Friday, December 30, 2011
Vacation time (sort-of)
You guys will be flying pretty much without me after Monday night. My wife and I are going to the Caribbean for 25 days. 10 days in ARUBA 7 in Curacao and 7 more in Bonaire. Some diving, snorkeling and fishing. Options bought this vacation for us so I want to thank all the traders on the other side.. I will have my lap-top to do some trading and checking on the blog. Take care and leave cushion…
Saturday, December 24, 2011
Merry Christmas to all ...
A very Merry Christmas and a Happy and prosperous New Years to all the Bloggers and option traders out there..
Friday, December 16, 2011
A wild week
Hi all, what a week, up and down in the hundreds. This Europe really has me somewhat worried. Places like Ireland and more, are paying more out each month than they are bringing in. This has to end in an ugly drop one day. I am still fully invested but in quality stocks. I avoid plays like trying to outguess RIMM or other stocks that have fallen pretty far and the temptation is to think that it can't fall more...IT CAN. Don't try to catch a falling knife. In this market my advice is to stick to quality and proven plays. I also avoid 'hot' stocks such as Panera bread and that bunch. There is plenty of money to be made and without as much risk. Many of these stocks will turn into super plays one day but not for me. I've been on the express train both north and south bound. North is much better.
Stocks like XOM, MSFT, ORCL, MCD and KO to name a few. They all offer weekly options with decent premiums. I also have a lot of CLF.
It might be a good time to do some vertical put spreads. Plenty of weekly plays that offer 1+% for a week. Compounded that is around 67% annual ROI.
Some good advice has been offered by other contributors. If you are new to options or are just getting a feel for them read all the post by our gang. Everyone here wants all of us to be successful. This is some of the best advice that is both free and available to all. Again, in a market which it can be up or down 300-400 points in a day.. leave lots of cushion and settle for less. The tortoise can win the race and have a smile on his face.
Stocks like XOM, MSFT, ORCL, MCD and KO to name a few. They all offer weekly options with decent premiums. I also have a lot of CLF.
It might be a good time to do some vertical put spreads. Plenty of weekly plays that offer 1+% for a week. Compounded that is around 67% annual ROI.
Some good advice has been offered by other contributors. If you are new to options or are just getting a feel for them read all the post by our gang. Everyone here wants all of us to be successful. This is some of the best advice that is both free and available to all. Again, in a market which it can be up or down 300-400 points in a day.. leave lots of cushion and settle for less. The tortoise can win the race and have a smile on his face.
Thursday, December 1, 2011
Rolling up a calendar spread
A common question is where and to what strike to roll to if the stock has made a move north in a calendar spread. The deciding factor on which strike is, which one makes the most $$. To consider---
If you can roll to the same strike you get more return. But I don't want the stock to run away from me, so it is kind of a guess on where to roll to. If the stock is generating more and more up pressure i will go to the next strike and maybe out a week or month?
It is important to remember that rolling up for a stock that has moved up even if a neutral roll, is not all bad as you get the new intrinsic value.
EX; you have sold the 25 strike and the stock has moved to 27. To buy-to-close the 25 might cost you 2.10 and the next month’s 27.50 sells for 1.50. On paper you have lost .60 to roll up and out. But remember that you now have gained 2 of intrinsic value and also the bought call has gone up in price..(there will come a day when you want to sell that one)
So on paper two things have happened.
1. you lost .60 on each contract
2. you have gained 2 of intrinsic val in the sold one.
The one danger is that all of a sudden the stock drops back to 25 and then the .60 you lost is really lost..lol That is why it is a balancing act of when to roll and how far. Intuition, experience and gut feeling is the answer. Oh yeah a crystal ball helps.
If you can roll to the same strike you get more return. But I don't want the stock to run away from me, so it is kind of a guess on where to roll to. If the stock is generating more and more up pressure i will go to the next strike and maybe out a week or month?
It is important to remember that rolling up for a stock that has moved up even if a neutral roll, is not all bad as you get the new intrinsic value.
EX; you have sold the 25 strike and the stock has moved to 27. To buy-to-close the 25 might cost you 2.10 and the next month’s 27.50 sells for 1.50. On paper you have lost .60 to roll up and out. But remember that you now have gained 2 of intrinsic value and also the bought call has gone up in price..(there will come a day when you want to sell that one)
So on paper two things have happened.
1. you lost .60 on each contract
2. you have gained 2 of intrinsic val in the sold one.
The one danger is that all of a sudden the stock drops back to 25 and then the .60 you lost is really lost..lol That is why it is a balancing act of when to roll and how far. Intuition, experience and gut feeling is the answer. Oh yeah a crystal ball helps.
Saturday, November 19, 2011
Some thoghts on this market
Regarding the overall market, this Europe stuff keeps affecting the market, next is Spain and France. My advice is leave lots of cushion and leave as little time as necessary. You don’t need to take excessive chances with options to make money. Even with the Europe problems etc, there is still plenty of money to be made with options.
Nicky; I would be careful following that advice regarding MSFT. That is a lot of time to give for bad news to come out. I have over 250 MSFT in my calendar spreads so I like the steady action of MSFT but caution should be the by-word with any naked put. There is a name for traders that take bigger chances on what ‘seems’ to be a safe play… they call them ‘broke..’ so be careful.
Nicky; I would be careful following that advice regarding MSFT. That is a lot of time to give for bad news to come out. I have over 250 MSFT in my calendar spreads so I like the steady action of MSFT but caution should be the by-word with any naked put. There is a name for traders that take bigger chances on what ‘seems’ to be a safe play… they call them ‘broke..’ so be careful.
Monday, November 7, 2011
Stock selection.
Hi all, just a reminder that there are different stocks that are appropriate for different situations. I don’t use stocks for a calendar spreads that I would use for vertical put spreads or for naked puts.
Don’t fall into the rut of using the same stocks and trying to force them to fit where they don’t belong. An example is AMZN. A great stock with good premiums. But that is ok ok for a short play such as a one week put or even a vertical put spread. The same might be said for even RIMM or FSLR. There are lots of examples of these kinds of plays.
For a calendar spread where you might plan on owning the long call for a year or so, you don’t want the roller coaster ride associated with hi-PE stocks.
I am listing the stocks that I am now using in calendar spreads. If they fit your profile for investing, jump aboard. There are lots of others that fit the profile but these are some of my favorites. They offer decent premiums, lower volatility and especially- WEEKLY options.
AAPL, CLF, IBM, KO, MCD, MOS, MSFT, ORCL POT, SLB, XOM
Don’t fall into the rut of using the same stocks and trying to force them to fit where they don’t belong. An example is AMZN. A great stock with good premiums. But that is ok ok for a short play such as a one week put or even a vertical put spread. The same might be said for even RIMM or FSLR. There are lots of examples of these kinds of plays.
For a calendar spread where you might plan on owning the long call for a year or so, you don’t want the roller coaster ride associated with hi-PE stocks.
I am listing the stocks that I am now using in calendar spreads. If they fit your profile for investing, jump aboard. There are lots of others that fit the profile but these are some of my favorites. They offer decent premiums, lower volatility and especially- WEEKLY options.
AAPL, CLF, IBM, KO, MCD, MOS, MSFT, ORCL POT, SLB, XOM
Friday, October 28, 2011
Which one..Calendar spreads, vert put spreads or naked puts??
HI all. Well a lot of chatter regarding the different kinds of plays while using options. For me I have pretty much rotated into calendar spreads. If you are not familiar with them, do some reading, they are easy once you get to know them. Also I hesitate to say this but it is hard to lose money with them. CaCa can happen but if it happens to calendar spreads the rest of the options market is in really bad shape.
But again there is nothing wrong with plain vanilla vert put spreads. They seem to give a pretty easy 1-3% a week. Naked Puts can usually match that but both have a potential downside. With calendar call spreads all the maint. needed is known up front. Each week or month should produce some profit . I only use weekly options but at times I might roll out two weeks to get some higher strike. Other than a major drop in the underlying stock, a continual problem with calendar spreads is the stock moves higher. This is both a curse and a blessing. Its true that it make it difficult to get decent prem’s at the same strike but and excuse the put ..A BIG BUTT, is that the bought call for Jan or ?? is going up and one day you get to sell that one.
EX; a stock is trading around 89, you buy a ‘leap’ for a year out at the 87.50 strike and sell this weeks 90 strike. All is well and then the stock starts moving up. You suffer through lower prems (but all positive) and in a year the stock has moved to 99. Well at that time you get to sell that bought call for over 10 when it might have cost you 5 or? Plus each week or month you made money. I am not saying these are for all traders as it takes some getting used to but for me it seems the easiest way to make money that I have found in the options market.
But again there is nothing wrong with plain vanilla vert put spreads. They seem to give a pretty easy 1-3% a week. Naked Puts can usually match that but both have a potential downside. With calendar call spreads all the maint. needed is known up front. Each week or month should produce some profit . I only use weekly options but at times I might roll out two weeks to get some higher strike. Other than a major drop in the underlying stock, a continual problem with calendar spreads is the stock moves higher. This is both a curse and a blessing. Its true that it make it difficult to get decent prem’s at the same strike but and excuse the put ..A BIG BUTT, is that the bought call for Jan or ?? is going up and one day you get to sell that one.
EX; a stock is trading around 89, you buy a ‘leap’ for a year out at the 87.50 strike and sell this weeks 90 strike. All is well and then the stock starts moving up. You suffer through lower prems (but all positive) and in a year the stock has moved to 99. Well at that time you get to sell that bought call for over 10 when it might have cost you 5 or? Plus each week or month you made money. I am not saying these are for all traders as it takes some getting used to but for me it seems the easiest way to make money that I have found in the options market.
Sunday, October 23, 2011
Earnings winding down
Quite a few of the major companies have reported and generally they confirm that earnings are still getting better. I still expect the fall season to be pretty good and a good Christmas season.
A heads up regarding the options business.
Don’t forget that you have to run your option trading as a business.
If your stock is dropping, it is probably not a good stock to use.
If analyst are downgrading your stock, it is probably not a good stock to use.
If your returns are too good, your strike is probably not a good one to use.
Be alert to the warning signs and trade smart.
I have open calendar spreads in the following stocks
MSFT, MCD, AAPL & KO. These spreads give a good return each week. Take a look and see if they work for you. Good luck
A heads up regarding the options business.
Don’t forget that you have to run your option trading as a business.
If your stock is dropping, it is probably not a good stock to use.
If analyst are downgrading your stock, it is probably not a good stock to use.
If your returns are too good, your strike is probably not a good one to use.
Be alert to the warning signs and trade smart.
I have open calendar spreads in the following stocks
MSFT, MCD, AAPL & KO. These spreads give a good return each week. Take a look and see if they work for you. Good luck
Tuesday, October 18, 2011
Earnings tonight
Well AAPL reports tonight and later this week MCD & MSFT report. It will interesting to see how the stocks respond. Especially AAPL, as expectations are so high. If they drop in after hours, it will probably be only for a day or so as the numbers will be massive.
Like the drop when the 4S was announced, big drop for a while and then roaring back.
My positions at this time are all calendar spreads;
AAPL- 1/2013—400 and 10-22—405 (will probably need rolling into next weeks 405’s)
1/2013 – 380 10-22--385 “ “
1/2013 –395 10-22—400
MCD 1-2013—87.5 10-22---90
MSFT 1-2013---25 10-22- some 26’S / some 27’S and lots of 29’S
Those are my only options at this time. So now it is sit back and wait for a few days. These plays average around 4-5% for a week.so there is money to be made out there but use caution and nothing wrong with waiting until Wednesday or Thursday to make trades.
Like the drop when the 4S was announced, big drop for a while and then roaring back.
My positions at this time are all calendar spreads;
AAPL- 1/2013—400 and 10-22—405 (will probably need rolling into next weeks 405’s)
1/2013 – 380 10-22--385 “ “
1/2013 –395 10-22—400
MCD 1-2013—87.5 10-22---90
MSFT 1-2013---25 10-22- some 26’S / some 27’S and lots of 29’S
Those are my only options at this time. So now it is sit back and wait for a few days. These plays average around 4-5% for a week.so there is money to be made out there but use caution and nothing wrong with waiting until Wednesday or Thursday to make trades.
Wednesday, October 12, 2011
Some calendar plays
Hi all, some great plays and ideas floating around. You guys all seem to ‘get-it’. Safety and good positions can equal some great profits and minimize the risk.
AAPL seem pretty determined to make a run towards its earnings announcement on the 18th. The new 4-S phone is flying off the shelf as usual and later the newer I-pad. So good things coming with them.
I still like the MSFT calendar trade. Make about the same as AAPL without as much volatility. I am buying the Jan 2013 and selling the Oct-22nd at the strike of 27. My plan is to sell each week for around .20 or more. That is times 60 weeks. If that works it will be around 300% ann ROI.
I have been asked what to do if the stock jumps past your sold strike with a calendar spread. If doing weekly options with the stock, here is what has worked for me. First, I am in no hurry to jump to the next strike. Stocks do go up and down so don’t be too anxious to jump up. Second, if moving up one strike a perfect time is the week before the monthly expires. This is that week, so before you would have sold this week’s option you can jump ahead two weeks and get a decent premium. This saves you from having to jump all the way into next month. It doesn’t all ways work but it is the first thing I check when thinking about rolling up one strike.
Keep all the good trades posted so other can continue to learn and find new positions to evaluate.
AAPL seem pretty determined to make a run towards its earnings announcement on the 18th. The new 4-S phone is flying off the shelf as usual and later the newer I-pad. So good things coming with them.
I still like the MSFT calendar trade. Make about the same as AAPL without as much volatility. I am buying the Jan 2013 and selling the Oct-22nd at the strike of 27. My plan is to sell each week for around .20 or more. That is times 60 weeks. If that works it will be around 300% ann ROI.
