not work out as anticipated... I close it and move on.
Good trading all.
Today i closed the position for two main reasons.
1. NFLX is heading up over 5 pts so far. This isn't a real problem as
I had a buy order in for the stock if it crossed 184.
2. I am leaving town for 10 days tomorrow and will be out of all contact.
No TV, cell or any other means of finding out what is going on in the
financial world. I could just leave and let the position do what ever it wants, but it is just something that i do not want on my mind while I am gone. If NFLX had gone down some this morning I would probably have left it open as it would have seemed even more safe. It now is possible for NFLX to 'maybe' make it to 185 or above. Not likely butttt....
3. I closed the position for $592 so i made some money in one day -145 when the dust settled.
The interesting part is how even though NFLX went up over 5 dollars the naked call went down. That is a classic example of premium being eaten up by the TIME factor.
As you can see by my trading style, if something goes different than I expected I do not hesitate to pull the trigger. To me that is an important part of trading. You can not be the deer in the headlights and just stare at the monitor wondering ..What's gonna happen next. You have to be decisive. You will be wrong often but hopefully you make profits and sleep better. As I've said in the past, I had those months where I tossed and turned all night. Those days are in the past for me. I will open a position for a specific reason and if it does not work out as anticipated... I close it and move on.
Good trading all.
Monday, November 1, 2010
Additional points regarding my trade with the naked calls
I didn't mention the profit percentage of this trade.
I took in 737 and needed 25,534 in maintenance funds. 25534 div by 737 = 2.88 % return for 4.5 day trade.
Before doing these naked calls that might involve having to buy the stock to cover your 'what if' scenario. You must be sure you have enough stock buying capability (funds). Also If as i mentioned the potential of buying stock and then it dropping back below what was you trigger point (184 in this case)
I will then own the stock and I will either just sell it next week or sell covered calls on the existing stock.
If any questions regarding this type of trade just add a comment on the posting and I will try to answer it as soon as i see your posting.
I took in 737 and needed 25,534 in maintenance funds. 25534 div by 737 = 2.88 % return for 4.5 day trade.
Before doing these naked calls that might involve having to buy the stock to cover your 'what if' scenario. You must be sure you have enough stock buying capability (funds). Also If as i mentioned the potential of buying stock and then it dropping back below what was you trigger point (184 in this case)
I will then own the stock and I will either just sell it next week or sell covered calls on the existing stock.
If any questions regarding this type of trade just add a comment on the posting and I will try to answer it as soon as i see your posting.
An opposite type trade
Ok, I hope I don't confuse you with this trade. I am doing a type of trade that I like in down-or flat markets. I am selling naked CALLS..
If you have read my book I have a chapter on this method. It is quite easy and similar but on the opposite side of naked puts.
I sold the naked calls for NFLX
with NFLX trading around 167.5 I sold the Nov 5 (weekly) 185 call.
I sold 10 of them for $737.
My plan is that NFLX will not go up to 185 during this week. And if that happens (stays below 185) then the naked calls just go away. If NFLX starts up i will have in place an order to buy the stock at 184. So the hoped for result is that nflx will then continue above 185 and I will have the stock and it will be called away. So i make another 1000 buy for 184. Called away for 185. This plus the 737. will make a nice profit any way it shakes out. The worst is the nflx goes to the 184 point and triggers my buy order and then drops down. But that is a lot of 'ifs' for only one week.
If you have read my book I have a chapter on this method. It is quite easy and similar but on the opposite side of naked puts.
I sold the naked calls for NFLX
with NFLX trading around 167.5 I sold the Nov 5 (weekly) 185 call.
I sold 10 of them for $737.
My plan is that NFLX will not go up to 185 during this week. And if that happens (stays below 185) then the naked calls just go away. If NFLX starts up i will have in place an order to buy the stock at 184. So the hoped for result is that nflx will then continue above 185 and I will have the stock and it will be called away. So i make another 1000 buy for 184. Called away for 185. This plus the 737. will make a nice profit any way it shakes out. The worst is the nflx goes to the 184 point and triggers my buy order and then drops down. But that is a lot of 'ifs' for only one week.
Closing a position
G'morning, A few minutes ago i closed my NFLX position.
I had sold the puts on 10/22 for +1195.
I closed on 11/1 for -748.
Profit in 9 days of ..............+447
the reason for closing are on at least two levels
a. NFLX is declining today as it is down around $5
b. I had a profit and I hate to give up a profit. Yes it wasn't as much as I had hoped, but a profit sure beats a loss! For me, I acted on the old adage 'You are never wrong to take profit' The position was probably still safe. However I don't want to watch the stock continue on down and pretty soon I would be wondering, why oh why didn't I follow my gut instincts and close it. As I mention in my book, when you start getting the feeling of 'what's going on here?' It is usually time to close the position.
So for now I am pretty much sitting on the sidelines trying to wait out the week ahead of us. A lot of news coming this week so I recommend if you plan on opening new positions use the utmost caution. I could be really good or so-so or really ugly. When I have no real feeling on the direction or things..I try to step back and wait!
Good trading all
I had sold the puts on 10/22 for +1195.
I closed on 11/1 for -748.
Profit in 9 days of ..............+447
the reason for closing are on at least two levels
a. NFLX is declining today as it is down around $5
b. I had a profit and I hate to give up a profit. Yes it wasn't as much as I had hoped, but a profit sure beats a loss! For me, I acted on the old adage 'You are never wrong to take profit' The position was probably still safe. However I don't want to watch the stock continue on down and pretty soon I would be wondering, why oh why didn't I follow my gut instincts and close it. As I mention in my book, when you start getting the feeling of 'what's going on here?' It is usually time to close the position.
So for now I am pretty much sitting on the sidelines trying to wait out the week ahead of us. A lot of news coming this week so I recommend if you plan on opening new positions use the utmost caution. I could be really good or so-so or really ugly. When I have no real feeling on the direction or things..I try to step back and wait!
Good trading all
Sunday, October 31, 2010
tough week coming
Hi traders, I have spent an hour or two looking for good positions for the coming week or month. So here goes with some thoughts.
