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.
19 comments:
Another interesting trade:
(AUXL) Sale of a new block of 3,000 February 22.50 puts for $2.15.
The investor collected $615,000 of premium, or a net $2.05 per contract sold short. The resulting position is similar to being long the stock, but with two key differences.
First, the position will make money from the simple passage of time. AUXL rose 1.1 percent to close at $21.14 yesterday, so those puts were in the money. If the stock remains at that level through February expiration, the puts sold short will be worth only $1.36, or 37 percent less than they were sold for.
Second, there will be limited profits if the stock rallies: If AUXL is above $22.50 on expiration, those puts will expire worthless. But the investor won't make any additional money past $22.50.
The stock is at $21.21, Next earnings announcement - Feb 14, 2011
Somebody answer for me why it WOULD NOT be an intelligent move to sell some AMZN JAN 2012 LEAP PUTS.....SAY YOU SOLD the 100s....collect 2.80 per contract....by my calculation that's a 22 percent return for 1 year....can't complain. I just have a really hard time seeing AMZN go below 100 this year....I know anything is possible (obviously this played out a couple of years ago)......but I just don't see it happening.
Yes Wire, there are lots of examples such as that. The negative is that you have to wait for a year to be sure you are out of the woods. Also it negates any chance of compounding your monthly return. However it is probably safe and how can you complain about +20% ann. return?
I find it hard to make a play and sit on it for a year. Of course you can close/roll etc. Probably the best way to incorporate that play is to sell the puts. Then as the year progresses, if AMZN goes up 20 points roll up the strike 10 points. That is a way to get some compounding and stay on top of the position.
CORRECTION TO MY LAST: Consensus Target Price of BTU is 65.
Corrected Post Follows:
Just sold some BTU Feb 50 Puts for .23
Currently at 64 so 22% cushion (14 pts)
93% Prob Of Expiration
4.4% ROI (in 49 days, so 2.7% monthly prorated ROI)
Up-Trending Chart & above 50-day and 20-day MAs
Analysts Buy Consensus with 65 target price
Another interesting point and BTU Put trade strategy:
While the BTU Feb 50 Put is at .23 bid, the BTU Jan 50 Put is at .05 ask.
From this, I can infer that IF BTU stays at or above its current price 30 days from now, then the BTU Feb 50 Put will likely drop to .05 ask on or about Jan 31. This means that I could potentially close for .18 profit in one month for 3.4% ROI over the next 30 days, and retain the same safety net.
Just did my first put sell after reading your book, Jerry and looking over charts, etc.
I chose FSLR 105 Jan puts at .26 (got lucky to get that premium; sold in split lots). 2.4% profit on 19% cushion (yeah, I realize I broke a rule :( but my rationale was only 22 days left to expiration).
Happy New Year everyone.
Mark
Newport News,
Congrats on taking the first step!!!!
For me, the biggest challenge is staying disciplined and especially following the rule of "not getting greedy" - for me, it's the hardest yet most important rule of all.
GOOD LUCK ALWAYS.
IT'S 4PM --- HAPPY TRADING NEW YEAR!!!
hey mark i seen where you sold 105 fslr puts. good trade. i got in at .41 for 105 about a week ago and they are nice. i also traded them the week before dec monthly expired and made good. hey jerry this cmg was looking good and i sold my 180 last week for .30 profit in two days while cmg stock was tanking. i had my doubts so havent went back to cmg again. that btu stock looks ok except for there debt but there pe ratio looks good. i will watch btu close.im still in amazon 150 puts but im like jerry these darn things move slow. lol
Now that CMG has pulled back a bit this trade can be done as a Bull Put Spread. For those with a smaller account it may beneficial as it will reduce margin requirements. The 185 strike can be sold for 1.00 while at the same time purchasing the 180 strike for .7 resulting in a net .30 credit. Margiin requirement is difference between strikes.
ROI .3/5.00 = 6%
One other benefit is if somthing crazy happens and CMG gaps way down before the bell max loss is limited to difference between strikes. This position can be closed out as well if premium on the sold call doubles.
John, Since im still new can you explain this
"Up-Trending Chart & above 50-day and 20-day MAs"
I understand up tranding chart but what about the other part.
Currently sitting on TCK
Trading at 61.83
Jan Puts at 45 Strike
Premium was .22
Current mark is .10
If this expires worthless - 4.4% ROI
I will most likely wait for this to expire and make a move on FEB puts when the new contracts open
Jserice thanks for that info. I am on the lower end for maintenance so this could prove useful. I will keep an eye on that.
Good luck everybody with your trades......I hope nflx holds above 155 by Jan expiration....i still feel pretty good about my sale of the 155s but it's not looking great technically. Still got a 10 percent cushion or so...
Fulgore, CAVEAT EMPTOR: I AM NOT A CHARTING EXPERT, and will NEVER be one. I just look at price trends and confirmations.
"Up-Trending Chart & above 50-day and 20-day MAs":
This is suggesting that the stock price is on a solid uptrend and that it's also above both the 50-day Moving Average and the 20-day Moving Average. This is a confirmation of technical strength. When the stock price drops below the 50-day Moving Average, this *may* be a signal of a price reversal and should be viewed with caution.
Let's use CMG for example, the chart now appears to be in a significant downward reversal, which can be viewed by just looking at the chart itself, but also noting that the current price of 212 has significantly fallen below the 20-day MA of 230 and 50-day MA of 229. While I have a CMG Put Write position that I opened 2 weeks ago, I will seriously consider dumping it this week it the price continues downward. My cushion down to 175 doesn't feel all that cushy any more :-(
FYI--Comparisons and filters versus these simple Moving Averages is one of the many data fields available in the "PowerOptions" Screening Tool. I'm finding PowerOptions to have paid for itself many times over.
(www.poweropt.com)
PEACE.
John
Hey John,
I just started a free 14 day trial to poweropt.com. The site looks great and just gave me a boost of confidence that I needed for my Jan 155 NFLX puts. Anyway, I really think I would like to join but that cost certainly is significant.....
Wire,
I pay $600/yr for the PowerOptions 20-minute delayed Screening Service. I like that I'm able to create unlimited unique options screens with very specific criteria that saves a lot of search time. And it helps me to find plays I would have otherwise overlooked.
I agree it's not cheap, but I feel it's very fairly and reasonably priced for what it provides. For me, it's already paid for itself.
Makes sense....I am really going to consider it....thanks for the tip.
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