I have been asked what to do if the stock jumps past your sold strike with a calendar spread. If doing weekly options with the stock, here is what has worked for me. First, I am in no hurry to jump to the next strike. Stocks do go up and down so don’t be too anxious to jump up. Second, if moving up one strike a perfect time is the week before the monthly expires. This is that week, so before you would have sold this week’s option you can jump ahead two weeks and get a decent premium. This saves you from having to jump all the way into next month. It doesn’t all ways work but it is the first thing I check when thinking about rolling up one strike.
Keep all the good trades posted so other can continue to learn and find new positions to evaluate.
Sunday, October 2, 2011
October is here
Hi all, Well Sept is normally worst month of the year. Most fear Oct but it is September over the years that bites the hardest.
I have lots of AAPL, some puts and a lot of calendar spreads with calls. Assuming the world does not collapse, I am expecting good things as AAPL approaches earnings. Lots of news coming from different companies during the next few weeks, so watch your step. I am not as comfortable as some or you are with the index positions. I want to find a one-off item I can look up and feel good about. To many iffy ones in the spx etc.
What are you guys playing out there? Any good puts or spreads?
I have lots of AAPL, some puts and a lot of calendar spreads with calls. Assuming the world does not collapse, I am expecting good things as AAPL approaches earnings. Lots of news coming from different companies during the next few weeks, so watch your step. I am not as comfortable as some or you are with the index positions. I want to find a one-off item I can look up and feel good about. To many iffy ones in the spx etc.
What are you guys playing out there? Any good puts or spreads?
Monday, September 26, 2011
I'm Home
Hi all, I have been in California for several reason. One was a high school reunion and the other was some business deals. No big story or other results at this time.
Sorry that I was unable to contribute to the blog for a while. I see many were worried that NFLX had hurt me etc.. Believe me I have not had NFLX for several months. I haven’t even looked at them for ?? No idea where anything but AAPL is trading. I know that I, and many preach diversification but I have only AAPL positions. I am spread over many different strikes and have some 2012 & 2013 calls. I’ve also sold both monthly and weekly calls on these. I am of the opinion that AAPL is probably the best stock in America at this time. So I am riding the coattails of this powerhouse.
I have received many questions as to my where-bouts.. So sorry for not being able to respond. It has been a hectic week or two. I will be back on line and looking forward to adding to the blog. You guys have seemed to progress so far that I am amazed at the interesting positions you have opened and the insight used to figure the returns and the up an downside possibilities.
Tonight I will review the complete blog and tomorrow I can answer any questions or help with ideas.
Good to be home. Thanks for all the best wishes etc.
Jerry
Sorry that I was unable to contribute to the blog for a while. I see many were worried that NFLX had hurt me etc.. Believe me I have not had NFLX for several months. I haven’t even looked at them for ?? No idea where anything but AAPL is trading. I know that I, and many preach diversification but I have only AAPL positions. I am spread over many different strikes and have some 2012 & 2013 calls. I’ve also sold both monthly and weekly calls on these. I am of the opinion that AAPL is probably the best stock in America at this time. So I am riding the coattails of this powerhouse.
I have received many questions as to my where-bouts.. So sorry for not being able to respond. It has been a hectic week or two. I will be back on line and looking forward to adding to the blog. You guys have seemed to progress so far that I am amazed at the interesting positions you have opened and the insight used to figure the returns and the up an downside possibilities.
Tonight I will review the complete blog and tomorrow I can answer any questions or help with ideas.
Good to be home. Thanks for all the best wishes etc.
Jerry
Wednesday, September 7, 2011
Some ideas for this week
Hi all; I just opened some new positions that seem safe.
I did a put spread on AAPL. AAPL trading at 382.3
I bought to open the 9/9--360
I sold to open the 9/9--365 for .11
that gives over 17 pt cush, with more or less 2 days to go. A ROI of +2%
I also did the same type spread with V, trading around 87.5
I bought to open the 9/9--80
I sold to open the 9/9--82.5 these were done for a credit of .05 = ROI of 2%
--------
There seems to be some good late week trades out there.
I did a put spread on AAPL. AAPL trading at 382.3
I bought to open the 9/9--360
I sold to open the 9/9--365 for .11
that gives over 17 pt cush, with more or less 2 days to go. A ROI of +2%
I also did the same type spread with V, trading around 87.5
I bought to open the 9/9--80
I sold to open the 9/9--82.5 these were done for a credit of .05 = ROI of 2%
--------
There seems to be some good late week trades out there.
Saturday, August 27, 2011
A good market of just short covering?
Hi all. My AAPL calls and puts did very well this week. No Jobs and fewer jobs. For those of you playing AAPL, it is a testament to the power of a stock that has tremendous earning power.
If you are looking at a vert put spread for the week, the AAPL 355/350 AT .16 cents is a 3% roi. If you just like naked puts the 355 is well over 1% per week. For these I would see how the open is this week and then do something on Monday as it will fade fast if AAPL is up. If down, wait and let is settle some. AAPL is heading towards a great earnings season and they are going to bring on line the Iphone 5. It will be big and PR showing lines around the block will be on all the channels. I have a ton of the Jan calls between the 380 and 400. I am expecting AAPL to be past 450 by Jan. that is Jerry’s guess but it should happen.
I see many are trading the SPX etc. Do be careful as Europe is still hanging over us. I have a friend in the investment business and the talk in his business is Europe, Europe. A major default of one of the PIGS (Portugal, Italy, Ireland Greece Spain etc. would bring havoc to our markets.
So the point is to keep you wits about you and don’t just jump in. The water is deep and full of crocodiles.
If you are looking at a vert put spread for the week, the AAPL 355/350 AT .16 cents is a 3% roi. If you just like naked puts the 355 is well over 1% per week. For these I would see how the open is this week and then do something on Monday as it will fade fast if AAPL is up. If down, wait and let is settle some. AAPL is heading towards a great earnings season and they are going to bring on line the Iphone 5. It will be big and PR showing lines around the block will be on all the channels. I have a ton of the Jan calls between the 380 and 400. I am expecting AAPL to be past 450 by Jan. that is Jerry’s guess but it should happen.
I see many are trading the SPX etc. Do be careful as Europe is still hanging over us. I have a friend in the investment business and the talk in his business is Europe, Europe. A major default of one of the PIGS (Portugal, Italy, Ireland Greece Spain etc. would bring havoc to our markets.
So the point is to keep you wits about you and don’t just jump in. The water is deep and full of crocodiles.
Sunday, August 21, 2011
Here comes Monday
HI all, I have been busy with some projects so I have missed much of the conversation.
Next week is going to be interesting with Libya maybe falling? If so, oil should drop and maybe gold and that means an up market. We will see. I still have my AAPL Jan and I have rolled the Aug calls into Sept. I am hoping that aapl makes a good move pretty soon. It is one of the best performing stocks on the exchange and the low PE has got to attract the big players. But then who knows. Come Oct. the calls should head up as we get close to earnings. AAPL will blow them away again. I can sell the Oct, Nov Dec and Jan so plenty of time if all goes right.
I still have some POT and the same plan with them. I also still have some V with the Jan 90 so I will be selling calls soon with those.
I had some 355/360 apple spread and I rolled them down to next weeks at the 335/340. I expect more strikes to be offered soon.
I still have no feeling for the SPX etc. With Europe just too much of a gamble either way…
Good luck all and don’t just trade. Trade with a plan on how to cover or roll or hold. But do have a plan with good stocks.
Sunday, August 14, 2011
A new week coming
Hi all. Well a new week ahead. For me I will wait until at the earliest Tuesday, to make a move. I have AAPL Jan 400 that needs some calls sold, but, again I will wait for direction. If Monday is up and also Tuesday then I will make my move by selling calls for this week. Europe is a mess and we are not much better so guard you money, don’t be in a hurry to make a move.
Be careful in this market
Be careful in this market
Thursday, August 11, 2011
wow again,
I have been doing nothing but stocks and options for 15 years and I have never seen anything quite like this. Yesterday down 600 today up 300. Every day it is the opposite of the previous.. How to play this.. do it like porcupines make love, very careful. Even if we are not at the bottom we have to be so close that it probably doesn’t matter. I try to not hit the bottom or the top. Just make money and trade careful. I see that many of you are still trading the SPX etc. To me it is just to risky. My stock positions move maybe 10 points or so and the index’s can move 50+ in heart beat. It is just to wild and unpredictable.
Today I opened several new positions all calendar spreads.
IBM bought the 1/12—165 sold the 8/20 170
POT – bought the 1/12—55’s sold the 8/20—57.5
These made around 10% ROI. I will continue to sell calls on the long calls. These plays are added to my BIDU & AAPL positions.
Today I opened several new positions all calendar spreads.
IBM bought the 1/12—165 sold the 8/20 170
POT – bought the 1/12—55’s sold the 8/20—57.5
These made around 10% ROI. I will continue to sell calls on the long calls. These plays are added to my BIDU & AAPL positions.
Friday, August 5, 2011
Wow is all I can say
Hi traders; what a week long ride...
I see many of you lost some, by rolling at the wrong time or not rolling at the right time…
I got lucky and all of my positions expired worthless. There were certainly some touchy moments. Lesson’s, I am going to take from this is to follow my own advice!! Do not trade but if you just have to.. trade later in the week and for little profits and lots of cushion. As mentioned in some other post, for me I will avoid SPX etc until things settle down around the world. The world is just a mess, as never before, one countries problems effects the whole world. For me I will continue to pick good stocks and at this time that is AAPL… I like my calendar spreads as I am treating them like covered calls. The difference is that I get full premium and only pay 1/10 the price for the use of the stock. As we have discussed there are some drawbacks, but my 390/395’s and 400-405’s all expired worthless and maybe Monday I will sell the appropriate calls for the week. I have some paper loss but by selling weekly calls, options are paying me better than 10% weekly to wait for the stock to come back. It is like dividends on steroids.
If opening new positions, try to wait until late Wednesday. By them you MIGHT have a feeling for the mkt. don’t start guessing if the mkt opens big Monday. The premiums will still be there later in the week. You will sleep better and have a better chance of making some money. These times, with Italy etc jumping all over the place, it is time for caution.
I see many of you lost some, by rolling at the wrong time or not rolling at the right time…
I got lucky and all of my positions expired worthless. There were certainly some touchy moments. Lesson’s, I am going to take from this is to follow my own advice!! Do not trade but if you just have to.. trade later in the week and for little profits and lots of cushion. As mentioned in some other post, for me I will avoid SPX etc until things settle down around the world. The world is just a mess, as never before, one countries problems effects the whole world. For me I will continue to pick good stocks and at this time that is AAPL… I like my calendar spreads as I am treating them like covered calls. The difference is that I get full premium and only pay 1/10 the price for the use of the stock. As we have discussed there are some drawbacks, but my 390/395’s and 400-405’s all expired worthless and maybe Monday I will sell the appropriate calls for the week. I have some paper loss but by selling weekly calls, options are paying me better than 10% weekly to wait for the stock to come back. It is like dividends on steroids.
If opening new positions, try to wait until late Wednesday. By them you MIGHT have a feeling for the mkt. don’t start guessing if the mkt opens big Monday. The premiums will still be there later in the week. You will sleep better and have a better chance of making some money. These times, with Italy etc jumping all over the place, it is time for caution.
Saturday, July 30, 2011
Budget (lack of) and other market items
Hi Traders; Well we made it through a tough week. Hopefully all of you made some money. My advice is to avoid opening positions in any of the index type of available trades. There is just to much unknown until this is settled. As the reported deadline of this coming week approaches, I would imagine that the two sides will make some concessions and the president will sign it. Well, lets hope so! If we get a budget, the market should take off.. should!
Even though we have introduced various new kinds of option plays, Fulgore demonstrated this past week that plain old vanilla naked puts can and do make money in this nervous market. Various spreads can help with margins and maintenance and allow more positions, but the simplicity of naked puts is still a very viable play.
For those that are impressed with the movement in PCLN, don’t forget that earnings come this week.
For me I will wait until I get some direction from the budget etc. Trade careful and don’t try to ‘outguess’ the market, it will eat your lunch.
Even though we have introduced various new kinds of option plays, Fulgore demonstrated this past week that plain old vanilla naked puts can and do make money in this nervous market. Various spreads can help with margins and maintenance and allow more positions, but the simplicity of naked puts is still a very viable play.
For those that are impressed with the movement in PCLN, don’t forget that earnings come this week.
For me I will wait until I get some direction from the budget etc. Trade careful and don’t try to ‘outguess’ the market, it will eat your lunch.
Sunday, July 24, 2011
Some thoughts
Hi all, some thoughts regarding how to trade all of the available stocks etc that allow weekly’s. I seem to consistently find that trading later in the week pays dividends. I have a hard time waiting when positions close on Friday and then trying to wait, but it gives (pays) many benefits as you can get a real feel for the direction of the general market, the direction of your stock and the amount of cushion that might be needed for 2 or 3 days of life left in the potential position.
The downside is some loss in potential earnings (ROI) So when opening a position I would recommend that you wait a few days to open. Also have an escape plan. The plan should include, do you want to keep the position. If what happened is a one time blip or a real change in the direction of your stock. Is the whole market in some sort of correction. Is there outside (the world) forces causing unrest. Add these and any other things that might,in your mind cause problems.
Right now the big question is who is going to give with the US debt ceiling and tax cuts etc. For me, I will not open any new positions until this budget deal is somewhat settled.
Some individual stocks could weather this but for the SPX and other stocks that follow the trend, it could be a real headache
So trade careful this coming week!
The downside is some loss in potential earnings (ROI) So when opening a position I would recommend that you wait a few days to open. Also have an escape plan. The plan should include, do you want to keep the position. If what happened is a one time blip or a real change in the direction of your stock. Is the whole market in some sort of correction. Is there outside (the world) forces causing unrest. Add these and any other things that might,in your mind cause problems.