Of course the wild card is the election. There Is talk that the (our) government is running a Ponzi scheme with our U.S. Bonds. If you read my book or some of my post you know that i try to somewhat ignore all the static and just go with good stocks that have decent premiums in the option market. But this coming week could be one of the bigger ones in recent history. I am certainly no 'chartists' but adding fuel to the fire is that a lot of informed people think the market is ready for a significant correction?
I don't run scared but i do try to keep my ear to the ground. So my advice is to be pretty cautious this week.
I now have positions with GOOG. I have over 90 points of cushion so i feel pretty safe there. I also have some NFLX monthly that also have a good cushion. But I will wait until after Thursday morning before I open new ones. That will give Tuesday election results time to be digested.
Protecting capital and not pushing the envelope is the plan this week. Lets see how it all shakes out before we leap in.
Positions that i like except for the week ahead are... In no special order.
MOS trading around 72.5 maybe the monthlies with the 57.5 strike it gives around 2.7% return for 3 weeks
POT trading near 145 selling the monthlies at the 120 strike it gives a good return of 3.6 plus 25pt of cushion and a recent good earnings report.
AMZN trading around 163 sell the monthlies at the strike of 135 for a return in three weeks of 2% and good cushion.
But again, I am going to be very careful this week..It is hard for me to sit and watch and not jump in and make a trade or two, but I will give it my best.
Good safe trading all
Of course the wild card is the election. There Is talk that the (our) government is running a Ponzi scheme with our U.S. Bonds. If you read my book or some of my post you know that i try to somewhat ignore all the static and just go with good stocks that have decent premiums in the option market. But this coming week could be one of the bigger ones in recent history. I am certainly no 'chartists' but adding fuel to the fire is that a lot of informed people think the market is ready for a significant correction?
I don't run scared but i do try to keep my ear to the ground. So my advice is to be pretty cautious this week.
I now have positions with GOOG. I have over 90 points of cushion so i feel pretty safe there. I also have some NFLX monthly that also have a good cushion. But I will wait until after Thursday morning before I open new ones. That will give Tuesday election results time to be digested.
Protecting capital and not pushing the envelope is the plan this week. Lets see how it all shakes out before we leap in.
Positions that i like except for the week ahead are... In no special order.
MOS trading around 72.5 maybe the monthlies with the 57.5 strike it gives around 2.7% return for 3 weeks
POT trading near 145 selling the monthlies at the 120 strike it gives a good return of 3.6 plus 25pt of cushion and a recent good earnings report.
AMZN trading around 163 sell the monthlies at the strike of 135 for a return in three weeks of 2% and good cushion.
But again, I am going to be very careful this week..It is hard for me to sit and watch and not jump in and make a trade or two, but I will give it my best.
Good safe trading all
Friday, October 29, 2010
Friday night update
Well my AMZN puts expired today and I averaged a little over 1% with them. Of course the good news is that it is over 1% in a week. If I can average that per year that is around 60% annual. Again, demonstrating the power of crumbs. We just keep picking up little crumbs and damned if we don't get rich together.
For next week, the ones I am looking at now are listed below, but Sunday will be the real decision day..
NFLX (net-flix) Trading around 174.5
The weeklies look good maybe the 150 strike that gets around 1.5% for the week. Of course what I like is the 25 points of cushion. Do you think NFLX can drop 25 points in a week..neither do I! But on Sunday I will go through my stocks and see what I pick for the coming week.
So another good week for the put sellers.
More on Sunday night.
Good trading all
For next week, the ones I am looking at now are listed below, but Sunday will be the real decision day..
NFLX (net-flix) Trading around 174.5
The weeklies look good maybe the 150 strike that gets around 1.5% for the week. Of course what I like is the 25 points of cushion. Do you think NFLX can drop 25 points in a week..neither do I! But on Sunday I will go through my stocks and see what I pick for the coming week.
So another good week for the put sellers.
More on Sunday night.
Good trading all
Thursday, October 28, 2010
Private letters I have received
Hi traders, Tonight I want to get a little personal and discuss some thoughts from private emails and letters I have received. It becomes obvious that many traders are looking for ways to make money and incorporate some safety into their option trades. Many want to, but have not yet opened an account to trade options.
There is much fear expressed from people that want to trade these options, but between the stigma and rumors there is certainly a misunderstandings and fear that keeps future traders from jumping in and doing it.
My goal here and in my book is to explain and let what is affectionately called 'new-be's' get both a basic understanding of options and a way to trade them and how relatively simple they can be. This is not rocket science. It really is easy and just takes a very little work or (my book) to understand them. Regarding my book, not to burst any bubbles but i make very little from any sales. I make more in any given day trading options than I will make in months of book sales. I sell the book hoping to just make back the cost of having a professional editor and someone to proof read my spelling and grammar. The book is filled with my experience and some humor yet hopefully insightful points. I mention the book hoping that you take a look as it will give you a full history of my trading and ways that you can learn from my mistakes.
Also I am hoping this blog gives some idea of what a professional trader does and goes through daily. I often get asked "How much time does it take to be a professional trader" First of all i hope you do not go through what I did 10 years ago. To lose a million plus dollars and more in 18 months is not fun. It probably builds character but destroys what little brain cells I had.
As I have said in my book and on other blogs, " there was a time when I was getting Industrial size 55 gallon drums of Pepto Bismol delivered to my personal loading dock. Whew, what a time. But it is funny now...I guess...
So my goal is to spare you the anguish and pain of dreading to see the market the next day. 10-- 15 or 100K per day drain out of your account and no end or remedy in sight. So as I said, I want to spare you this charter-building experience.
So follow my trades or buy my book or best of all do both. We will make money together and try our best to avoid the bad times. I will do my best to help you and we will travel this option road together.
Jerry
There is much fear expressed from people that want to trade these options, but between the stigma and rumors there is certainly a misunderstandings and fear that keeps future traders from jumping in and doing it.
