Ways to trade

Hi all, Lots of talk regarding instructional ideas. Wow you guys have more time than I do. I have mixed emotions regarding all the info available on the web and in seminars etc. I am glad that so many find the information helpful as nothing beats knowledge and experience. For those of you that find it confusing, the relationship of the IV compared to a rising delta and a dropping stock price and all the other variables that affect the premiums, I’m with you. I have been doing this nearly everyday for fifteen years. I’ve made lots of money and sorry to say lost my fair share. But I have never found any of the tons of info that is available to be of much help. It certainly will spell out a lot of what if’s, but it all changes immediately with the stock price change. You can spend hours researching all the variables but eventually you have to pull the trigger based on plain old common sense. The correct gamma and delta and IV and all the other info won’t help a bit if you don’t pick your stock or index based on common sense. For those of you that don’t have the time to watch all the videos and web cast, just follow some simple rules. Pick a darn good stock Pick one with a decent PE Use options that have a decent premium and plenty of O-I Avoid stocks with coming news i.e; earnings etc. Optionsense; I think you mentioned that you are finding a longer time period safer as you have more time to be correct.. Hmm don’t you also have more time to be wrong? To me time is the biggest enemy of all. I don’t want to be holding a position a month from now when Israel attacks Iran or vise-versa. I want a position that is only a few days long unless I’m doing a bullish call spread such as I have with AAPL. For short term spreads, call or puts, I want my money at risk for just a few days. An example of positions that I will open probably Tuesday assuming all is right with the world.. AAPL trading around 700 Iron Condor (IC) this weeks 630/625 put for a nickel =1% On the call side 750/755 for another nickel=1% for around 2% a week with these two. GOOG trading around 734 put side 680/670 for a nickel and 765/770 on the call side = .05 for another 2%. I have absolutely no idea what the various greeks or other indicators would say about these trades but they are common sense. A long ways from the stock price and 1-2% in a week. Someone show me a mutual fund that makes 100% a year, and they get to use computers as big as your house… For you traders that love ‘more’ information good luck as there are a ton of people selling ideas of how you can make money. To me I fall back on my natural skeptical side and think if it works that good, why don’t they use it and give the information away as they obviously can make all the money they want. I make quite a lot of money from trading and the last thing I want is some of your hard earned money just so you can have me tell you the end all way of trading. For the traders that are just getting started, take it easy. Use common sense. Don’t try to learn too much or you might get paralysis by analysis. There can be too much info out there for some of us. Gbarbs, you mentioned rolling down the sold side of a call spread. Don’t forget when you do that, it takes profit off of total profit at maturity. I also do it at times but generally it is costly if you assume that the stock will come back by expiration of the long side. If you believe the stock will come back, usually you are better off to not roll down. Good luck all and I do enjoy sharing ideas Jerry

Hi all, a lot of questions on the blog regarding which brokerage is best, cheapest, fastest etc. I have been with Schwab, Fidelity, Ameritrade etc. At this time I trade with two brokerages. Most of my trades are with TradeKing because of the rates. I do manage two accounts that are with Ameritrade and I like their platform. I also seem? to have faster trade executions with them. Maybe I put in a more reasonable attempt? But 75% of my trades are with TradeKing. I get no kick back for recommending them..lol (wish I did). But the rates are 4.95 and .65 per option. I look around every now and then and have not found anyone to beat them. They have next day fund transfers of money. Decent online help when needed. They seem to have a fair amount of tools for you traders that look at that stuff. I trade most days quite few options and never use any of the tools. Most of you that have known me for a year or two know that I don’t use vix, (I have no idea how to use Gamma, Theta, Alpha etc. I never look at the Delta or the Implied Vol. For those that do use all of the Greeks etc. TK seems to offer it? The opening and closing and rolling out is very simple and intuitive. They make a four legged trade very simple. So if you are looking around you might check them out. For those that have been trading AAPLE, it sure has been an upward road. The premiums are good and the upside is still to come. The new phone and other products will just keep producing money. I do think that a pullback could happen as it has gone up a hundred points in the last month or so. But for every seller there is a buyer waiting to jump in on any correction. I appreciate you traders that always jump in to help new traders or anyone with a question. It is a pleasure to exchange ideas with you.

Hi all, Well I have lately been called Johnny Apple seed, do to my liking AAPL and using it nearly exclusively. For me it is a stock that comes along only once every 10 years or so. The premiums are great, the upside with new products is fantastic and the management is forward thinking and innovative. They lead in market share and customer loyalty. So I am breaking the rules of diversification. At this time I only have AAPL options. That said there are other great stocks that offer great option situations. I like GOOG, which continues to innovate and if they cannot beat you they buy you. GOOG hires the best and brightest from other companies and will for years be a force to consider. At this time Priceline (PCLN) is the leader in their field and has some great options. But lookout PCLN as GOOG is thinking of getting into the booking of hotels etc. If so with name recognition and their marketing, they usually eat the completion. I get questions regarding longer term options. As most of you know that follow my thoughts, to me, time is the biggest enemy. Too much can happen. i.e. war in Iran, election coming, some goof ball doing something stupid, major earthquake, Europe meltdown.. Pick your disaster, it can happen. I have many Jan options that were opened at the buy side of a longer term play. But I am uncomfortable with them. Not because of the stock but strictly the TIME factor. So for those of you that look at selling puts into Oct etc. be very careful and leave lots of cushion. There is so much money to be made with careful choices there is no reason to go out to far. We (I) talk of 1+% a week. We forget that, that is considered outrageous to sophisticated money managers. There isn’t a mutual fund that makes that kind of money. Do weeklies and just make deposits. No reason to guess on the potential of a stock that maybe has reached bottom or the next GOOG etc. Pick winners, leave cushion, avoid earnings. With those three sure ways to making money there is no reason to guess. Good luck all Jerry

Hi all; Just a reminder to check what AAPL has done in the last 5 days. 31 points and still heading towards Oct release of the new I-Phone. Quality will come to the surface. For those that are looking for a naked put trade check out aapl for Aug 18 at the 550 strike. With 57 points of cushion you get +1% for two weeks. Pretty safe and a good ROI. I sould like a cheerleader for AAPL but with a lot of options in several accounts i love the stock and its future. I like GOOG also but worry for AMZN with its high PE. Plenty of positions with good ROI out there. Use caution and play safe. Don't fall for market HYPE ala FB. Go with proven fundementals and you will be safe.