Right now the big question is who is going to give with the US debt ceiling and tax cuts etc. For me, I will not open any new positions until this budget deal is somewhat settled.
Some individual stocks could weather this but for the SPX and other stocks that follow the trend, it could be a real headache
So trade careful this coming week!
Wednesday, July 20, 2011
some blow-out earnings
Hi all, Wow, first GOOG and now AAPL. Apple was expected to be big. They can't keep inventory on the shelf. I would not be surprised to see a little pull back with Apple. From today’s 380's down to the 370's by Friday night? Just a guess but history show that happens more often than not. Tomorrow I will be making some decision on my appl calendar spreads.
Hope all have made some money this week.
Hope all have made some money this week.
Friday, July 15, 2011
I'm back Hello GOOG
Wow, guys, What a ride for GOOG. I had lots of them but closed nearly all before the announcement. A nice profit. I now have all AAPL calendars. A bunch of the 355 and more of the 360’s.
I have received many emails asking for more info on these. So the quickest way to explain them is to think of them exactly as covered calls on stocks. The advantage as I told in one email; As follows;
I now have 35 cal spreads in AAPL for the 360 July-22 and the Jan 360 calls.
The difference between a covered call and a calendar spread is as follows;
To do 35 covered calls means that I would have bought 3500 shares of AAPL, at 355 cost that would have cost me 1,246,500. and I would have received 14 ea. in prem. So cash in would be 49,000. This is a 3.9 ROI – But to set up the same income of 49,000 doing the spread, I just had to buy the Jan 360 call for a cost of 105,088 which is a ROI of, 49,000. / 105,088 = 46% on a week play. If AAPL goes up all is about the same. If it goes down below 360, I let them expire and then next week sell the 360’s again. Of course a major drop in the stock means your next week prem will be smaller but without a super drop, it is money in the bank each week. You have to keep in mind that Jan 2012 has a ton of ‘time value’ in it and that will start eroding. So I will only use these until late September or so. Eventually you will want to sell these so you don’t want them to drop to far.
This is not necessarily a bullish position. AAPL is reporting this week and I always expect good things but … it is advised to not use a close strike that is below the Jan strike. Use the same or a higher ‘near’ call strike price.
I hope all had a great week and more profits to come. I promise no new strategies.. lol
Jerry
I have received many emails asking for more info on these. So the quickest way to explain them is to think of them exactly as covered calls on stocks. The advantage as I told in one email; As follows;
I now have 35 cal spreads in AAPL for the 360 July-22 and the Jan 360 calls.
The difference between a covered call and a calendar spread is as follows;
To do 35 covered calls means that I would have bought 3500 shares of AAPL, at 355 cost that would have cost me 1,246,500. and I would have received 14 ea. in prem. So cash in would be 49,000. This is a 3.9 ROI – But to set up the same income of 49,000 doing the spread, I just had to buy the Jan 360 call for a cost of 105,088 which is a ROI of, 49,000. / 105,088 = 46% on a week play. If AAPL goes up all is about the same. If it goes down below 360, I let them expire and then next week sell the 360’s again. Of course a major drop in the stock means your next week prem will be smaller but without a super drop, it is money in the bank each week. You have to keep in mind that Jan 2012 has a ton of ‘time value’ in it and that will start eroding. So I will only use these until late September or so. Eventually you will want to sell these so you don’t want them to drop to far.
This is not necessarily a bullish position. AAPL is reporting this week and I always expect good things but … it is advised to not use a close strike that is below the Jan strike. Use the same or a higher ‘near’ call strike price.
I hope all had a great week and more profits to come. I promise no new strategies.. lol
Jerry
Thursday, July 7, 2011
Another way of doing optons.
Ok all, another way of trading options. It was mentioned a while back by someone?
Calendar call spreads. I have done some for awhile and I will pass on the results. It is a little more complicated than straight naked puts and pretty much the same as our normal spreads.
These are not an 'end all', but in an up market they work pretty well. I hesitate to add another layer to what started as a simple (and still viable) naked puts blog, but I promised to share my trading styles.
Here is an example of recent trades I have made.
These are using the Jan 2012 options as the first part, and the current options (this weeks or next weeks.) So here goes all, I hope I don’t confuse and discourage new and old traders.
When doing these it is important to know what the ‘time’ value is. These are not for a trader that checks their positions at night. You should be on top of these as conditions change and never forget.. I believe in taking profits
Here is how they work for you, and then I will get in to a few examples.
These are for bullish thoughts. You can also do them for neutral or bearish feelings. You sell a near term option. And buy a ‘way out’ option. Most of the options books will tell you that it is usually done with the same strike. I do that sometimes but more often, I use different strikes. I am using the Jan strike and that is the lower strike..
I open by buying the Jan. 2012 at a near strike
I sell the July 16 at one strike above the strike I am using in Jan 2012
The best situation is when the stock you are using has a lot of time value in the near term options. For example the July 16 GOOG 545 sells for 15+ With GOOG trading at 546 there is easy to see that you have around 14 of time value in a one week option…wow.
So the trade
GOOG is trading at 546.60
I bought the Jan 2012 555 strike. Cost is 38.10
I sold the July 16, 560 strike for 8.60
Net debit is 29.5 or 2950 per options
Ok the plan is with GOOG trading at 546, the July 16, 560 strike is trading at 8.60. The stock has to go up within a week over the 560 (12.40) or it will expire worthless. And even if it goes up, the Jan 2012 will be in the money and will track along pretty close. So they both go up.
My bet is that it will not go above the 560 but I do not really care as stated, the one I bought will also go up and I get to sell it when closing.
An example; GOOG goes up 20 points to 566 next week. At closing the July 560 will be now ‘in the money’ 6 points and for me to buy it back it might cost 6.50 I sold it for 8.60 so I make roughly 2 dollars on that side but….
I now get to sell my Jan 555 and it will track along and might sell for around 14 more than I bought it for. So maybe 43.5
The profit picture looks like this.
Make 2 points on the July options and make 14 on the Jan option.
For 16 total. The set up cost me 29.10 but I will close the spread for around 45 for a net overall of 16 points. I invested 29.5 made 16 net =54% in a week. 16/29.5 =54%) Now that would be for a big run up in the stock
For a stock that does not move at all the results might be like this.
Bought the 1/2012 555 strike for 38.10
Sold the July 7, 2011 260 strike for 8.60
Net cost to open is 29.50
The stock does not move a bit
In a week the Jan option will trade about the same but the ‘time’ will leak out of the near term option and it will expire worthless. So you sell the Jan option for about 37 and don’t forget your net out of pocket was 29.5 so you make around 7.50. If the option ends any where below the 560 strike you will keep the premium of the sold July option.
Now for the downside.
If the stock falls much, the July option will expire but the long Jan option will drop and if it drops more than around 7 then you lose on it. But next week you can sell another near term option for the next week etc. it is basically a covered call on an option.
I have done many and some with AAPL and all others with GOOG as it has so much time value figured in. I also have some with the Jan 560 and the July 560 also the jan 550 and the July 555. So there are many ways to do these. The main point is that you are betting on the time leaking out. You must be prepared that the stock can drop and like owning a stock, your position can lose money. But for a stock like GOOG, trading around 546, it is like buying it for 29.5 in the above example. You can sell the near term call each week and hope that the stock comes back. BUT, IT MAY NOT… So be aware of the different ways the move can go against you.
Also it should be noted that you do not let these expire if any or both are in the money. . You are to close them before expiration. If the near term goes into the money and you are assigned, you will have to go through the hoops of assigning yours and the related hoops.
If neither is in the money let them expire and sell again next week.. etc etc. It is also advised to not 'leg' in or out of these positions. If the stock turns, a winning play can become a loser...
Also be advised that the time value is bigger as options are getting near earnins. Earnings = potential up or down...
This is just a quick over-view and I’m sure most get the idea. So if you don’t understand read up on them and the risk involved before jumping in.
Sorry for the long post but the profits for me have been quite big and I wanted to share this style with those interested. If any of you traders want to discuss these and the high POTENTIAL PROFITS, drop me a line at putman3232@ yahoo.com
Calendar call spreads. I have done some for awhile and I will pass on the results. It is a little more complicated than straight naked puts and pretty much the same as our normal spreads.
These are not an 'end all', but in an up market they work pretty well. I hesitate to add another layer to what started as a simple (and still viable) naked puts blog, but I promised to share my trading styles.
Here is an example of recent trades I have made.
These are using the Jan 2012 options as the first part, and the current options (this weeks or next weeks.) So here goes all, I hope I don’t confuse and discourage new and old traders.
When doing these it is important to know what the ‘time’ value is. These are not for a trader that checks their positions at night. You should be on top of these as conditions change and never forget.. I believe in taking profits
Here is how they work for you, and then I will get in to a few examples.
These are for bullish thoughts. You can also do them for neutral or bearish feelings. You sell a near term option. And buy a ‘way out’ option. Most of the options books will tell you that it is usually done with the same strike. I do that sometimes but more often, I use different strikes. I am using the Jan strike and that is the lower strike..
I open by buying the Jan. 2012 at a near strike
I sell the July 16 at one strike above the strike I am using in Jan 2012
The best situation is when the stock you are using has a lot of time value in the near term options. For example the July 16 GOOG 545 sells for 15+ With GOOG trading at 546 there is easy to see that you have around 14 of time value in a one week option…wow.
So the trade
GOOG is trading at 546.60
I bought the Jan 2012 555 strike. Cost is 38.10
I sold the July 16, 560 strike for 8.60
Net debit is 29.5 or 2950 per options
Ok the plan is with GOOG trading at 546, the July 16, 560 strike is trading at 8.60. The stock has to go up within a week over the 560 (12.40) or it will expire worthless. And even if it goes up, the Jan 2012 will be in the money and will track along pretty close. So they both go up.
My bet is that it will not go above the 560 but I do not really care as stated, the one I bought will also go up and I get to sell it when closing.
An example; GOOG goes up 20 points to 566 next week. At closing the July 560 will be now ‘in the money’ 6 points and for me to buy it back it might cost 6.50 I sold it for 8.60 so I make roughly 2 dollars on that side but….
I now get to sell my Jan 555 and it will track along and might sell for around 14 more than I bought it for. So maybe 43.5
The profit picture looks like this.
Make 2 points on the July options and make 14 on the Jan option.
For 16 total. The set up cost me 29.10 but I will close the spread for around 45 for a net overall of 16 points. I invested 29.5 made 16 net =54% in a week. 16/29.5 =54%) Now that would be for a big run up in the stock
For a stock that does not move at all the results might be like this.
Bought the 1/2012 555 strike for 38.10
Sold the July 7, 2011 260 strike for 8.60
Net cost to open is 29.50
The stock does not move a bit
In a week the Jan option will trade about the same but the ‘time’ will leak out of the near term option and it will expire worthless. So you sell the Jan option for about 37 and don’t forget your net out of pocket was 29.5 so you make around 7.50. If the option ends any where below the 560 strike you will keep the premium of the sold July option.
Now for the downside.
If the stock falls much, the July option will expire but the long Jan option will drop and if it drops more than around 7 then you lose on it. But next week you can sell another near term option for the next week etc. it is basically a covered call on an option.
I have done many and some with AAPL and all others with GOOG as it has so much time value figured in. I also have some with the Jan 560 and the July 560 also the jan 550 and the July 555. So there are many ways to do these. The main point is that you are betting on the time leaking out. You must be prepared that the stock can drop and like owning a stock, your position can lose money. But for a stock like GOOG, trading around 546, it is like buying it for 29.5 in the above example. You can sell the near term call each week and hope that the stock comes back. BUT, IT MAY NOT… So be aware of the different ways the move can go against you.
Also it should be noted that you do not let these expire if any or both are in the money. . You are to close them before expiration. If the near term goes into the money and you are assigned, you will have to go through the hoops of assigning yours and the related hoops.
If neither is in the money let them expire and sell again next week.. etc etc. It is also advised to not 'leg' in or out of these positions. If the stock turns, a winning play can become a loser...
Also be advised that the time value is bigger as options are getting near earnins. Earnings = potential up or down...
This is just a quick over-view and I’m sure most get the idea. So if you don’t understand read up on them and the risk involved before jumping in.
Sorry for the long post but the profits for me have been quite big and I wanted to share this style with those interested. If any of you traders want to discuss these and the high POTENTIAL PROFITS, drop me a line at putman3232@ yahoo.com
Tuesday, July 5, 2011
Some thoughts for this short week
Hi all, like most of you I have not found any trades yet. AAPL NFLX and GOOG up. I will see if tomorrow opens up any decent plays. I am still bothered by Rick's situation. As someone mentioned, spread your exposure among several plays. Regarding when to close a spread I have not really decided what I want to use as a trip wire. Maybe falling back to the standard of a double of the ask? But the main point that I think we should take with us is to not let your losses run. Most that I have closed didn’t end up in the money but I wasn’t going to wait and see.
Some points..
--If you look at a position, and you think, you would not open it now.. Then it is probably time to close it.
--If your gut is telling you, this is getting ugly… close it.
--Develop a trip wire that you stick to. Avoid the trap of giving it ‘just one’ more day.
-- I have decided that I do not like opening both sides of an IC until I know which way the market is heading. Last week I had none.
I usually have so many options open that I do not think of a spread as any protection at all. For me it is just a way to limit and stabilize the maintenance needed. There is some truth that in a world collapse, it would give some limits, but for everyday trading don’t figure on it as stop loss position.
Think cushion and caution. If you can’t find a good trade,,,,don’t trade!
Some points..
--If you look at a position, and you think, you would not open it now.. Then it is probably time to close it.
--If your gut is telling you, this is getting ugly… close it.
