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
6 comments:
With the NFLX Nov 125s down to .21 with stock at 174 I'm thinking of rolling up to the 130s or 135s sometime this week. As long as it stays near 175. We'll see. S/B a volatile week.
Seems like a great play. However, do you have a strategy in calculating your returns with commissions? I figured with my brokerage firm, about 1.5cents of each contract i sell is related to commissions. If i buy back the contract above 5 cents, its another 1.5 cents. Do you factor your commission in your return? If i sell NFLX at 20 cents of which 1.5 cents would be attributed to commision, i'm effectively paying 7.5% on commissions. If i sell the contract, it results in 15%.
Hi Mark and Glenn, Mark, to me you are correct and wrong? Sounds odd but here is my thinking and it involves two dynamics
1. When rolling out you use more maintenance and if you were maxed out like I often am, you have to do less new options as the new position uses more maintenance. So If you have 20 options now you might be only able to open 17 new ones. So when the dust settles after commissions etc you hardly make any money yet you expose yourself to more risk (a higher strike) Now if you have plenty of maintenance available it does make more sense to do the trade.
2. Regarding figuring in commission and letting that be a deterrent to rolling up or doing any trade for that matter is not correct thinking. I certainly do not like paying commissions and taxes but that is part of trading. I do not want to be able to make 200 but saying to myself 'heck the brokerage cost is 100 so the end result is I only make 100 so I will not do that trade. You just gave up 100 dollars? True the cost were high but cutting off your nose to spite the brokerage is not correct thinking. Hey you make a 100 bucks.
I have heard the saying many times 'that the cost was just to outrageous to make that trade' Excuse me, don't give up profits just because the brokerage is also making good money.
My way is to make sure the trade makes sense. Check all factors and then if it still works, pull the trigger.
Mark - I do think about that when premiums get low even with a 99% probability of expiring OTM. Still, is it worth doing the trade? I differ from you though. I have 15 NFLX 125 puts. I can roll them to the 135s for a net credit of say $0.20 or $300 before commissions. At Tradeking I'll pay $14.70 (about $0.01) for a net of $285.30. Like Jerry, I'll pay $15 to pocket a highly probable $285.
Hi guys,
Thanks for the insight. What you guys are saying makes alot of sense. BTW, I really really love you method of selling puts.
I'm saying that now since the market has treated us well the past several months. Guess what separates successful traders to an unsuccessful is when the market becomes unfavorable.
I treat your method alot like poker. Its easy to win when you have pocket AA, but the real successful players are those who can fold when odds are against them.
Wow Mark - that's a great analogy. Money management and limiting losses in poker is what separates winners from losers. Same as trading option, or any investment. I think that most lose because they set their strikes too close to the money for fatter premiums and then they hang on too long when the trade moves against them. I am often in the latter but working very hard better discipline. Jerry just today bailed out of his NFLX position giving up about 1/2 his potential profit. The stock is way down today and he's probably right. Part of me says to hang in there but I should probably get out now too...
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