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
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