--Develop a trip wire that you stick to. Avoid the trap of giving it ‘just one’ more day.
-- I have decided that I do not like opening both sides of an IC until I know which way the market is heading. Last week I had none.
I usually have so many options open that I do not think of a spread as any protection at all. For me it is just a way to limit and stabilize the maintenance needed. There is some truth that in a world collapse, it would give some limits, but for everyday trading don’t figure on it as stop loss position.
Think cushion and caution. If you can’t find a good trade,,,,don’t trade!
Wednesday, June 29, 2011
Ideas regarding rolling up
Hi traders, a lot of talk of rolling up, out and how to take profits. First a note of caution, never forget before you roll up an option to capture a little extra profit.. You opened the first position hoping to make that money. Then things go your way and you can't wait to roll to another strike price to make more. Two things can happen...it works and you make a little more profit or.. the stock turn against you and your roll up, for a few pennies’s more cost you thousands. Be very care on these roll-ups. Try to keep in mind how happy you were to make the first profit. Try to resist the temptation of endangering 'made' profits for the little gain of rolling. I do it sometimes but generally I try to be happy with my opening position. As I have said before, most of my losses come from rolling either to high or to soon. Learn to enjoy your hard earned profits, not endangering them.
Saturday, June 25, 2011
A new week coming
Hi all, sorry for the previous long post list. I was out of town and only had a chance to peek at my positions and no time to even check the blog. I will read all of the post to see if I need to answer any questions.
Hopefully all made some money in this market. It certainly was an up and down roller coaster. All of my positions ended ok with all expiring today.
I want to remind all to be careful and leave lots of cushion for this crazy market. Stocks like PCLN (which I had over 100 positions) need plenty of extra cushion. I see one day it was up 28 pts...wow. AAPL has been a pretty good source of money (free) for the last few weeks. But don't get careless. I have not had time to look forward to the coming week. Maybe some of you posted new ideas? If so I will check them out to see if they fit my style. The last week I avoided any of the SPX OR SPY trades. Maybe they will fit nest week. Again this week I will look to start opening positions on Monday - Tuesday or better yet Wednesday, The more cushion and less time the better in this market.
Be careful with your picks as earning season is coming fast.
Jerry
Hopefully all made some money in this market. It certainly was an up and down roller coaster. All of my positions ended ok with all expiring today.
I want to remind all to be careful and leave lots of cushion for this crazy market. Stocks like PCLN (which I had over 100 positions) need plenty of extra cushion. I see one day it was up 28 pts...wow. AAPL has been a pretty good source of money (free) for the last few weeks. But don't get careless. I have not had time to look forward to the coming week. Maybe some of you posted new ideas? If so I will check them out to see if they fit my style. The last week I avoided any of the SPX OR SPY trades. Maybe they will fit nest week. Again this week I will look to start opening positions on Monday - Tuesday or better yet Wednesday, The more cushion and less time the better in this market.
Be careful with your picks as earning season is coming fast.
Jerry
Friday, June 17, 2011
wow, what a week
Hi all, I hope this finds all of you counting you win money and not adding up losses. I had one trade that seemed to be heading south and I closed it at a loss (PCLN 445/450) I would have been safe but I was leaving the computer so I bit the bullet. First loss in a while but all the others were great.
If looking for a trade next week check out AAPL 290/285 put spread. 30 pts of cush with a week to go. AAPL would have to drop an average of 6 pt a day. Not likely.
Plenty of other trades to ponder this weekend.
Good trading all
If looking for a trade next week check out AAPL 290/285 put spread. 30 pts of cush with a week to go. AAPL would have to drop an average of 6 pt a day. Not likely.
Plenty of other trades to ponder this weekend.
Good trading all
Monday, June 13, 2011
A new week ahead
Hi traders. Well most of us are scrambling around trying to find some good trades for the week ahead.
Thanks to Newport (maybe) I have opened some VECO puts for July at both the 40 and 41 strikes. A new stock for me but it looks pretty good.
I also have some spreads with NFLX and PCLN
Tomorrow maybe we can tell if the mkt is going to come back some. At this time the DOW is up a little and the NASDAQ is down some. The market is certainly in need of a positive bounce one of these days. That being said, the market will do what it does!
Trade careful and don’t try to force a trade by compromising your filters.
Thanks to Newport (maybe) I have opened some VECO puts for July at both the 40 and 41 strikes. A new stock for me but it looks pretty good.
I also have some spreads with NFLX and PCLN
Tomorrow maybe we can tell if the mkt is going to come back some. At this time the DOW is up a little and the NASDAQ is down some. The market is certainly in need of a positive bounce one of these days. That being said, the market will do what it does!
Trade careful and don’t try to force a trade by compromising your filters.
Wednesday, June 8, 2011
time for a new thread
Hi all, a ton of comments on the previous post. Today I was happy to see my stocks were treated ok. As I mentioned, I am liking call spreads more and more. It has not been a good market for naked puts or put spreads, Hopefully we are all safe as I know we all BELIEVE IN LOTS OF CUSHION... Right? It is one of the few ways for us, the little guys to protect ourselves. We can't out play or out guess the big boys. Also the traders that continue to bet on the big returns will make them now and then, but more often they bust out and slink away. To stay in the game it is time for caution and safety. Small crumb returns will keep you around and make you money. This is one of the more bearish markets in years. Don't fight it. Let it do what it wants to and take the opposite side. If it wants to go down, fine, we play calls. When it turns and goes up, we play puts. It is that easy.
Good trading all.
Good trading all.
Saturday, June 4, 2011
Whew, what a week
Hi all, well the week is past and some good news and some bad. SPX was certainly a ride. It seemed that many, like me, had the spread 1300/1295. I was tempted to close mine for a small loss when the index jumped up to around 1308 late in the trading period. I held on and was rewarded by the index finishing just a fraction over 1300. Much to close for comfort!
I had many positions that were never in danger. But trading these index options you MUST leave lots of cushion.
I hope all noticed that the mkt has been down for weeks in a row. This certainly shows a trend of bearish activity. I am going to start trading more call and less put positions. Also when trading weeklies, I will wait until Tuesday or Wednesday to open new position. This market is not an easy market to plan your plays. Settle for less profit and keep the profits you have. Avoid the temptation to start thinking, 'the market is oversold', 'we have hit the resistance level' etc.
As most of you who have read my book know, I do not believe there is any consistent thing that predicts bottoms or tops or resistance levels etc. You certainly can see a trend with these things, but you can not bet the farm on these predictions.
I also recommend being careful with AAPL this week. A big conference by S. Jobs and AAPL should really bounce the stock BUT.. What if the announcement says that S. Jobs is retiring completely from AAPL and is very ill. The point is, trying to guess on these types of things can turnout either way. And guessing, if wrong can cost you.
I also would be very careful of doing plays with covered calls. You do not want to try and catch a falling knife.
And last but maybe the most important is the coming battle regarding extending the credit card that the U.S. uses to pay its bills. The government wants no restrictions on how much it can spend. As a citizen, I have to live on a budget; evidently the U.S. does not want to. I would not open positions until this is settled. The market could react severely if things do not go in a direction that stocks want it to.
Trade safe, this is a big week coming.
I had many positions that were never in danger. But trading these index options you MUST leave lots of cushion.
I hope all noticed that the mkt has been down for weeks in a row. This certainly shows a trend of bearish activity. I am going to start trading more call and less put positions. Also when trading weeklies, I will wait until Tuesday or Wednesday to open new position. This market is not an easy market to plan your plays. Settle for less profit and keep the profits you have. Avoid the temptation to start thinking, 'the market is oversold', 'we have hit the resistance level' etc.
As most of you who have read my book know, I do not believe there is any consistent thing that predicts bottoms or tops or resistance levels etc. You certainly can see a trend with these things, but you can not bet the farm on these predictions.
I also recommend being careful with AAPL this week. A big conference by S. Jobs and AAPL should really bounce the stock BUT.. What if the announcement says that S. Jobs is retiring completely from AAPL and is very ill. The point is, trying to guess on these types of things can turnout either way. And guessing, if wrong can cost you.
I also would be very careful of doing plays with covered calls. You do not want to try and catch a falling knife.
And last but maybe the most important is the coming battle regarding extending the credit card that the U.S. uses to pay its bills. The government wants no restrictions on how much it can spend. As a citizen, I have to live on a budget; evidently the U.S. does not want to. I would not open positions until this is settled. The market could react severely if things do not go in a direction that stocks want it to.
Trade safe, this is a big week coming.
Monday, May 30, 2011
Next week plays
Hi all, in the final comment of the last post I wrote my ideas on when to close. If you have not read it, it has some answers to previous questions of when to close and how.
For next week. it is a short week of 4 days...
I am looking at the following. I will judge if I will use any or all depending on the mkt and what is happening.
These are not in any order!
NFLX @ 264 240/235---290/295
GOOG @ 521 490/485--545/550
AAPL @ 337 310/305--355/360
PCLN @ 501 470/465--535/540
AMZN @194 175/170--215/220
BIDU @134 120/115
SPX @1331 1250/1245--1380/1385
OEX @ 590 560/555
I might still use these same stocks but adjust the strikes if the mkt is up or down etc. These of course are not the only good plays out there but what I am looking at. If the mkt is really weird tomorrow, I will let it rest until Wednesday etc.
Good trading all
Jerry
For next week. it is a short week of 4 days...
I am looking at the following. I will judge if I will use any or all depending on the mkt and what is happening.
These are not in any order!
NFLX @ 264 240/235---290/295
GOOG @ 521 490/485--545/550
AAPL @ 337 310/305--355/360
PCLN @ 501 470/465--535/540
AMZN @194 175/170--215/220
BIDU @134 120/115
SPX @1331 1250/1245--1380/1385
OEX @ 590 560/555
I might still use these same stocks but adjust the strikes if the mkt is up or down etc. These of course are not the only good plays out there but what I am looking at. If the mkt is really weird tomorrow, I will let it rest until Wednesday etc.
Good trading all
Jerry
Friday, May 27, 2011
Market closed Monday
Since the market is closed on Monday, I would not rush into positions for the coming week. A three day weekend with the world still in turmoil, too many things can happen! My advice is to wait until Tuesday or even Wednesday.
I am liking the usual suspect with weeklys. NFLX, AMZN, AAPL, SPX, PCLN. There are more but those are the ones I check first.
The simple secret to options (from my point of view) is leave lots of cushion, limit your goals to reasonable ROI, Don't put all your maintenance into one position, control time as best as you can (weeklys).
The game plan for option trading is to stay in the game. When you break some of the above guidelines you put yourself in jeopardy. It only take one of two positions to turn against you and you will be one of the statistics that are used to demonstrate the danger of options. With the leverage options offer, it works both ways.. Just plod along with boring crumbs and you will get wealthy and you will sleep better.
Good trading all
I am liking the usual suspect with weeklys. NFLX, AMZN, AAPL, SPX, PCLN. There are more but those are the ones I check first.
The simple secret to options (from my point of view) is leave lots of cushion, limit your goals to reasonable ROI, Don't put all your maintenance into one position, control time as best as you can (weeklys).
The game plan for option trading is to stay in the game. When you break some of the above guidelines you put yourself in jeopardy. It only take one of two positions to turn against you and you will be one of the statistics that are used to demonstrate the danger of options. With the leverage options offer, it works both ways.. Just plod along with boring crumbs and you will get wealthy and you will sleep better.
Good trading all
Tuesday, May 24, 2011
Blog problems
Hi all, they are working on the blog problems. I can post here but not in the comment section. Hope to be fixed soon.
Sunday, May 22, 2011
A free, extra chapter regarding spreads.
Hi all, I get many many questions regarding selling puts or calls in a spread. I have written a 13 page article explaining how I do them. It is of course not the definitive way to trade spreads, just what I am doing with very good results. The extra chapter to the book is free to anyone that wants it. Just email me at
putman3232@yahoo.com
and request a copy. There are probably many of you that have traded spreads longer than I, but the 13 page chapter will get beginners going in what i hope is the right direction.
I will put this on the front page of the blog for all to see. You will have to excuse any mistakes in editing as I just wrote it off the top of my head... and let me tell you, that is uncomfortable..lol
The article does reference the book often so if you have not bought the book, pick it up and you will have the complete guide to our way of using options.
Jerry
putman3232@yahoo.com
and request a copy. There are probably many of you that have traded spreads longer than I, but the 13 page chapter will get beginners going in what i hope is the right direction.
I will put this on the front page of the blog for all to see. You will have to excuse any mistakes in editing as I just wrote it off the top of my head... and let me tell you, that is uncomfortable..lol
The article does reference the book often so if you have not bought the book, pick it up and you will have the complete guide to our way of using options.
Jerry
Saturday, May 21, 2011
Plays for the coming week
Hi all, Well a successful week has passed. I hope all of you found the same. For the coming week I am looking at a few weekly spreads. Mostly puts but some possible call spreads.
I will wait until I have clear feeling for Monday or wait until Tuesday or even Wednesday. Like most traders I have to fight the feeling that "I should be trading something" It is ok to wait until Wednesday or even Thursday. You might have to take .07% by waiting but you do eliminate a lot of TIME, and as we know, time can equal trouble. So I'm looking at some aapl maybe 305/300
AMZN maybe 170/175
bidu 105/110 and calls maybe 205/200
pcln 470/480 calls maybe 555/560
------------
I will watch and as time goes by I will move the strike a little closer.
Good luck all
Jerry
I will wait until I have clear feeling for Monday or wait until Tuesday or even Wednesday. Like most traders I have to fight the feeling that "I should be trading something" It is ok to wait until Wednesday or even Thursday. You might have to take .07% by waiting but you do eliminate a lot of TIME, and as we know, time can equal trouble. So I'm looking at some aapl maybe 305/300
AMZN maybe 170/175
bidu 105/110 and calls maybe 205/200
pcln 470/480 calls maybe 555/560
------------
I will watch and as time goes by I will move the strike a little closer.