My goal here and in my book is to explain and let what is affectionately called 'new-be's' get both a basic understanding of options and a way to trade them and how relatively simple they can be. This is not rocket science. It really is easy and just takes a very little work or (my book) to understand them. Regarding my book, not to burst any bubbles but i make very little from any sales. I make more in any given day trading options than I will make in months of book sales. I sell the book hoping to just make back the cost of having a professional editor and someone to proof read my spelling and grammar. The book is filled with my experience and some humor yet hopefully insightful points. I mention the book hoping that you take a look as it will give you a full history of my trading and ways that you can learn from my mistakes.
Also I am hoping this blog gives some idea of what a professional trader does and goes through daily. I often get asked "How much time does it take to be a professional trader" First of all i hope you do not go through what I did 10 years ago. To lose a million plus dollars and more in 18 months is not fun. It probably builds character but destroys what little brain cells I had.
As I have said in my book and on other blogs, " there was a time when I was getting Industrial size 55 gallon drums of Pepto Bismol delivered to my personal loading dock. Whew, what a time. But it is funny now...I guess...
So my goal is to spare you the anguish and pain of dreading to see the market the next day. 10-- 15 or 100K per day drain out of your account and no end or remedy in sight. So as I said, I want to spare you this charter-building experience.
So follow my trades or buy my book or best of all do both. We will make money together and try our best to avoid the bad times. I will do my best to help you and we will travel this option road together.
Jerry
Trading frustrations
One of the frustrating parts of option trading is dealing with other traders and their over estimation of reality.
An example is as follows.. I have 25 puts for AMZN (Amazon) The puts are for the 150 strike and AMZN is now trading around 166. There is only today and tomorrow left in these puts before they expire. These puts are now selling for between .08 / .10
So the reality is that AMZN will have to fall below 150 for these to have any value, or over 16 points in a day and a half. At this time the put is all extrinsic value and not any intrinsic value. So how it effects me as a trader, is that I have a lot of maintenance funds tied up with these and they should be selling around .01 /.02. I could then buy them and sell another position and make a little more in the last two days of this week.
Of course when I make trades that are over-inflated it is good trading, but when other try the same tactics it is 'greed & unreasonable' lol
The result is that sometimes you just have to either bite the bullet and pay the 'going rate' or as I am doing this week, say, to heck with them and just let them expire tomorrow afternoon.
An example is as follows.. I have 25 puts for AMZN (Amazon) The puts are for the 150 strike and AMZN is now trading around 166. There is only today and tomorrow left in these puts before they expire. These puts are now selling for between .08 / .10
So the reality is that AMZN will have to fall below 150 for these to have any value, or over 16 points in a day and a half. At this time the put is all extrinsic value and not any intrinsic value. So how it effects me as a trader, is that I have a lot of maintenance funds tied up with these and they should be selling around .01 /.02. I could then buy them and sell another position and make a little more in the last two days of this week.
Of course when I make trades that are over-inflated it is good trading, but when other try the same tactics it is 'greed & unreasonable' lol
The result is that sometimes you just have to either bite the bullet and pay the 'going rate' or as I am doing this week, say, to heck with them and just let them expire tomorrow afternoon.
Tuesday, October 26, 2010
position update
G'morning traders.
A quick update on the positions I now hold and my current thoughts.
1. 2 GOOG 520 strike for JAN 2011 GOOG trading around 614.50 now.
I will try to hold for a while as I have a lot of cushion and GOOG
has so much going for it. If held a while it gives an average of 3%
per month ( my goal)
2.AMZN trading around 168
I have 10 of the weeklies at the strike of 155 These are working out nice with 3.5 days to go
I Have 25 of the 150 strike for the weeklies also. These look good with
19 pt of cushion with 3.5 days to go.
NFLX today around 171 and headed up some
I have 30 of the Nov monthlies at the strike of 125. So around 46 pt of cushion and 3.5 weeks to go.
These positions are all making 3% or better per month and going as expected. Goog is down a little today, however, the premium is falling also. That is the beauty of lots of cushion. The time factor starts eating at the premium quickly if the stock doesn't start dropping rapidly.
So, if nothing drastic happens today I will hold these and watch. As you know if things go off track I have no hesitation to close or make a move even if it involves taking a loss.
Good trading all.
Jerry
A quick update on the positions I now hold and my current thoughts.
1. 2 GOOG 520 strike for JAN 2011 GOOG trading around 614.50 now.
I will try to hold for a while as I have a lot of cushion and GOOG
has so much going for it. If held a while it gives an average of 3%
per month ( my goal)
2.AMZN trading around 168
I have 10 of the weeklies at the strike of 155 These are working out nice with 3.5 days to go
I Have 25 of the 150 strike for the weeklies also. These look good with
19 pt of cushion with 3.5 days to go.
NFLX today around 171 and headed up some
I have 30 of the Nov monthlies at the strike of 125. So around 46 pt of cushion and 3.5 weeks to go.
These positions are all making 3% or better per month and going as expected. Goog is down a little today, however, the premium is falling also. That is the beauty of lots of cushion. The time factor starts eating at the premium quickly if the stock doesn't start dropping rapidly.
So, if nothing drastic happens today I will hold these and watch. As you know if things go off track I have no hesitation to close or make a move even if it involves taking a loss.
Good trading all.
Jerry
Monday, October 25, 2010
Some mid- day GOOG puts
I had some money sitting on the side-lines and made an unusual move for my style. I sold 2 puts for GOOG for the Jan 2011 520 strike. This gives me around 98 points of cushion. The return was $1,053. It takes 11,522 maintenance. So this is a return of (1053 div by 11522) = 9.14% return. If held until maturity that is a little better than 3% per month. If you have followed my trading you know that I have a hard time sitting on my hands for nearly 3 months, but I will give it a good try as 3% a month are my long term goals. GOOG with its Android interest should have a long run before much profit taking.
New AMZN positions, closed the AAPL puts
G'morning all,
This morning I made a few option moves with one of my favorite stocks.
With AMZN trading around 171 and 4+ days to go...
