Welcome to the page that discusses Put Options

I want to start this blog by telling you that I have no 1-800 number, I am not trying to sell you any newsletter with the next great stock idea. I am not inviting you to come to my house and view a cleaning agent. I will not try to sell you plastic bowls or any other ‘can’t miss’ ideas. I do not have any life changing secrets and I cannot promise you a flat stomach.



I am going to share with you my daily option moves and the reasons behind them. My way of trading options are of course not the only way to utilize Put Options. This is a way that I have found to be simple and easy and not as complicated as some make this business. My hope is that you can develop a steady stream of income and continue to enjoy your life.











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

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.

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.

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

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?

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

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

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