Good luck all
Jerry
Wednesday, May 18, 2011
A great time to pick up some free money
Hi all, This is the best time for trading. Stocks like PCLN etc, you can leave lots of cushion and still pick up .05 =00 1% in a three day trade.
These are of course spreads for this week.
So do some looking and pick a good stock and jump in.
Jerry
These are of course spreads for this week.
So do some looking and pick a good stock and jump in.
Jerry
Saturday, May 14, 2011
what's with the blog?
Hi all, the blog seemed to have derailed. I do not know what is up with that but I hope it gets back on line and squared away soon.
Looking at next weeks options, I have to say, it is possible to wait until even Wednesday and get one percent returns using spreads with weekly options with stocks like PCLN. The stock is trading around 530 and on Wednesday and maybe Thursday morning, you should be able to sell a put 40 points below the existing stock price. To do the spread you then buy the next strike below that. You will end up with maybe the stock trading at 530 and you selling the 500 strike and buying the 495 strike. The goal is to take in from .03 to .05 cents. As the maintenance will be 5 for each opition, which equals for a two day trade could give you a return on investment (ROI) of from .06 to 1%. And that is in a one-day or two-day trade. AAPL and NFLX etc may prove to have some like opportunities. If you get a .06% ROI in a week that is over 2% a month and that is more than except able in these times. Do not risk your capital on risky plays. Take the easy money (crumbs). There really is easy money out there but many traders refuse to see or to take advantage of the opportunity.
Looking at next weeks options, I have to say, it is possible to wait until even Wednesday and get one percent returns using spreads with weekly options with stocks like PCLN. The stock is trading around 530 and on Wednesday and maybe Thursday morning, you should be able to sell a put 40 points below the existing stock price. To do the spread you then buy the next strike below that. You will end up with maybe the stock trading at 530 and you selling the 500 strike and buying the 495 strike. The goal is to take in from .03 to .05 cents. As the maintenance will be 5 for each opition, which equals for a two day trade could give you a return on investment (ROI) of from .06 to 1%. And that is in a one-day or two-day trade. AAPL and NFLX etc may prove to have some like opportunities. If you get a .06% ROI in a week that is over 2% a month and that is more than except able in these times. Do not risk your capital on risky plays. Take the easy money (crumbs). There really is easy money out there but many traders refuse to see or to take advantage of the opportunity.
Wednesday, May 11, 2011
The week is winding down, finally
Hi all, Wow, I take a day away from the market and you guys have been busy trading and posting.
Some good points regarding different plays. I still have my SINA naked puts. Not real happy with them but don't want the loss. Tomorrow will be interesting. I will roll them down if necessary.
I have lots of AAPL spreads. Tomorrow i will close most and open new ones if all is calm in the mkt. I like the spread of 335/340. 6 pts of cush with 2 days.. A little spooky so maybe the 330/335 for .04cents.
We don't have to wait for new options as they are already on line and with plenty of open int.
NFLX, trading around 239+ maybe the 225/220 with 2 days to go. Just trying to pick up crumbs.
I try to avoid over-thinking the market. Who know why OIL is down, or commodities are down and some consumer items up. To me these are just what they are. About the time i think i see a trend, then the tide turns and all that was up is down and all that was down is up. The pundits will tell you why, but where were they before it happened? I just take what the mkt will give and pick up the crumbs. You will never out-think these items. You might out-guess but recognize that it is a guess. As I have said in the past, mutual funds with computers bigger than your house...have no idea what will happen tomorrow. Just keep picking up the crumbs and let others try to out guess tomorrow.
Jerry
Some good points regarding different plays. I still have my SINA naked puts. Not real happy with them but don't want the loss. Tomorrow will be interesting. I will roll them down if necessary.
I have lots of AAPL spreads. Tomorrow i will close most and open new ones if all is calm in the mkt. I like the spread of 335/340. 6 pts of cush with 2 days.. A little spooky so maybe the 330/335 for .04cents.
We don't have to wait for new options as they are already on line and with plenty of open int.
NFLX, trading around 239+ maybe the 225/220 with 2 days to go. Just trying to pick up crumbs.
I try to avoid over-thinking the market. Who know why OIL is down, or commodities are down and some consumer items up. To me these are just what they are. About the time i think i see a trend, then the tide turns and all that was up is down and all that was down is up. The pundits will tell you why, but where were they before it happened? I just take what the mkt will give and pick up the crumbs. You will never out-think these items. You might out-guess but recognize that it is a guess. As I have said in the past, mutual funds with computers bigger than your house...have no idea what will happen tomorrow. Just keep picking up the crumbs and let others try to out guess tomorrow.
Jerry
Thursday, May 5, 2011
Well some interesting comments
Hi all, Reading the comments from the previous post was interesting. Some bad stories and some good...
Regarding the bad, a common thread of the bad demonstrates is a common mistake.
a. Don't use stocks that have no history...especially chinese!
b. Leave lots of cushion.
c. Have rules and follow them.
d. Even with a spread you can use the doubling rule. If you think the stock will or might continue to fall, only close the sold put or call. leave the bought in place to capture some of the rising prem. If not much time left close both.
e. Research the stock you are using. i.e.: earnings etc. don't get caught without knowing what is common knowledge for all...
f. Don't take flyer's on unknowns.. know your stock
---------
These rules / guidelines are to help protect you when things turn against you. You want to minimize your losses, not watch them continue to run. The goal is to make a SMALL profit but a consistent one.
Hope the reminders help.
Jerry
Regarding the bad, a common thread of the bad demonstrates is a common mistake.
a. Don't use stocks that have no history...especially chinese!
b. Leave lots of cushion.
c. Have rules and follow them.
d. Even with a spread you can use the doubling rule. If you think the stock will or might continue to fall, only close the sold put or call. leave the bought in place to capture some of the rising prem. If not much time left close both.
e. Research the stock you are using. i.e.: earnings etc. don't get caught without knowing what is common knowledge for all...
f. Don't take flyer's on unknowns.. know your stock
---------
These rules / guidelines are to help protect you when things turn against you. You want to minimize your losses, not watch them continue to run. The goal is to make a SMALL profit but a consistent one.
Hope the reminders help.
Jerry
Saturday, April 30, 2011
Another week on the way
Hi Traders, Well NFLX disappointed some but when the dust settled if you were using them and left anything over a 10% cushion you were safe. You were worried but safe..
NFLX is getting more and more competition from many directions so be careful when using it. With a PE of 66+ it is still priced pretty high, so leave a good cushion.
I seemed to have broken my own rules once to often. I had a loss on an SPX spread. The return was 1.7% when I opened the weely position. That equates to about a 7% gain in a month. As I said in my book when getting over 6% a month you are pushing your luck. I pushed once to often. No big deal but it serves as a reminder to me to 'follow the rules'...lol
We all will have losses now and then but our goal is keep them to small losses and not very often.
Most the heavyweights have reported but still some out there. PCLN is coming next weeks so I will avoid that puppy..
Pick your positions with care, leave lots of cushion and go for smaller profits...
Good luck this week and month.
NFLX is getting more and more competition from many directions so be careful when using it. With a PE of 66+ it is still priced pretty high, so leave a good cushion.
I seemed to have broken my own rules once to often. I had a loss on an SPX spread. The return was 1.7% when I opened the weely position. That equates to about a 7% gain in a month. As I said in my book when getting over 6% a month you are pushing your luck. I pushed once to often. No big deal but it serves as a reminder to me to 'follow the rules'...lol
We all will have losses now and then but our goal is keep them to small losses and not very often.
Most the heavyweights have reported but still some out there. PCLN is coming next weeks so I will avoid that puppy..
Pick your positions with care, leave lots of cushion and go for smaller profits...
Good luck this week and month.
Monday, April 25, 2011
NFLX reports..ouch!!
Hi all, Well we are deep into earnings season. Today's announcement by NFLX again demonstrates the importance of avoiding trying to out guess an earnings report. The report may be great but not what the street wanted or expected and zap out goes several billion dollars worth of investors money. It is expected that NFLX will drop around 20 dollars tomorrow morning. If so by mid-day it might be time to dip your toe into the water to test the temperature. There might be some decent puts available when the dust settles. But don't rush and don't try to out guess the market.
Today I opened some put spreads with..
SPX weeklys 1295/1300 puts for 1.75% ROI
SPX WEEKLY 1360/1365 CALL FOR 1.7% Roi
GOOG weekly 545/550 call spread 1% ROI
So there are some decent plays out there but i spent several hours digging for ones that I liked. Maybe tomorrow will find some more spreads or regular puts available. Lets see how the mkt does in the AM.
Jerry
Today I opened some put spreads with..
SPX weeklys 1295/1300 puts for 1.75% ROI
SPX WEEKLY 1360/1365 CALL FOR 1.7% Roi
GOOG weekly 545/550 call spread 1% ROI
So there are some decent plays out there but i spent several hours digging for ones that I liked. Maybe tomorrow will find some more spreads or regular puts available. Lets see how the mkt does in the AM.
Jerry
Thursday, April 21, 2011
What a week
Hi all, What a week. AAPL announced and blew away the 'guesses'. FFIV also. So a long weekend with lots of time to pick our next weeks positions. If you are doing monthlys then you now have 4 weeks. If doing weeklys, it is start over time for next week. I will be posting all my choices for the coming sessions. There are lots of choices as we work our way through the reports. AAPL, FFIV LULU, GOOG, RIMM, CMG, PCLN, DECK, ISRG, OPEN and others. Just watch for reports and trends, as we have seen, the numbers can jump out of sight if you misstep.
Weeklies have certainly added a new dimension to option trading. We are all still working the bugs out of different way to utilize them. They certainly help with the time part of the equation.
I have yet to get into all of the ETF's and other various items to use but more will be coming as we all learn to use the tools available to us.
I hope the past week/month was kind to all of you. I really appreciate the kind way all want to share what is working for them. There are many ways to play these options and the important thing is to find what works for you with some degree of safety and comfort.
For you younger traders, if you start with 20,000 and are careful and can average 4% a month in 10 years you will be a millionaire. It can be done but with care and running your options like a business will get you there. Not shooting from the hip and trying to out-guess the market. Just plod along and it will happen.
Jerry
Weeklies have certainly added a new dimension to option trading. We are all still working the bugs out of different way to utilize them. They certainly help with the time part of the equation.
I have yet to get into all of the ETF's and other various items to use but more will be coming as we all learn to use the tools available to us.
I hope the past week/month was kind to all of you. I really appreciate the kind way all want to share what is working for them. There are many ways to play these options and the important thing is to find what works for you with some degree of safety and comfort.
For you younger traders, if you start with 20,000 and are careful and can average 4% a month in 10 years you will be a millionaire. It can be done but with care and running your options like a business will get you there. Not shooting from the hip and trying to out-guess the market. Just plod along and it will happen.
Jerry
Saturday, April 16, 2011
Earnings season
Hi all. I hope the past option period treated you ok. If not it is important to examine what went wrong and how you could have changed things. Usually when I examine my mistakes I see...
1. More cushion would have equaled more safety.
2. I was trying to get to high of a return.
3. Playing with a stock during earnings report.
4. Sometimes it is a combo of all of the above, Not quite enough cush, a little to much time left when opening the positions and a slightly to large return expected.
I know a lot of time I seem to be preaching but running your options as a business requires good judgment and certainly caution. You don't need an MBA from Harvard, just common sense and restraint. When I see a position that is giving me 3% in a weekly position, I am looking at the wrong option... You must keep in mind that the trader on the other side of your position probably knows exactly what he is doing. None of us are bullet proof and one serious misstep can ruin you and your finances.
This coming week requires utmost caution. Most of the biggies are reporting in the coming week, or the one after. Even if your stock reports in the second week, a bad report from a similar stock can drag down your stock and force you to close to soon.
Also keep in mind that there are mutual fund companies that have computer rooms bigger than your house and they cannot get 10% annual returns. Most of them have a zillion ivy-league MBA's on staff. So every now and then I have to slap myself to remind myself, good returns are a plus but restraint will carry you into an early comfortable retirement. So plod along and set goals that are reasonable and you and I will be writing on this blog for the next 10 years.
1. More cushion would have equaled more safety.
2. I was trying to get to high of a return.
3. Playing with a stock during earnings report.
4. Sometimes it is a combo of all of the above, Not quite enough cush, a little to much time left when opening the positions and a slightly to large return expected.
I know a lot of time I seem to be preaching but running your options as a business requires good judgment and certainly caution. You don't need an MBA from Harvard, just common sense and restraint. When I see a position that is giving me 3% in a weekly position, I am looking at the wrong option... You must keep in mind that the trader on the other side of your position probably knows exactly what he is doing. None of us are bullet proof and one serious misstep can ruin you and your finances.
This coming week requires utmost caution. Most of the biggies are reporting in the coming week, or the one after. Even if your stock reports in the second week, a bad report from a similar stock can drag down your stock and force you to close to soon.
Also keep in mind that there are mutual fund companies that have computer rooms bigger than your house and they cannot get 10% annual returns. Most of them have a zillion ivy-league MBA's on staff. So every now and then I have to slap myself to remind myself, good returns are a plus but restraint will carry you into an early comfortable retirement. So plod along and set goals that are reasonable and you and I will be writing on this blog for the next 10 years.
Friday, April 8, 2011
A new week coming
Hi Traders, It looks like all of my trades are going to expire today. I hope you guys are experiencing the same. I do have a few that are close so I will have to keep an eye on them.
Looking forward to next week means that we are working are way into the earning season. Keep that in mind as unexpected bad news can bring down a lot of stocks. So it is the season to use good choice and don't bet on what you want to happen. Bet on what seem to turn the odds into your favor. Settle for less during the next couple of weeks and watch your money grow.