1. I sold 20 of the weeklies for AMZN at the strike of 150. Net income of 426. This needed 38,175. of maintenance which = a return of 1.1%
2. I sold 10 of the weeklies for AMZN at the strike of 155 net income of
287. This position required a maintenance of 20,186 = a return of 1.4%
Reasons for the moves...
1. With a little less than 5 days to go and over 21 point of cushion I like this move. Only 1.1 % gain but that is for a week.
2. Also less than 5 days to go but only 16 point of cushion. I lowered my volume to just 10 puts for safety. The gain is better than the 150 strike but the risk go up.
I closed the AAPL puts at a very small profit of $21.
I had opened them for 360 and closed them 341. The position was eating up to much maintenance and my account went up 353 by moving into the AMZN. Plus I have some maintenance left over to use on another position as the week progresses.
This morning I made a few option moves with one of my favorite stocks.
With AMZN trading around 171 and 4+ days to go...
1. I sold 20 of the weeklies for AMZN at the strike of 150. Net income of 426. This needed 38,175. of maintenance which = a return of 1.1%
2. I sold 10 of the weeklies for AMZN at the strike of 155 net income of
287. This position required a maintenance of 20,186 = a return of 1.4%
Reasons for the moves...
1. With a little less than 5 days to go and over 21 point of cushion I like this move. Only 1.1 % gain but that is for a week.
2. Also less than 5 days to go but only 16 point of cushion. I lowered my volume to just 10 puts for safety. The gain is better than the 150 strike but the risk go up.
I closed the AAPL puts at a very small profit of $21.
I had opened them for 360 and closed them 341. The position was eating up to much maintenance and my account went up 353 by moving into the AMZN. Plus I have some maintenance left over to use on another position as the week progresses.
Sunday, October 24, 2010
Expanding on my way of trading
For those that have not read my book, I will give a quick summation of how I figure my profits.
I trade Put Options. I sell them, and I keep it simple (KISS)
I try to leave as much cushion as possible and still get an acceptable return. Returns are hard to figure when you don't actually put out any money. However, I calculate my returns by what my account was at the beginning of the month and what it is at the close of the month. How much simpler can it get? When selling put options, you will have to set aside part of your account to back up your trade. This is called 'MAINTENANCE'
If you have to set aside $10 for a position and you make .30, you made 3%
So, often you will read that I made 3% etc on a trade. That is how it is figured.
If you have a 10,000. account and you made 300, it is a 3% gain that month. Often you might think, Wow he only made 300 or whatever on a trade but it continually adds up. That is what I try to impress to newer traders (and experienced ones) The little profits add up and keep risk to a manageable level. There will always be risk, if you want to be in the options business risk is part of the business. But to manage them and be satisfied with smaller but consistent gains it how I trade them. I've been doing it for 14 years now and have seen traders come and go. Being able to maintain consistent returns even small ones seems to be the holy grail.
Good trading all.
I trade Put Options. I sell them, and I keep it simple (KISS)
I try to leave as much cushion as possible and still get an acceptable return. Returns are hard to figure when you don't actually put out any money. However, I calculate my returns by what my account was at the beginning of the month and what it is at the close of the month. How much simpler can it get? When selling put options, you will have to set aside part of your account to back up your trade. This is called 'MAINTENANCE'
If you have to set aside $10 for a position and you make .30, you made 3%
So, often you will read that I made 3% etc on a trade. That is how it is figured.
If you have a 10,000. account and you made 300, it is a 3% gain that month. Often you might think, Wow he only made 300 or whatever on a trade but it continually adds up. That is what I try to impress to newer traders (and experienced ones) The little profits add up and keep risk to a manageable level. There will always be risk, if you want to be in the options business risk is part of the business. But to manage them and be satisfied with smaller but consistent gains it how I trade them. I've been doing it for 14 years now and have seen traders come and go. Being able to maintain consistent returns even small ones seems to be the holy grail.
Good trading all.
Friday, October 22, 2010
Some thoughts on Option evaluations
If you are new to options trading you will bump up against some terms that might mystify you. Below are some of these terms. If you find them useful, more power to you. I find them useless! If you have read my book you already know my thoughts regarding most of these, but for people new to my way of trading, please put up with my rant...
There are Delta's for an options
There are Greeks
There is 'implied volatility'
Put to Call ratio
Black-Scholes Model
There are probably many other methods of evaluating the potential return and possibility of success. Besides my book (of course) any option trader should have McMillan's book 'Options as a strategic investment'
But for me,I have lost all faith in the predictive value of any of the normal option valuation tools. Resistance levels, up-side or down-side. You constantly hear "oh xxx broke resistance etc..Then it wasn't very resistant... The Greeks and the Romans can still fight over Troy but don't tell you squat about the next day or week. I know many traders swear by them (many swear at them) As a broker told me years ago when I asked for the delta of an options "Why in the world would you want or care about that" 10 years later and Hundreds of thousands of trades and I still don't have an answer. I can see the reasons for some of the spreads that people set up. There is comfort and some good ideas behind the protection of a good spread. But (to me and you don't need to justify your reasons) the ideas of all of these things that traders throw into the equations just make it harder than it is. When I say an outlandish thing such as I try to average 3% a month, I see post that 'it isn't about returns etc" Excuse me, I am doing this for the returns!
But we all do it different and that is the beauty of Options, I just thank God that there are guys on the other side of my trades.
I hope readers enjoy my simple way of trading these options.
Ps; I shot a great score in golf today! Now that is important.
There are Delta's for an options
There are Greeks
There is 'implied volatility'
Put to Call ratio
Black-Scholes Model
There are probably many other methods of evaluating the potential return and possibility of success. Besides my book (of course) any option trader should have McMillan's book 'Options as a strategic investment'
But for me,I have lost all faith in the predictive value of any of the normal option valuation tools. Resistance levels, up-side or down-side. You constantly hear "oh xxx broke resistance etc..Then it wasn't very resistant... The Greeks and the Romans can still fight over Troy but don't tell you squat about the next day or week. I know many traders swear by them (many swear at them) As a broker told me years ago when I asked for the delta of an options "Why in the world would you want or care about that" 10 years later and Hundreds of thousands of trades and I still don't have an answer. I can see the reasons for some of the spreads that people set up. There is comfort and some good ideas behind the protection of a good spread. But (to me and you don't need to justify your reasons) the ideas of all of these things that traders throw into the equations just make it harder than it is. When I say an outlandish thing such as I try to average 3% a month, I see post that 'it isn't about returns etc" Excuse me, I am doing this for the returns!