An easy 80% in 6 months

Hi all, I had a friend that is interested in options but doesn’t have the time necessary at this point to do full time trading. He asked me if there was a simple trade that should make good profit. I looked around and decided to show him a trade that I now have and that will work for full time traders or new traders that want a profit yet not trade every week. This is simple and only requires one thing to happen. By January 2013 AAPL needs to be over 600 and over 630 for full profit. I see no problem with that part as AAPL might be over 630 this month. So the trade is to -- B2O (buy to open) a Jan 2013 AAPL call at the strike of 565. This will cost you today 80.90 S2O a Jan 2013 AAPL call at the 630 strike. You will receive 45.60. You now have a net debit of 35.3 If AAPL is over 630 at expiration date you close both side right before expiration and the result is a profit of 65 difference between strikes minus 35.3 = net gain of 29.7. As the set up cost you 35.3, it is 29.7 / 35.3 = 84% ROI in 6 months. This is about the easiest way to make over 80% in 6 months that I know of. Your break-even point is if AAPL is over 600 at closing time.

Hi all, I have been pretty busy with several projects so not enough time to post or keep up with all the comments and finally did today. Regarding this AAPL run, wow it sure makes it hard to continue on the path I was hoping for. First, Artelly; please write again. Don’t know how I missed your request. Now on to the ITM spreads. Well as probably most of you know even though you started with a ITM spread you now probably have a Deep In The Money spread. One day away from the ability to trade and now today I found myself way behind the curve. Here is what I did. I had several different long sides but most were 565 Jan 2013 and this July 20 575. Yikes already 35 points behind the stock. First there are two main ways to make money with this method and of course you can mix and match when that is appropriate. At the end of this I will tell you of what I have done today. One goal is to make weekly money by selling the strike that keeps you around 10 points below the current stock price. If the stock moves then you sell the next higher strike. If it moves even more you might have to roll out to the next month and pick up some credit as well as a strike or two. The other way to win is to get a bigger and bigger spread between the long side and the short side. This has the down side of not really building the account while doing it, but the profits are deferred until closing. EX; you have the aapl 550 and you keep rolling out to the next month and getting 10 points more. You might have to do this without taking in $$ when doing this roll. So you opened this on June 1 and had the Jan 550 and had sold the June 565 and each month you had to roll out to the next month and made no money while rolling, but you did pick up 10 points or more each month. So by Jan you had rolled up 10 points per month for a total of 70 more points. So now you could have the Jan 635 sold and the Jan 550 bought and it all expires. You now get the full distance between the two strikes for a total of 85 points so now if you 10 of them it would be worth 85,000. During some of those months the stock probably didn’t go up and you caught up some and just rolled out to the same strike for a decent credit. That of course would be mixing the two objectives. So you can make profits rolling to the next month or just taking a credit weekly / monthly. Now what I did was a little different. Today I rolled all of my current shorts July 575’s) into the Jan 630. I picked up for an 8.50 in credit and I also picked up 65 points of spread between my 565’s and the 630’s. What I accomplished was two-fold. I now have a big spread between the two strikes and I used the new credit to open some more spreads and this time I went to the 600 Jan 2014 and sold the July 6 – 615’s. (when I did this AAPL was trading at 614..) with these I have around 76 weeks to either roll up or up and out. I will sit on the old ones that have the two Jan expirations and just collect the difference at closing time. If AAPL should fall back on bad earns etc. I might close the short Jan 630’s and open a lower strike and collect the lost TV of the old 630.. But that is just a thought hanging out these if AAPL drops. I hope all are adjusting to the different plays with AAPL as it is sure moving towards earnings. Moving this fast has certainly makes one do some deep thinking and scrambling.

Home again

Hey, I'm home and had a good time and ready to get back into trading. Ihaveo's, your post of 6/21 @ 1:12 was correct. There is no 'sure' way to trade options. But turning the odds in your favor is the best way to make money that I have found. Regarding some confusion of DITM options. (deep in the money options) The plan is to buy a low strike far enough out and sell a near term option a little below the current stock price. As you roll up, if the stock goes up, you create a difference between the bought and the sold option. In two of the acc’t I manage, the bought is now the Jan 2013, 535 strike. So assuming AAPL continues upward somewhat towards earnings I will be rolling up 5-10 points a week or even having to jump into the next month. I will continue to roll up and out and get a bigger and bigger spread between the two strikes. Come Jan I want to close all and if the stock is at 700? I can sell the 535 for 165 points. Let’s assume that I have only been able to roll into the 650 strike for the sold one. I will have to buy it back for 50 points. That means that at that time I will receive 115 points of credit. That does not take into account each credit I received when rolling. If AAPL only goes to 620 by Jan then I will get 85 points of credit and also have the credit of the roll ups. As Ihaveo’s mentioned AAPL (or any stock) does not always go up. So if one set of these expire without rolling then you get to keep the credits and start over. I see I missed an interesting week FOMC, Greek and Egypt elections. So let’s get back into trading and see where we go from here. Some great post and questions. I hope all are learning and enjoying as much as I am. I thank all that try to help other others and either explain or de-mystify options. Jerry