I'm not sure what to think about regarding the possible shut-down of the government. It could be another thing that tries to stop the bull market. So far, wars, earthquakes and gasoline high prices have been unable to dent the bullish trend. But one day it will end, so as I said previously, don't be the one standing up when the music stops. It is the time to be somewhat defensive. There is still crumbs out their...
Looking forward to next week means that we are working are way into the earning season. Keep that in mind as unexpected bad news can bring down a lot of stocks. So it is the season to use good choice and don't bet on what you want to happen. Bet on what seem to turn the odds into your favor. Settle for less during the next couple of weeks and watch your money grow.
I'm not sure what to think about regarding the possible shut-down of the government. It could be another thing that tries to stop the bull market. So far, wars, earthquakes and gasoline high prices have been unable to dent the bullish trend. But one day it will end, so as I said previously, don't be the one standing up when the music stops. It is the time to be somewhat defensive. There is still crumbs out their...
Friday, April 1, 2011
A good week of trading but some warnings
Hi all, Well it appears all of my positions will expire today. I hope it has been a good week for all of you. I transferred my brokerage at the start of the week so a little down time, but up and running now.
I have to admit after fighting it for years I now seem to be doing more and more spreads. These are only for weekly options and then limited to just a few stocks. The availability of weekly puts made more sense out of spreads than in the past. At this time I am using AAPL, AMZN, PCLN NFLX, GOOG, BIDU. The danger and temptation is to move the strike price too close for my comfort. I will wait until Monday or Tuesday before opening the next weekly spreads. When doing a vert put credit spread, the returns seem small but the lower maint makes up for it. If you are using a 5 pt difference between the two strikes you need 5 pts of maint for each put. If doing a weekly getting around 1 % per week is 4+% per month. So don't be piggish, just pick up the crumbs. They are there also while doing spreads.
As each Put returns less the temptation is to move the strike way too close. My advice is to be careful and avoid what could be a real trap if things go wrong.
The market keeps going up and it makes it easy to sell puts in any form. But one of these days it will turn and we don't want to be the one looking for a chair when the music stops. Make your money but don't get fooled thinking you are a genius in this market. Like the late 90's, a monkey and a dart board can make money selling puts in this market. All we need to burst our bobble is a couple of days of 200-400point drops and it will separate the better players from the would-be players. So do be careful.
The world is a mess with gasoline pushing 4 and problems all over the mid-east. Even though the market has been doing just fine, things are out there going bump in the night.
Good and safe trading
Jerry
I have to admit after fighting it for years I now seem to be doing more and more spreads. These are only for weekly options and then limited to just a few stocks. The availability of weekly puts made more sense out of spreads than in the past. At this time I am using AAPL, AMZN, PCLN NFLX, GOOG, BIDU. The danger and temptation is to move the strike price too close for my comfort. I will wait until Monday or Tuesday before opening the next weekly spreads. When doing a vert put credit spread, the returns seem small but the lower maint makes up for it. If you are using a 5 pt difference between the two strikes you need 5 pts of maint for each put. If doing a weekly getting around 1 % per week is 4+% per month. So don't be piggish, just pick up the crumbs. They are there also while doing spreads.
As each Put returns less the temptation is to move the strike way too close. My advice is to be careful and avoid what could be a real trap if things go wrong.
The market keeps going up and it makes it easy to sell puts in any form. But one of these days it will turn and we don't want to be the one looking for a chair when the music stops. Make your money but don't get fooled thinking you are a genius in this market. Like the late 90's, a monkey and a dart board can make money selling puts in this market. All we need to burst our bobble is a couple of days of 200-400point drops and it will separate the better players from the would-be players. So do be careful.
The world is a mess with gasoline pushing 4 and problems all over the mid-east. Even though the market has been doing just fine, things are out there going bump in the night.
Good and safe trading
Jerry
Monday, March 28, 2011
Some weekly option trades
Hi all, While waiting for my new account to open i have done some trading in accounts that i manage for others. These are weekly vert-put-spread trades as the other accounts do not have clearance for full naked puts.
Some more aapl 330/335 = +.16
some NFLX 210/220 = + .13
PCLN 460/465 = + .20
These have averaged around 2+% So not bad at all for the week.
Some more aapl 330/335 = +.16
some NFLX 210/220 = + .13
PCLN 460/465 = + .20
These have averaged around 2+% So not bad at all for the week.
Thursday, March 24, 2011
Hi all, some thoughts
I thought I would start a new page as the last one was getting long.
I sure don't like the oil price going up. Also the falling employment effects the market. Libya and the general world situation also concern me and effects my position choices. So do be careful. Any one of these could trigger a sell-off. Cushion and time factor is the only safety factors that we can control.
Trade safe.
I sure don't like the oil price going up. Also the falling employment effects the market. Libya and the general world situation also concern me and effects my position choices. So do be careful. Any one of these could trigger a sell-off. Cushion and time factor is the only safety factors that we can control.
Trade safe.
Thursday, March 17, 2011
From mexico
Hi all, What a market. Glad to see the mkt up. It looks like my puts will expire tomorrow. Again I want to say that traders must be careful. Do not force trades. Leave lots of cushion and settle for less ROI. This is not a market that can be counted on to move somewhat predictable.
With the news from Japan not good and the mid-east is still a mess.
There are profits out their but care must to be used in picking your positions. Even waiting until there is only one or two weeks left in an option period is a valid strategy.
trade smart.
Jerry
With the news from Japan not good and the mid-east is still a mess.
There are profits out their but care must to be used in picking your positions. Even waiting until there is only one or two weeks left in an option period is a valid strategy.
trade smart.
Jerry
Friday, March 11, 2011
What a week
Well we have all had an unusual week or at least I have. From, oh oh to Yes!!
The up and downs have been odd for one week.
My positions are as follows. I feel good about them but next week will tell.
PCLN-425
SPY - 123
AMZN - 155
WLT - 105
LO - 65'S
So a fair amount of puts that are around 10+ points to the good side with a week to go.
The times and the things going on make me nervous but I still keep active and in the put market. But do be careful. Take less profit and sleep better.
To all the traders that are reading the blog and not members..jump in. We welcome all levels of traders and questions. We were all learning at some point and enjoy helping and pointing others to help make their trading successful. All are welcome.
Monday I am heading to Mexico for 12 days so I am leaving you guys in charge. Keep the market to the upside and lets make some money. I will have my laptop with me so will able to contribute to the blog as well as trade when necessary. I still have some maintenance available so if the mkt turns a little more positive I will get some more puts.
Good trading all, Jerry
The up and downs have been odd for one week.
My positions are as follows. I feel good about them but next week will tell.
PCLN-425
SPY - 123
AMZN - 155
WLT - 105
LO - 65'S
So a fair amount of puts that are around 10+ points to the good side with a week to go.
The times and the things going on make me nervous but I still keep active and in the put market. But do be careful. Take less profit and sleep better.
To all the traders that are reading the blog and not members..jump in. We welcome all levels of traders and questions. We were all learning at some point and enjoy helping and pointing others to help make their trading successful. All are welcome.
Monday I am heading to Mexico for 12 days so I am leaving you guys in charge. Keep the market to the upside and lets make some money. I will have my laptop with me so will able to contribute to the blog as well as trade when necessary. I still have some maintenance available so if the mkt turns a little more positive I will get some more puts.
Good trading all, Jerry
Tuesday, March 8, 2011
Big market today
Hi all, Wow to figure this market is tough. First down and then a big turnaround. I am not sold that all the bad news is out there. Between oil / gasoline and unrest in the Mid-east-Africa and ?? There is potential for more bad news. One caveat is that there is always bad news just around the corner. So that said I am fully invested, but nervous.
My 180 NFLX still have 15 point of cush but i got near my double point today. As I was watching and aware that there is only 3 more days of trading i would have violated that rule a little bit. But all in all most of my positions are doing ok.
I would advise all to leave more cushion and expect lower returns until the world settles down some. It is one thing to worry about earnings and your CFO heading to Brazil but having the US oil supply cut off etc is a real market killer. So be careful, leave lots of cushion and less profit for awhile.
Also after March comes our major April earnings season. So tread lightly for awhile.
Jerry
My 180 NFLX still have 15 point of cush but i got near my double point today. As I was watching and aware that there is only 3 more days of trading i would have violated that rule a little bit. But all in all most of my positions are doing ok.
I would advise all to leave more cushion and expect lower returns until the world settles down some. It is one thing to worry about earnings and your CFO heading to Brazil but having the US oil supply cut off etc is a real market killer. So be careful, leave lots of cushion and less profit for awhile.
Also after March comes our major April earnings season. So tread lightly for awhile.
Jerry
Friday, March 4, 2011
Market looking up with new jobs
Well the market is looking up this morning with a good jobs report. All my positions are doing great, but, still 'out-there' is the mid-east and Libya. So don't get complacent and caught up in the 'I'm bullet proof' state of mind. That is when something in the market sends a silver bullet right through you. Also avoid the rolling up 'to soon' as it has been a long and good run for the mkt. Continue conservatively and just picking up the crumbs. When all the hogs are eating, that is when they keep pushing crumbs off the table. My job is to pick them up..lol
Tuesday, March 1, 2011
Tough market
Well a couple of days ago the market calmed down when the Saudi’s said they would make up the lost oil from Libya. Now the Saudi’s are having demonstrations.
Tomorrow AAPL shows off the new I-pad. Maybe that will help tech stocks. Especially if Steve J makes an appearance.
When the market is spooked it is best to trade with lots of safety or not all. Don’t fall into the trap of forcing a trade. Sometimes it is better to avoid the market altogether and golf or whatever. It is better to miss a little possible profit than to take two or three hits.
Tomorrow AAPL shows off the new I-pad. Maybe that will help tech stocks. Especially if Steve J makes an appearance.
When the market is spooked it is best to trade with lots of safety or not all. Don’t fall into the trap of forcing a trade. Sometimes it is better to avoid the market altogether and golf or whatever. It is better to miss a little possible profit than to take two or three hits.
Saturday, February 26, 2011
Reviewing some safety thoughts
Hi all..
I have received several emails asking for more clarification on a couple of areas..
When do I close a position? .. When the returns get below 1% (using the prem divided by the maint),or .05 remaining prem. I start giving serious thought to finding another position. Usually i roll up with the current stock to a higher strike.
-I only do this if I feel safe rolling up
-I only do it if the new return justifies it (sometimes the new higher maint negates the return)
-I like using the same stock as I now have a good idea of how it is moving
-I also am aware of the filters that have already been cleared
But, and a big Butt so to speak is that most of my losses come from rolling up to soon and to high. If the stock is at 100 and you opened the position at 75 strike and now there is a week left and the there is no return that looks good without using the 90 or even the 95 strike. You just might fall to the temptation of STRIEK CREEK... It is easy to convince yourself that with 5 days left what can go wrong... You just entered the area where i get most of my losses. lol.
Don't forget, the part where I recommend 20% cushion, that is the starting point! More important is using the 20% rule but resisting the temptation to get better than 6% and even then it is dicey. Those good returns tell me that something is afoot. My filters may not have found it but someone somewhere knows something... I expect to get around 2.5--3.5 as a safe area when opening. The extra returns come from rolling up and tweaking it some. Also I wrote the book before weeklys were available. So mental adjustments need to be figured in. EX; a 1% return with weeklys is over 4% monthly. Someone doing weeklys and trying to get 3% weekly etc is asking for trouble. Now and then good trades do come along, enjoy them but be aware you just dodged a bullet.
Good safe trading
I have received several emails asking for more clarification on a couple of areas..
When do I close a position? .. When the returns get below 1% (using the prem divided by the maint),or .05 remaining prem. I start giving serious thought to finding another position. Usually i roll up with the current stock to a higher strike.
-I only do this if I feel safe rolling up
-I only do it if the new return justifies it (sometimes the new higher maint negates the return)
-I like using the same stock as I now have a good idea of how it is moving
-I also am aware of the filters that have already been cleared
But, and a big Butt so to speak is that most of my losses come from rolling up to soon and to high. If the stock is at 100 and you opened the position at 75 strike and now there is a week left and the there is no return that looks good without using the 90 or even the 95 strike. You just might fall to the temptation of STRIEK CREEK... It is easy to convince yourself that with 5 days left what can go wrong... You just entered the area where i get most of my losses. lol.
Don't forget, the part where I recommend 20% cushion, that is the starting point! More important is using the 20% rule but resisting the temptation to get better than 6% and even then it is dicey. Those good returns tell me that something is afoot. My filters may not have found it but someone somewhere knows something... I expect to get around 2.5--3.5 as a safe area when opening. The extra returns come from rolling up and tweaking it some. Also I wrote the book before weeklys were available. So mental adjustments need to be figured in. EX; a 1% return with weeklys is over 4% monthly. Someone doing weeklys and trying to get 3% weekly etc is asking for trouble. Now and then good trades do come along, enjoy them but be aware you just dodged a bullet.
Good safe trading
Wednesday, February 23, 2011
what I am doing now
Hi all, today I am selling some puts, even in the tricky market.
I like CLF TRADING AROUND 94.5. Selling the 75 put for .20 =2.5%
A stock that is trading up today and being natural resources i like that in this market.
I am also looking hard at MOS 79.60 Sell the march 60 for .10 1.6% Roi
With food/fuel going up farmers need to max out their productivity.
On any play this week I am not refi'ing the house, just taking some loose change off the table.
I like CLF TRADING AROUND 94.5. Selling the 75 put for .20 =2.5%
A stock that is trading up today and being natural resources i like that in this market.
I am also looking hard at MOS 79.60 Sell the march 60 for .10 1.6% Roi
With food/fuel going up farmers need to max out their productivity.