But we all do it different and that is the beauty of Options, I just thank God that there are guys on the other side of my trades.
I hope readers enjoy my simple way of trading these options.
Ps; I shot a great score in golf today! Now that is important.
Todays moves and the why.
This morning I sold some puts on two different stocks and each with a different expiration date
1. with NFLX (Net-flix) trading around 169 I sold 30 of the Nov. 19, 125 strike I received 1195 for a return of a little over 3%
2. I also sold some AAPL (apple) puts with an expiration in one week
10-29-2010. With AAPL trading around 307 I sold 20 of the 280 strike. I received 340.
Rational behind the moves.
1. With NFLX trading around 169 I sold the 125 puts. These expire in a month so there is some waiting with this position. My plan is to roll up (move to a higher strike) as the time factor withers away. I feel with NFLX just reporting great earnings, they won't fall 44 points during the month.
2.With the AAPL puts, the return isn't super but I can do that (or better) each week all year. With AAPL trading around 307 and just reporting great earnings, I don't think that it will fall 27points during the coming week.
On Monday when the weekend shakes out, I will try to find some more moves that both bring in some income and let me sleep at night (or day)
Good trading all
1. with NFLX (Net-flix) trading around 169 I sold 30 of the Nov. 19, 125 strike I received 1195 for a return of a little over 3%
2. I also sold some AAPL (apple) puts with an expiration in one week
10-29-2010. With AAPL trading around 307 I sold 20 of the 280 strike. I received 340.
Rational behind the moves.
1. With NFLX trading around 169 I sold the 125 puts. These expire in a month so there is some waiting with this position. My plan is to roll up (move to a higher strike) as the time factor withers away. I feel with NFLX just reporting great earnings, they won't fall 44 points during the month.
2.With the AAPL puts, the return isn't super but I can do that (or better) each week all year. With AAPL trading around 307 and just reporting great earnings, I don't think that it will fall 27points during the coming week.
On Monday when the weekend shakes out, I will try to find some more moves that both bring in some income and let me sleep at night (or day)
Good trading all
Thursday, October 21, 2010
Darn, but part of the trading
Good Morning, Well Tuesday I took a small loss on a rather large AMZN position. I guess I will have to take the rear-view mirror and turn it around and look forward!
You will get this feeling often trading options. They are so powerful with the leverage factor that you can not risk letting a small loss turn into a disaster. That was the rational of me closing a position even though I had lots of cushion. I was sure it was safe but as the sign taped to my monitor says " DISCIPLINE TRUMPS CONVICTION" The obvious meaning of that saying is, to not let what you want to be true obscure what is really happening.
Of course AMZN is up today in anticipation of good earnings. So my 200 or so loss would probably be looking pretty good right now. Try to avoid falling into the trap of thinking "next time I am holding the position longer." When option prices are dropping, it is easy to tell yourself "OK, just a little more and it might turn around" It becomes very hard to pull the trigger on a loss. Use my rules or your own, but have rules and follow them. DISCIPLINE TRUMPS CONVICTION...
You will get this feeling often trading options. They are so powerful with the leverage factor that you can not risk letting a small loss turn into a disaster. That was the rational of me closing a position even though I had lots of cushion. I was sure it was safe but as the sign taped to my monitor says " DISCIPLINE TRUMPS CONVICTION" The obvious meaning of that saying is, to not let what you want to be true obscure what is really happening.
Of course AMZN is up today in anticipation of good earnings. So my 200 or so loss would probably be looking pretty good right now. Try to avoid falling into the trap of thinking "next time I am holding the position longer." When option prices are dropping, it is easy to tell yourself "OK, just a little more and it might turn around" It becomes very hard to pull the trigger on a loss. Use my rules or your own, but have rules and follow them. DISCIPLINE TRUMPS CONVICTION...
Wednesday, October 20, 2010
Can't win them all
Hi all, I was away on various commitments yesterday and only had enough time to take quick looks at the market and especially AAPL and AMZN..
I of course was happy to see AAPL delivered such great numbers and as I’ve seen over and over it is what the ‘street ‘ wants and not what is actually delivered. I was surprised that AMZN followed suit with AAPL dropping.
OK, the bad news for me. MY 135 puts went up in cost and my position was immediately underwater. It wasn’t drastic enough for me to close, however it did raise my blood pressure. I took a peek as often as I could. I still had what I felt was enough cushion to ride out the storm. Eventually my AMZN puts leveled off and even got back to even. When the stock turned down again I decided to close the position and not go through the worry and anxiety, as I was not able to keep a close watch on the stock. Therefore, the bottom line is I took a small loss and will now wait until after the earnings are reported. Maybe and that is a big maybe... I will make a move on Friday. I do not believe that I have ever taken a loss on a position when I have nearly 25 points of cushion and only 3½ days to go. However, when I have a losing position, I try to not let the losses run away from me.
Opened on Monday. 2024 [75 puts]
Closed the position 2271
Loss of 247
I kept the position opened even though it was a losing one for a while thinking that ---
a. I had plenty of cushion
b. I could roll into the next weeks at a much lower strike and either break even or possibly make money.
However, the final call was made on the belief and experience telling me, just close it and breath easier. Not every position will make money. Just do not let those become the norm. In hind sight, mistakes I made were.
a. rolling into the 135’s from the 130’s
b. no patience with what was a nearly sure winner. (a continuing problem I have)
c. opening a new position during heavy earnings week.
My lesson to share today. Just wait out earnings week.
