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.











Monday, January 30, 2012

A little different trade

Hi all, I am home and looking forward to more posting and getting back into trading. It was difficult while in places that had just so-so wi-fi.
Here is a trade many of you might be interested in. It is a calendar or vertical call spread. Using CMG but I have them in AAPL also.
CMG is trading around 365. Earnings are this week so ?? But I have bought the Jan 365 for around 48.25
I have sold this weeks 390 for around 2.20 This is a debit of approx. 46. Obviously you need at least 4600 per option of free cash to make the trade.
Here is the idea. If CMG makes a big move with earns, for example they go to 390 (up 25pts in a week) you can close the 390 for approx. $1. But your bought calls for the 365’s will go up approximately 10. So you would make the opening 2.2 and maybe 9 more for 11. If CMG makes a move but not as big then the 390 expire and you again sell calls next week. I am now staying at least 20 or 25 pt’s ahead of the current stock price. Next week without earnings coming the prem will be lower and I will fall back to just over 20 pts from the current stock price. This is a +4% a month trade this week and as CMG has good prem’s I should be able to get a decent ROI each week. I closed other spreads I have, as the recent run-up in stock price kept going past my sold call. This resulted in constantly having to roll-up and out at a loss and hoping the stock continued upward.(Read MSFT) It works unless the stock corrects and then the roll-up was for no reason. I also have some with AAPL and looking at others. ISRG’s is interesting but little volume. Also GOOG and PCLN probably SPX also.
As many of you commented on it is TAX season. It is a days job sorting it all out, but when done it is over for the year. Hope all have been making money as the earnings are settling down and trading might be easier.
Just another way to use options.
Jerry

Friday, January 20, 2012

Now on Bonaire

Hi all, I am now on Bonaire. Looking forward to some diving soon.
Had lousy wifi for the last week. sometimes ok and then in the middle of writing.. zip..
So now that Friday has come and gone and money made and loss, here is my take on the market and different strategies.
These dang calendar spreads have made some good money but have put me behind the curve with MSFT. I had 250 of them at one time and i see Nicky roller those. I closed the last of mine yesterday. Just got tired of trying to squeak out a few pennies. One problem with rolling them out and up is that when you bite the bullet with the loss thinking you will/can make it on the new amount with the in-the-money long ones..the stock after a while drops back and all the rolling was for naught/. Sometimes it works and some not..
Geo, I have no special connection or association with this broker but I use them and am pretty happy. Especially with the commission rates. I use TradeKing. I am not sure if they are the fastest as I seem to fill faster with some other accounts at Ameritrade but they beat the pants off of Ameritrade with commissions. The ameritrade accounts I trade are for other people that I trade for. If they are happy I have no worry? I have traded with TK for over a year now and have no complaints.

Still earning season so use caution and leave extra cushion.

Sunday, January 8, 2012

Some thoughts from Aruba

Hi all. Like many of you i also have a ton of the msft's. The good side is that my leap side has closer to even. There is a full year for them to continue to climb if msft goes up. But of course the stock can drop back to 25 or so in the last few days and all that growth will evaporate. The decision.. I can continue to sell weeklies for only pennies or go out a month and get a little more. With the stock around 28 i am 2 behind the curve with the 26's. msft has a history of dropping back towards the 25's but history doesn't help if it continues upward..lol. Looking over the history of my position i am going to evaluate if it might be better to close and break about even or continue with the spread.

Today (Sunday) i am leaning towards closing and moving into different positions that pay as well or probably better without as much stress. Often, even with over 15 years of trading daily options I still find it hard to give up on positions. Many times the answer is obvious but not always.

Seeing some of the post above from SKA and others reminds me of a question i am always asked. 'If this works so well why doesn't everybody do it'. Options are just not for all traders! Nothing wrong with that or with trying it and then finding out it isn't for you. A bad position now and then is to be expected and absorbed into the business. As Hannah and others know, i stress cushion and more cushion. Cutting losses and trying to recognize bad positions before they turn terrible. Just guessing from scanning over my positions from last year I made around 40% for last year. Many losses were included. Losses are part of the deal, they just can't be avoided it you trade much. I have been though melt up's, melt down's, bubble burst and flash crashes. But I have not found a better way to make money. I want to repeat to all of you traders that this is earnings season. Care in stock selection and fund allocation is very important.

As this list is getting long I will post this as a new post also.

ps; the weather has been great and the diving also. I have seen where the east coast of the U.S.has been quite warm? Weird to have the market open at 10:30 am instead of 6:30..