On any play this week I am not refi'ing the house, just taking some loose change off the table.
Tuesday, February 22, 2011
World events
Hi all, Well the mid-east - N. Africa is sure effecting our markets. I hope this brings home the practice of leaving lots of cushion for the unknown. Many traders focus on the specifics of their stock. When I recommend such large cushion, it is to help build into the position an allowances for the unknown which can be out of control of the individual stock.
For me I will wait a few days for the current events to settle down and show a direction. There is never a time to jump into positions when there is this much unknown.
For me I will wait a few days for the current events to settle down and show a direction. There is never a time to jump into positions when there is this much unknown.
Saturday, February 19, 2011
March Options
HI all, a few days ago I posted a list of the stocks that I was considering for the coming month. I want to add that the way I finalize my choices is to wait until Monday morning. If the mkt is down a fair amount I do not make a trade. Even if my stocks are somewhat positive. I also take in some feeling for the world market. If things are getting worse in the Mid-East I will either hold up on my trades or settle back for a smaller percent gain at the opening. Which of course means more cushion.
Also I hardly ever open a position with the stock falling, while I am trying to decide. Most of these points are intuitive but you can blind yourself to obvious facts without seeing or believing the writing on the wall.
When I look back 10-11 years ago and I lost roughly 1.5 million I wonder how I was blinded to the obvious. You can and I did, fall into the trap of thinking this stock has to be better.. Or this stock cannot fall any lower.
Also the worst the situation gets the more bad choices you start making. To try to recoup the losses you move the strike closer and of course in a falling market, that just magnifies the losses.
These are some of the reasons I am always stressing safety.
Enough preaching today. Just trade safe and smart and options can be a viable tool.
Jerry
Also I hardly ever open a position with the stock falling, while I am trying to decide. Most of these points are intuitive but you can blind yourself to obvious facts without seeing or believing the writing on the wall.
When I look back 10-11 years ago and I lost roughly 1.5 million I wonder how I was blinded to the obvious. You can and I did, fall into the trap of thinking this stock has to be better.. Or this stock cannot fall any lower.
Also the worst the situation gets the more bad choices you start making. To try to recoup the losses you move the strike closer and of course in a falling market, that just magnifies the losses.
These are some of the reasons I am always stressing safety.
Enough preaching today. Just trade safe and smart and options can be a viable tool.
Jerry
Thursday, February 17, 2011
Options for March
Hi all, while waiting for the last of the Feb's to expire i have started looking towards the next set of plays. If any appeal to you double check my numbers and the other filters. This list is by no means the 'end-all' list. Just the ones that I check first. You guys keep on finding good ones and posting them.
But here is a quick list of ones that I will do or reevaluate on Monday morn. No special order and I don't have any weeklys that i like yet.
CLF AT 100 -- 80 STRIKE --.25 =3%
CMG 266.5 -- 210 -- .60 = 2.75
CRM 142.2 -- 105 -- .42 = 3.7
LULU 83.3 -- 65 -- .2 = 3%
NFLX 138 -- 190 -- .90 = 4.5
OPEN 92.5 -- 70 -- .35 = 4.7%
MOS 86.3 -- 70 -- .23 = 3%
PCLN 459.2 -- 365 -- 1.7 = 4.3%
RCL 47.2 -- 37 -- .12 = 3%
TCK 57 -- 45 -- .18 = 3.8%
WLT 127 -- 100 -- .4 = 3.8%
So those are my prime suspects for the coming month. If you have a good one or two post them so we can all get some of the free money. Do be aware that the market has come a long ways and many suspect that a little pull back is due?
But here is a quick list of ones that I will do or reevaluate on Monday morn. No special order and I don't have any weeklys that i like yet.
CLF AT 100 -- 80 STRIKE --.25 =3%
CMG 266.5 -- 210 -- .60 = 2.75
CRM 142.2 -- 105 -- .42 = 3.7
LULU 83.3 -- 65 -- .2 = 3%
NFLX 138 -- 190 -- .90 = 4.5
OPEN 92.5 -- 70 -- .35 = 4.7%
MOS 86.3 -- 70 -- .23 = 3%
PCLN 459.2 -- 365 -- 1.7 = 4.3%
RCL 47.2 -- 37 -- .12 = 3%
TCK 57 -- 45 -- .18 = 3.8%
WLT 127 -- 100 -- .4 = 3.8%
So those are my prime suspects for the coming month. If you have a good one or two post them so we can all get some of the free money. Do be aware that the market has come a long ways and many suspect that a little pull back is due?
Sunday, February 13, 2011
Review of my filters
Hi all. I thought that I would review some of my filters that I have developed for my trading. As blog has 400-600 views a day, when the filters get mentioned, I am sure many are wondering, 'what's that about.' If you have the book they start on page 50 and go for several pages.
I feel that these eight simple things to check will make your trading safer and more profitable. IN the book I expand on each one but here is a simple list for those without the book.
The Eight Filters I Use to Select a Stock and an option position for this month’s use.........
1. I usually use stocks in a price range of $50 to $500
2. The strike price filter is 20%
3. Will earnings be reported in the coming option period?
4. I look at a chart showing the previous two years of the same month to see if there is a history of the stock falling during that period.
5. I look at analyst’s recommendation
6. Price to Earnings, or PE.
7. Is the return worth tying up the maintenance funds that are required?
8. Is there 100 or more open interest for this option?
----------
These simple guidelines will help you be more successful and give you a starting point to evaluate a potential position.
Good trading all
Jerry
I feel that these eight simple things to check will make your trading safer and more profitable. IN the book I expand on each one but here is a simple list for those without the book.
The Eight Filters I Use to Select a Stock and an option position for this month’s use.........
1. I usually use stocks in a price range of $50 to $500
2. The strike price filter is 20%
3. Will earnings be reported in the coming option period?
4. I look at a chart showing the previous two years of the same month to see if there is a history of the stock falling during that period.
5. I look at analyst’s recommendation
6. Price to Earnings, or PE.
7. Is the return worth tying up the maintenance funds that are required?
8. Is there 100 or more open interest for this option?
----------
These simple guidelines will help you be more successful and give you a starting point to evaluate a potential position.
Good trading all
Jerry
Wednesday, February 9, 2011
Some questions and answers
HI all, I have received some questions and stock ideas. I thought I would answer and comment
1. Nolan, you ask about the annual returns. Usually I average2-4% monthly. Every now and again I have a disappointment. I shoot for 3% to open a position and many times the opportunity to roll up and tweak it to maybe 5% happens. As i have said, most of my losses come from rolling up to soon. Often with a week to go i might get within 10% or less of a stock and then ouch. So I constantly remind myself to be patient. But using my guidelines you should be able to average the same results. But discipline is the answer. The 20% cushion is where you start. Don't hesitate to use more % if returns justify it. The answer to success is DON'T BE GREEDY!! The returns are there if you don't crowd the stock price and you use caution. In the previous thread someone is using CSCO with earnings coming out. To me a no no. but it might work out. Several of my personal rules were broke with that play.
1. the stock price to low. (which does not let you use a safe strike)
2. Earnings are coming out immediately... Whew danger
3. A strike price right next to the current stock price.. no no
If you avoid the traps and temptations you will do well. but caution and 'right' thinking will prevail and make you a winner. That is the best advice I can give. The game is easy if you use good sense and are careful.
Newport; i just checked out OPEN. I like it. it is now trading around 85+ and the 75 strike has a good return. This proves that i certainly do not know all. You guys and dolls find a lot of good positions!
Again, my experience and history alerts me to danger signals. I have learned that to avoid them is not easy. Trust me, caution will make you wealthy. I have to laugh when I read this as many would say..Caution.. and you advocate options.. Safety and options are an oxymoron.. Not true! Rules and good sense will beat out aggressiveness all the time.
Ok, enough preaching tonight. You guys seem to "get-it" You younger traders are going to be wealthy. But that isn't happiness. Good friends, family and a smile on you face will make you many friends and a happy person. I have several 'associates' that are multi millionaires.. But when they are around, other can't wait for them to leave. Be the one that people want around. ...but money helps...lol
1. Nolan, you ask about the annual returns. Usually I average2-4% monthly. Every now and again I have a disappointment. I shoot for 3% to open a position and many times the opportunity to roll up and tweak it to maybe 5% happens. As i have said, most of my losses come from rolling up to soon. Often with a week to go i might get within 10% or less of a stock and then ouch. So I constantly remind myself to be patient. But using my guidelines you should be able to average the same results. But discipline is the answer. The 20% cushion is where you start. Don't hesitate to use more % if returns justify it. The answer to success is DON'T BE GREEDY!! The returns are there if you don't crowd the stock price and you use caution. In the previous thread someone is using CSCO with earnings coming out. To me a no no. but it might work out. Several of my personal rules were broke with that play.
1. the stock price to low. (which does not let you use a safe strike)
2. Earnings are coming out immediately... Whew danger
3. A strike price right next to the current stock price.. no no
If you avoid the traps and temptations you will do well. but caution and 'right' thinking will prevail and make you a winner. That is the best advice I can give. The game is easy if you use good sense and are careful.
Newport; i just checked out OPEN. I like it. it is now trading around 85+ and the 75 strike has a good return. This proves that i certainly do not know all. You guys and dolls find a lot of good positions!
Again, my experience and history alerts me to danger signals. I have learned that to avoid them is not easy. Trust me, caution will make you wealthy. I have to laugh when I read this as many would say..Caution.. and you advocate options.. Safety and options are an oxymoron.. Not true! Rules and good sense will beat out aggressiveness all the time.
Ok, enough preaching tonight. You guys seem to "get-it" You younger traders are going to be wealthy. But that isn't happiness. Good friends, family and a smile on you face will make you many friends and a happy person. I have several 'associates' that are multi millionaires.. But when they are around, other can't wait for them to leave. Be the one that people want around. ...but money helps...lol
Saturday, February 5, 2011
Some possible plays for the Feb expiration
HI all, I'm home from my road trip. I've been looking for some put plays for the remainder of the Feb ex. These are just ones that look pretty good after a quick look at the situation. They are not in any order and they are not recommendations. Just ideas for you to check out and see if they meet your safety scanner. I'm rounding off some of the numbers but they are close. Also these may not still be available on Monday
NFLX trading near 220 sell the 190 .47 return % of 2.2
AAPL 345 325 .74 1.4
CRM 138 115 .22 1.3
CTXS 66.5 55 .10 1.7
ISRG 337 300 .50 1.5
LULU 77 60 .10 1.5
POT 181.4 165 .42 1.9
FFIV 123.6 110 .25 1.8
SHLD 83.7 70 .17 2.
This shows that there are still some decent plays out there. There is only two weeks left in this period, that is a plus but be careful with the world events going on.
Remember, if you don't see a play that you're comfortable with --then don't open a position. Of course the same is true for positions you now have. If things are not going in the right direction, close 'em.
Enjoy the super bowl and - Good Trading
NFLX trading near 220 sell the 190 .47 return % of 2.2
AAPL 345 325 .74 1.4
CRM 138 115 .22 1.3
CTXS 66.5 55 .10 1.7
ISRG 337 300 .50 1.5
LULU 77 60 .10 1.5
POT 181.4 165 .42 1.9
FFIV 123.6 110 .25 1.8
SHLD 83.7 70 .17 2.
This shows that there are still some decent plays out there. There is only two weeks left in this period, that is a plus but be careful with the world events going on.
Remember, if you don't see a play that you're comfortable with --then don't open a position. Of course the same is true for positions you now have. If things are not going in the right direction, close 'em.
Enjoy the super bowl and - Good Trading
Saturday, January 29, 2011
Caution is the word
Hi all. Just a note to advise put sellers to use caution with these world events. I am not opening any new positions and I am closing most of my current positions on Monday. I just don't like the unknown and neither does the market. If this escalates to the level that the S. canal is closed...?
So my view is to take any profits and wait and see for a few days to see how this shakes out.
This is not the time to try and out-guess the direction of stocks or options.
Common sense is the way during these events.
Jerry
So my view is to take any profits and wait and see for a few days to see how this shakes out.
This is not the time to try and out-guess the direction of stocks or options.
Common sense is the way during these events.
Jerry
Friday, January 28, 2011
Another example of earnings.
Hi all, Wow, AMZN announced last night record earnings, but that didn't meet some expectations. Today it is around 15 points lower. This emphasises the importance of being aware of the coming earnings as well as keeping in mind a company with a higher PE can react more violently to surprises. NFLX is also an example that good news can be a real boost. But these are not where you should bet your farm. Avoid these important spots where a stock can go either way. Someone asked a while back how to play a coming split. To me a point like that is another place where it is to much of a guess.
A good play someone mentioned a few days ago was Sears [SHLD] I did some puts with the 62.5 strike. I like this but I am keeping an eye on it. I closed some puts with Isrg for a wash. I didn't like the way things looked.
Another item is EGYPT. Do be careful with world events. The market does not like uncertainty.
Keep up all the good ideas but be cautious. These are touchy times. We are over half way through the earnings season but still important stocks to announce.
If opening a new position please leave lots of cushion. Take lower profits during these times. Don't hesitate to close a position that is going south. Also if you have profits and the stock turns, don't hesitate to take profits.
A good play someone mentioned a few days ago was Sears [SHLD] I did some puts with the 62.5 strike. I like this but I am keeping an eye on it. I closed some puts with Isrg for a wash. I didn't like the way things looked.
Another item is EGYPT. Do be careful with world events. The market does not like uncertainty.
Keep up all the good ideas but be cautious. These are touchy times. We are over half way through the earnings season but still important stocks to announce.
If opening a new position please leave lots of cushion. Take lower profits during these times. Don't hesitate to close a position that is going south. Also if you have profits and the stock turns, don't hesitate to take profits.