I of course was happy to see AAPL delivered such great numbers and as I’ve seen over and over it is what the ‘street ‘ wants and not what is actually delivered. I was surprised that AMZN followed suit with AAPL dropping.
OK, the bad news for me. MY 135 puts went up in cost and my position was immediately underwater. It wasn’t drastic enough for me to close, however it did raise my blood pressure. I took a peek as often as I could. I still had what I felt was enough cushion to ride out the storm. Eventually my AMZN puts leveled off and even got back to even. When the stock turned down again I decided to close the position and not go through the worry and anxiety, as I was not able to keep a close watch on the stock. Therefore, the bottom line is I took a small loss and will now wait until after the earnings are reported. Maybe and that is a big maybe... I will make a move on Friday. I do not believe that I have ever taken a loss on a position when I have nearly 25 points of cushion and only 3½ days to go. However, when I have a losing position, I try to not let the losses run away from me.
Opened on Monday. 2024 [75 puts]
Closed the position 2271
Loss of 247
I kept the position opened even though it was a losing one for a while thinking that ---
a. I had plenty of cushion
b. I could roll into the next weeks at a much lower strike and either break even or possibly make money.
However, the final call was made on the belief and experience telling me, just close it and breath easier. Not every position will make money. Just do not let those become the norm. In hind sight, mistakes I made were.
a. rolling into the 135’s from the 130’s
b. no patience with what was a nearly sure winner. (a continuing problem I have)
c. opening a new position during heavy earnings week.
My lesson to share today. Just wait out earnings week.
Monday, October 18, 2010
Todays trades
Hi all, I should start today's trade activity by telling that these trades might not be for all traders. These are my trades and the reasons behind them. They are not recommendations just my trades.
10/18 With AMZN dropping a small amount i decided to roll my 60 of the 130 strike puts that expire on this Friday, into the 135's. Here are the numbers..
Sold 60 puts on 10/15 Friday for + $1450
bought to close today (Monday) for - 890
One day profit of + 560
10/18 (Monday) I sold to open 60 135 puts
for + 1635
later this morn I sold 15 more of the 135's for - + 389
Net result in the account today is + 2024
These puts expire on Friday. So that is a little over 404 per day for these. But I should again point out that Thursday after trading hours AMZN reports their earnings for this QTR. I have not decided on what actual number I will use for a trip wire to close or keep open these puts.
Generally I do not keep a position open during a earnings report. Buttt, and a big one is that I might have lots of cushion between the current stock price and the strike i am using (135). The rational is that with the 135's and lets assume that AMZN is trading round 160. That means with one day of trading left after the report AMZN would have to drop over 25 points. Very unlikely. But it can and has happened. So I will have a plan that will have a high probability of success, meaning that they expire worthless on Friday night. If you have been reading these post you now know that I do not hesitate to either take profits or a loss if that is what make me feel comfty... If you have read my book you know that I went through the wringer 9 years ago. Losing over a million dollars by putting my head into the sand. I do not want to experience that nightmare again. Take profits--take losses but have a plan. It is easy to be the deer in the headlights when Ca-Ca hits the fan.
10/18 With AMZN dropping a small amount i decided to roll my 60 of the 130 strike puts that expire on this Friday, into the 135's. Here are the numbers..
Sold 60 puts on 10/15 Friday for + $1450
bought to close today (Monday) for - 890
One day profit of + 560
10/18 (Monday) I sold to open 60 135 puts
for + 1635
later this morn I sold 15 more of the 135's for - + 389
Net result in the account today is + 2024
These puts expire on Friday. So that is a little over 404 per day for these. But I should again point out that Thursday after trading hours AMZN reports their earnings for this QTR. I have not decided on what actual number I will use for a trip wire to close or keep open these puts.
Generally I do not keep a position open during a earnings report. Buttt, and a big one is that I might have lots of cushion between the current stock price and the strike i am using (135). The rational is that with the 135's and lets assume that AMZN is trading round 160. That means with one day of trading left after the report AMZN would have to drop over 25 points. Very unlikely. But it can and has happened. So I will have a plan that will have a high probability of success, meaning that they expire worthless on Friday night. If you have been reading these post you now know that I do not hesitate to either take profits or a loss if that is what make me feel comfty... If you have read my book you know that I went through the wringer 9 years ago. Losing over a million dollars by putting my head into the sand. I do not want to experience that nightmare again. Take profits--take losses but have a plan. It is easy to be the deer in the headlights when Ca-Ca hits the fan.
Sunday, October 17, 2010
Possible Monday moves
It is hard finding a 'safe' (if there is such a thing) put play. I still like AMZN for several reasons.
1. Earns come on Thurs night This gives you time to let the option premium drop down.
2. There seems to be no decent plays that work during this volatile week. More on this later.
Worrisome is some parts of AMZN. It is in an up mode. But I don't like the PE of AMZN 68. That is getting high! A comparison is AAPL which is 23 but NFLX is 63, BIDU is 102... Goog is 24. So you can see that with a DOW average PE over the years and years of around 14. this gives you come idea if a stock is 'off the chart'.
AAPL reports on Monday night so there might be some good plays on Tues morn? I would stick with the newer weekly's until things settle down some (earnings)
I have to admit that I am really liking the weeklies. The quick time decay is great. Some problems you have to adjust and live with are lower volumes (open interest) But to work around items such as earnings, they work well. So the plays i like are AMZN (have a plan regarding the Thur earns) I now have 60 of the 125's. I will either let them go until
Thursday or maybe if AMZN continues up on Monday i might roll into the 130's or 135's. Right now the 125's = about .06% return. The 130's = 1% and the 135's = 1.5%... Never forgetting the difference between us (winners) and many other traders is they would be going for the 145's etc. Baby steps and soon you will be running. So good trading and I will post my next plan on Monday during trading hours.
1. Earns come on Thurs night This gives you time to let the option premium drop down.
2. There seems to be no decent plays that work during this volatile week. More on this later.
Worrisome is some parts of AMZN. It is in an up mode. But I don't like the PE of AMZN 68. That is getting high! A comparison is AAPL which is 23 but NFLX is 63, BIDU is 102... Goog is 24. So you can see that with a DOW average PE over the years and years of around 14. this gives you come idea if a stock is 'off the chart'.
AAPL reports on Monday night so there might be some good plays on Tues morn? I would stick with the newer weekly's until things settle down some (earnings)
I have to admit that I am really liking the weeklies. The quick time decay is great. Some problems you have to adjust and live with are lower volumes (open interest) But to work around items such as earnings, they work well. So the plays i like are AMZN (have a plan regarding the Thur earns) I now have 60 of the 125's. I will either let them go until
Thursday or maybe if AMZN continues up on Monday i might roll into the 130's or 135's. Right now the 125's = about .06% return. The 130's = 1% and the 135's = 1.5%... Never forgetting the difference between us (winners) and many other traders is they would be going for the 145's etc. Baby steps and soon you will be running. So good trading and I will post my next plan on Monday during trading hours.
Saturday, October 16, 2010
Monday moves
HI all, Tomorrow I will check my list of stocks that i use for some good positions for next week. As you know it is earnings season and most of my stocks will be reporting. I try to never hold a position over those volatile times. But,like the AMZN position i just opened, if i do, i will plan to close them before the REPORT DAY.
I will post the results of my search and let you know what my Monday moves might be. Never push the envelope. It is pretty easy to make a good living if you use some care and thought.
Jerry
I will post the results of my search and let you know what my Monday moves might be. Never push the envelope. It is pretty easy to make a good living if you use some care and thought.
Jerry
Friday, October 15, 2010
Mark's comment
It seems like you go in and out of various stock positions fairly often. Based on your book, I would have thought you bought and held until the premium doubled or hit the strike price.
Normally Mark, I would stick with a position longer. This is a unique time in the option world as the period is/did come to an end today. Also with the weeklies for AMZN having so much premium today I am expecting quite a bit of time decay coming Monday or Tuesday. Other than the report of earn's on Thur. the stock has to drop over 6 points a day and AMZN just does not do that... So the move did cost me a few dollars but I anticipate making that quickly in the Monday time decay. There of course no 'perfect' way to do these and each move is a judgment call.
Thanks for the comment
Jerry
Normally Mark, I would stick with a position longer. This is a unique time in the option world as the period is/did come to an end today. Also with the weeklies for AMZN having so much premium today I am expecting quite a bit of time decay coming Monday or Tuesday. Other than the report of earn's on Thur. the stock has to drop over 6 points a day and AMZN just does not do that... So the move did cost me a few dollars but I anticipate making that quickly in the Monday time decay. There of course no 'perfect' way to do these and each move is a judgment call.
Thanks for the comment
Jerry
Todays moves
I found it hard to just sit on my hands and watch the time value eat up the last of my premium. So I made the following moves minutes ago.
I bought to close the 55, NFLX 140 puts that expire tonight. Cost of 159, sold 3 days ago for 889 = +730
I sold 60 of the AMZN 130 next week puts for 1450.
REASONS
With AMZN trading above 160 and only a week to go, I feel good about these puts. AMZN does report earnings on Thursday night So i will close before that itme unless there is a lot more cushion between the existing then price and the strike price of 130. If I can let them expire it will be a profit of 2180 in about 8 days of trading.
I bought to close the 55, NFLX 140 puts that expire tonight. Cost of 159, sold 3 days ago for 889 = +730
I sold 60 of the AMZN 130 next week puts for 1450.
REASONS
With AMZN trading above 160 and only a week to go, I feel good about these puts. AMZN does report earnings on Thursday night So i will close before that itme unless there is a lot more cushion between the existing then price and the strike price of 130. If I can let them expire it will be a profit of 2180 in about 8 days of trading.
Rolling up on the last day
With nflx trading up in pre-mkt i might roll the 55 puts at the 140 strike into the 145. make a dime or so and it will be another 500+ in the last day.
I will look at the open mkt for a min or two first.
I will look at the open mkt for a min or two first.
Thursday, October 14, 2010
My AMZN move today
With AMZN trading up about .64 to 155.90 I just sold 11 of the 120 strike for next week. +$273.
They expire on Friday. But and a bigggg buttt is that AMZN reports after the bell on Friday. However, with over 30 points of cushion and only 6.5 trading days to go i felt pretty good. But at the least hint of trouble i will close.
I hope this demonstrates how I just keep taking some money here and there and keep picking up the crumbs around the table. To make your fortune you don't have to pick one position and refi the house and bet it all on one play.
They expire on Friday. But and a bigggg buttt is that AMZN reports after the bell on Friday. However, with over 30 points of cushion and only 6.5 trading days to go i felt pretty good. But at the least hint of trouble i will close.
I hope this demonstrates how I just keep taking some money here and there and keep picking up the crumbs around the table. To make your fortune you don't have to pick one position and refi the house and bet it all on one play.
closing positions
As you can see I had 9 of the NFLX 145's
I had sold for $285. Today with NFLX failing some I closed for -237 So I netted $+48. Not much and I could probably stay with the position but the extra 237 is not worth me worrying about. The lesson is, when things get your attention (NFLX FALLING) give it your attention. It is a tough week coming up with earnings be reported in most of the stocks I have been using lately. It will take some work this weekend to find good positions.
I had sold for $285. Today with NFLX failing some I closed for -237 So I netted $+48. Not much and I could probably stay with the position but the extra 237 is not worth me worrying about. The lesson is, when things get your attention (NFLX FALLING) give it your attention. It is a tough week coming up with earnings be reported in most of the stocks I have been using lately. It will take some work this weekend to find good positions.
More APOL lessons
Hi all, I see that APOL is now down a little over $12. Another lesson is the correlation between 'like' stocks. When APOL announced all of the other education stocks dropped. Even though they have not reported yet. In the earning season alway pay attention to other stocks in 'like' companies. An example of this might be PCLN. They have been just going up and up. But if one of the travel / booking type compaines report traffic falling off, it will probably hit all of the 'like' companies. People that lose in this business usually fail to do their home work.