Monday, January 24, 2011
Hard to find good puts
Hi all, wow a lot of post since I've been off the beaten trail. I came to town today and found a Starbucks for WiFi..
This morning i sold some fslr 120's for 3.5% return. With FSLR trading around 154.62 I like this trade. Earns later in the option month but plenty of time.
I also did some ISRG. Trading around 332 - I sold some 290's. Only 2.5% return but with earns out of the way i like it.
Not many trades that look good right now. Anybody have some good ones?
This morning i sold some fslr 120's for 3.5% return. With FSLR trading around 154.62 I like this trade. Earns later in the option month but plenty of time.
I also did some ISRG. Trading around 332 - I sold some 290's. Only 2.5% return but with earns out of the way i like it.
Not many trades that look good right now. Anybody have some good ones?
Tuesday, January 18, 2011
I did some covered calls today..aapl
Hi traders, I could not resist the drop in aapl this morning right before earnings. Who doesn't thing aapl will have blow-out earns this month (today). I had some maintenance sitting around, so to finish the week I bought a thousand shares of aapl at 335.42 I sold some calls at the 330 strike.
I sold the calls for 11.15 for 11,150. but I will take a loss on the stock if called away of 5.42 for a net gain of around 5.7 So if aapl stays above 330 I make a nice 5,700, for the next three days. I see in after hours that appl is trading up so it looks good for now. Not naked puts but you have to be adaptable in this mkt when opportunity knocks on your door. The three methods of trading I keep handy are-
naked puts,
naked calls
and covered calls
each has a time and place.
I sold the calls for 11.15 for 11,150. but I will take a loss on the stock if called away of 5.42 for a net gain of around 5.7 So if aapl stays above 330 I make a nice 5,700, for the next three days. I see in after hours that appl is trading up so it looks good for now. Not naked puts but you have to be adaptable in this mkt when opportunity knocks on your door. The three methods of trading I keep handy are-
naked puts,
naked calls
and covered calls
each has a time and place.
Friday, January 14, 2011
Some things to think about this coming week
Hi guys (and dolls)
This week and the next is more crucial for the market and us option traders than usual. The big thing on a lot traders minds are ..Is the market run-up justified. The earnings report coming soon will tell the story. Do be especially careful on picking you positions. If you saw coinstar drop like a rock this morning you know what I mean. One hint that 'redbox' will not do well and ouch. The plan of some traders is to get out or close a position right before the actual earnings. That is not a good move as many companies will announce a 'warning' a few days before.
Don't just pick stocks you like or that you have had good success with. The stocks we use are just inventory. Do not become attached to them and overlook things such as earnings reports.
Deidre and B. thanks for the nice words on the book. As I have told many of you, i just wrote the book as a way to help pass the word on how PUTS can be played somewhat safe. I wanted other traders to avoid my heartache. From being a rock start multi-millionaire to back where I started was gut wrenching to say the least.
I know when i have a few good weeks and then I Have to drop down to hardly any profits, I always felt like I was just treading water. Treading water is better than sinking..
So settle for less during the coming week(s) and keep an eye on your positions.
This week and the next is more crucial for the market and us option traders than usual. The big thing on a lot traders minds are ..Is the market run-up justified. The earnings report coming soon will tell the story. Do be especially careful on picking you positions. If you saw coinstar drop like a rock this morning you know what I mean. One hint that 'redbox' will not do well and ouch. The plan of some traders is to get out or close a position right before the actual earnings. That is not a good move as many companies will announce a 'warning' a few days before.
Don't just pick stocks you like or that you have had good success with. The stocks we use are just inventory. Do not become attached to them and overlook things such as earnings reports.
Deidre and B. thanks for the nice words on the book. As I have told many of you, i just wrote the book as a way to help pass the word on how PUTS can be played somewhat safe. I wanted other traders to avoid my heartache. From being a rock start multi-millionaire to back where I started was gut wrenching to say the least.
I know when i have a few good weeks and then I Have to drop down to hardly any profits, I always felt like I was just treading water. Treading water is better than sinking..
So settle for less during the coming week(s) and keep an eye on your positions.
Wednesday, January 12, 2011
Are we all getting itchy fingers?
Hi guys, reading the comments section I see a lot of traders are getting itchy fingers to make a trade. I certainly am. But I am trying to resist until maybe Friday or next Monday. The trades will still be there and at the same time we will have a clearer idea of the market direction. Try to keep in mind that when we opened the position we were happy...lol I know, I know, your mouth is watering for some of the good trades but hold on for awhile. This is an important earnings season. It should validate that stocks are doing pretty good. If most traders are like me, they enjoy making good trades so these times are juicy. When making trades please leave lots of cushion as we don't want to get caught if the mkt hiccups.
With fuel (oil) going up, there might be some good plays with FSLR. Also AAPL after next weeks earns. One of these days they will announce a 10-1 split...
positions I am sitting on. as of today-
CMG 180's Amzn 165's Nflx 160.
Jerry
With fuel (oil) going up, there might be some good plays with FSLR. Also AAPL after next weeks earns. One of these days they will announce a 10-1 split...
positions I am sitting on. as of today-
CMG 180's Amzn 165's Nflx 160.
Jerry
Tuesday, January 11, 2011
I just traded these NFLX
Hi all, like some of you, I have been looking for a decent trade to finish off the month. This morning I sold NFLX jan/160. I received .28 for a return of around 1.7% This has 26+ points of cushion and 8.5 days left in the month. So a decent return on what should be a 'safe' play. Nflx earnings are 1/24
Still letting the time value leak out of my CMG's.
Do be careful with this earnings season. The mkt has come along ways and some profit taking is due. I'm not negative on the mkt, just careful.
Still letting the time value leak out of my CMG's.
Do be careful with this earnings season. The mkt has come along ways and some profit taking is due. I'm not negative on the mkt, just careful.
Sunday, January 9, 2011
Which stock price to use.
Hi all. For those of you who have my book or have read many of the post, you know that a constant theme is the 20% rule. I want to remind all put sellers that follow my method (safety first- profits later) to remember that, that is only a starting point. If you find a position where you used the 20% rule (your chosen strike is 20% below the current stock price)and the return is around 5%, drop down a strike or two and start the position earning around 3%.
However, i wanted to demonstrate by using an example, why I limit myself to using stocks that have a current price around $50 or higher. This is just a guideline and not written in cement, but it is where I usually start.
Assume you have an account balance 7500. You like xyz stock and it trades at 5. You take away 20% and it that says you could use a strike of 4. This pays .10 Your maintenance would be 4.10 for each option. The profit would look like .10 div by 4.10 = 2.4% With your account bal of 7500 you could do 1800 of these. 1800 x .1 = $180 - 180 div by 7500 = 2.4 again.
But with this example all is well with the world. you followed most of my rules and have a decent return. But if the stock drops just ONE dollar you are in trouble.
Now same scenario, but with a different stock price.
Your account bal is again 7500. You find zzz stock selling at 100 and the 75 strike pays .20/.25 If you use the 75 strike (25% below the stock) you receive .20 Your maintenance would be 7.75. You could do [7500 div by 7.75]
900 of these (1/2 of the above example) but you take in 900 x .2 = 180
10 div by 7500 = 2.4%
The point is, that using a much safer strike and doing less options you made the same amount. Don't fall for the trap of 'Wow I can do a lot more of these.' It is return and safety that are important.
I hope I have not confused you to much with all these numbers. If so ask me for clarification.
Never sacrifice safety while trying for higher returns.
Jerry
However, i wanted to demonstrate by using an example, why I limit myself to using stocks that have a current price around $50 or higher. This is just a guideline and not written in cement, but it is where I usually start.
Assume you have an account balance 7500. You like xyz stock and it trades at 5. You take away 20% and it that says you could use a strike of 4. This pays .10 Your maintenance would be 4.10 for each option. The profit would look like .10 div by 4.10 = 2.4% With your account bal of 7500 you could do 1800 of these. 1800 x .1 = $180 - 180 div by 7500 = 2.4 again.
But with this example all is well with the world. you followed most of my rules and have a decent return. But if the stock drops just ONE dollar you are in trouble.
Now same scenario, but with a different stock price.
Your account bal is again 7500. You find zzz stock selling at 100 and the 75 strike pays .20/.25 If you use the 75 strike (25% below the stock) you receive .20 Your maintenance would be 7.75. You could do [7500 div by 7.75]
900 of these (1/2 of the above example) but you take in 900 x .2 = 180
10 div by 7500 = 2.4%
The point is, that using a much safer strike and doing less options you made the same amount. Don't fall for the trap of 'Wow I can do a lot more of these.' It is return and safety that are important.
I hope I have not confused you to much with all these numbers. If so ask me for clarification.
Never sacrifice safety while trying for higher returns.
Jerry
Friday, January 7, 2011
Flash Crash info
HI traders, I have had many inquires regarding what the flash crash of May 6 did to my account. I reviewed my positions and the results. NOTHING!
I had some AAPL it dropped round 10 pts the same with AMZN and NFLX etc. When observers see the dow drop 400 point or so they relate that to individual stocks. I get that a lot while golfing with buddy's and at party's etc."Wow, I bet that really hurt you". To non-traders and especially to non-put sellers it looked like a disaster. Mutual funds took a good hit as did individual stock owners. But with my BIG cushion rule I was saved any serious damage.
You read a lot of ideas that a spread will save the big loss. Yes it certainly can in a major problem. But most spread users seem to get close to the existing stock price to get better premiums. They might think that they have security as the spread will prevent major losses. Yes and no. EX: if you used a stock at 100 price and sold the 95 put and bought the 90 for a credit of maybe 1. If the stock drops to 90, yes your losses are capped at 5pt, minus the 1 you received. For a net of 4 loss. If you had 40 of these you just lost 16K But if you had sold the (crumb method) 75 strike price, you are safe with no loss. But different ways for all traders. Also before a trader gets approval to do naked puts you might have to build a history with your broker to demonstrate that you are experienced enough for naked options. Also you might need to do spreads while building your account to the minimum to go naked.
Jerry
I had some AAPL it dropped round 10 pts the same with AMZN and NFLX etc. When observers see the dow drop 400 point or so they relate that to individual stocks. I get that a lot while golfing with buddy's and at party's etc."Wow, I bet that really hurt you". To non-traders and especially to non-put sellers it looked like a disaster. Mutual funds took a good hit as did individual stock owners. But with my BIG cushion rule I was saved any serious damage.
You read a lot of ideas that a spread will save the big loss. Yes it certainly can in a major problem. But most spread users seem to get close to the existing stock price to get better premiums. They might think that they have security as the spread will prevent major losses. Yes and no. EX: if you used a stock at 100 price and sold the 95 put and bought the 90 for a credit of maybe 1. If the stock drops to 90, yes your losses are capped at 5pt, minus the 1 you received. For a net of 4 loss. If you had 40 of these you just lost 16K But if you had sold the (crumb method) 75 strike price, you are safe with no loss. But different ways for all traders. Also before a trader gets approval to do naked puts you might have to build a history with your broker to demonstrate that you are experienced enough for naked options. Also you might need to do spreads while building your account to the minimum to go naked.
Jerry
Wednesday, January 5, 2011
Be aware of earning season
Hi Traders, just a note to remind all that earning season is upon us. To me this is the most dangerous season. Your stock or one in its orbit reports bad or disappointing earnings and --your stock can fall like a bowling ball. So be careful! During this season if I have one of these stocks, i look hard at closing if there is any profit or unless I have lots of cushion...Cushion, always a comfort and it has save my butt many times..
Jerry
Jerry
We are at the half-way point in this period
Hi traders. we are approaching the 1/2 way point in the this option period. It is the time that I review my positions and start giving serious thought to rolling up. But that said, I want to avoid jumping in to soon. As I said in an earlier post. Nearly all of my losses occur because I rolled up to soon. So when your left brain says 'alright, it's time to roll up' make sure you engage the right side and ask if it might be a little early. Try to avoid risking your profits just to make a 'little' more.
These little things will make the difference between you and people that lose money in the option market.
These little things will make the difference between you and people that lose money in the option market.
Sunday, January 2, 2011
New Years Resolutions
Hi all, I thought that I would share some of my 2011 new years resolutions for option selling and safety. After doing this daily for 14 years I still find it hard to always use good sense. Maybe some resolutions will help me with my goal of smaller profits and more safety.
1. I will not roll up to soon.
2. I will always use a lower strike price when in doubt
3. I will be satisfied with lower returns.
4. I will take losses sooner rather than later.
5. I will be more aware of using different stocks.
So there you have it. Short and simple. As you can see most of these come under the title of being greedy or pushing the envelope. We all do this for profits and enjoyment of our labors but always trade smart. Let the people that continually lose money take all the risk.
I know many of you are younger and are trying to build your wealth. This is good, but never lose sight of the real goal and that is to enjoy your life. The ultimate goal is to be a good person, have a happy life, be healthy and enrich the lives of others.
Smile at everyone you meet. Always say thank you to yourself and others. Tell your spouse that they are beautiful. Call your parents and tell them you love them.
Lets all have a happy and prosperous New Year.
Jerry
1. I will not roll up to soon.
2. I will always use a lower strike price when in doubt
3. I will be satisfied with lower returns.
4. I will take losses sooner rather than later.
5. I will be more aware of using different stocks.
So there you have it. Short and simple. As you can see most of these come under the title of being greedy or pushing the envelope. We all do this for profits and enjoyment of our labors but always trade smart. Let the people that continually lose money take all the risk.
I know many of you are younger and are trying to build your wealth. This is good, but never lose sight of the real goal and that is to enjoy your life. The ultimate goal is to be a good person, have a happy life, be healthy and enrich the lives of others.
Smile at everyone you meet. Always say thank you to yourself and others. Tell your spouse that they are beautiful. Call your parents and tell them you love them.
Lets all have a happy and prosperous New Year.
Jerry
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