Wednesday, October 13, 2010
The dangers of put selling at earnings time...
Hi friends. Tonight I wanted to mention the dangers of selling puts at or around earning season. I saw yesterday where a fellow put seller wrote that he was selling puts on APOL. These were to be for Nov. He mentioned that with the stock around 49 he was selling the 38 &39 strike. A couple of danger signs flashed for me and I wrote him regarding my concerns.
1. Earnings were to be reported next day (today)
2. The return he was getting was way too high (around 10%)
3. There were 5 1/2 weeks to go and many companies were going to report their earnings
All of these are mentioned as a learning tool. Each one is a flashing light of danger. In order...
1. Earnings are always to be avoided ..Period! Tonight APOL reported and it was not good. They opened today around 49.98 and dropped after the close to 42.10..-7.88--- Folks, Avoid earnings they are trouble!...
2. Any return of over 6% should get your attention. Period! I try to open a position with returns of around 3% and if all is going well then roll up at a later time as the time-decay eats up the premium.
3. This is a long period. Five and half weeks are a long time and add in earnings season and that spells trouble. Never push the time envelope. Time is our biggest enemy. Well I guess you can add in greed. Both are controllable.
Good night.
1. Earnings were to be reported next day (today)
2. The return he was getting was way too high (around 10%)
3. There were 5 1/2 weeks to go and many companies were going to report their earnings
All of these are mentioned as a learning tool. Each one is a flashing light of danger. In order...
1. Earnings are always to be avoided ..Period! Tonight APOL reported and it was not good. They opened today around 49.98 and dropped after the close to 42.10..-7.88--- Folks, Avoid earnings they are trouble!...
2. Any return of over 6% should get your attention. Period! I try to open a position with returns of around 3% and if all is going well then roll up at a later time as the time-decay eats up the premium.
3. This is a long period. Five and half weeks are a long time and add in earnings season and that spells trouble. Never push the time envelope. Time is our biggest enemy. Well I guess you can add in greed. Both are controllable.
Good night.
Trades I have made in the last two days. 10/12/2010 & 10/13/2010
Today I am starting my blog after being asked many times by other traders for a posting that tracks my trades. I am not going to go back over the complete month, I will just start my trades as of Tuesday 10-12-2010. After entering the trades I will give a brief 'reason' behind the why's..
This trading month is winding down and on Tuesday 10-12 I closed some positions and opened others. The plan is to take advantage of the decaying time value. This Friday the current month of options expires so this leaves only 3-4 days for my positions to expire and vanish. The numbers below are after commission and are the net results.
Position EXPIR/STRIKE Date/ opened Closed Results $$
20 AMZN 10/16 -140 10/11 .17 10/12 .13 + .04 80.
20 NFLX 10/16 -130 10/08 .27 10/11 .08 + .19 385.
20 NFLX 10/16 -135 10/11 .25 10/11 .12 + .13 265.
15 WHR 10/16 -75 10/11 .17 ACTIVE 254.
55 NFLX 10/16 - 140 10/13 .16 ACTIVE 889.
9 NFLX 10/16 - 145 10/13 .33 ACTIVE 285.
In the first AMZN trade I closed it to move into other trades. You are never wrong to take profits!
In the second trade I opened and closed in three days and took a quick $385 profit.
In the third trade I closed these to roll into the 140 NFLX puts for a profit of $265.
In the fourth trade with WHR (which are still open) there was a paper profit of $254.
In the fifth trade I opened 55 NFLX puts with the stock around 155 I feel safe with 15 points of cushion and 3 days to go.
In the sixth trade I opened the 145 puts as NFLX is moving up and I now have 10 points of cushion with 2.5 days left.
As you can see I go for just the crumbs around the table. Many other traders ignore these small amounts but they do add up.
I have used some abbreviations and other terms in the above posting for a more detailed explanation of these terms you can reference my book for more information. My style of trading and goals of trading are fully explained in the book. It can be purchased at Amazon through the following link:
http://www.amazon.com/Selling-Put-Options-Way-ebook/dp/B00408A6AC/ref=sr_1_1?ie=UTF8&m=AG56TWVU5XWC2&s=books&qid=1286991042&sr=1-1
This trading month is winding down and on Tuesday 10-12 I closed some positions and opened others. The plan is to take advantage of the decaying time value. This Friday the current month of options expires so this leaves only 3-4 days for my positions to expire and vanish. The numbers below are after commission and are the net results.
Position EXPIR/STRIKE Date/ opened Closed Results $$
20 AMZN 10/16 -140 10/11 .17 10/12 .13 + .04 80.
20 NFLX 10/16 -130 10/08 .27 10/11 .08 + .19 385.
20 NFLX 10/16 -135 10/11 .25 10/11 .12 + .13 265.
15 WHR 10/16 -75 10/11 .17 ACTIVE 254.
55 NFLX 10/16 - 140 10/13 .16 ACTIVE 889.
9 NFLX 10/16 - 145 10/13 .33 ACTIVE 285.
In the first AMZN trade I closed it to move into other trades. You are never wrong to take profits!
In the second trade I opened and closed in three days and took a quick $385 profit.
In the third trade I closed these to roll into the 140 NFLX puts for a profit of $265.
In the fourth trade with WHR (which are still open) there was a paper profit of $254.
In the fifth trade I opened 55 NFLX puts with the stock around 155 I feel safe with 15 points of cushion and 3 days to go.
In the sixth trade I opened the 145 puts as NFLX is moving up and I now have 10 points of cushion with 2.5 days left.
As you can see I go for just the crumbs around the table. Many other traders ignore these small amounts but they do add up.
I have used some abbreviations and other terms in the above posting for a more detailed explanation of these terms you can reference my book for more information. My style of trading and goals of trading are fully explained in the book. It can be purchased at Amazon through the following link:
http://www.amazon.com/Selling-Put-Options-Way-ebook/dp/B00408A6AC/ref=sr_1_1?ie=UTF8&m=AG56TWVU5XWC2&s=books&qid=1286991042&sr=1-1
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