I closed the AMZN puts

Well I hope I didn't roll a little soon, but I feel good about the move.
I closed the AMZN 145 puts as they were only earning .085 for the rest of the month. I opened some CMG 185's that earn right at 3%
There is always a danger of rolling to soon but with only three weeks to go and 34 points of cushion I like the trade. A negative is this gives me two positions in CMG (180--185's)and one with NFLX (135's). I will let things shake out some after the first of the year and possibly make some more moves.
Happy New Year all, here's to a healthy and prosperous year ahead.

When to close a winning position

Hi traders. there has been some good discussion and points in the comment sections regarding when some traders like to close their positions. I thought I would add my thoughts.
I won't get into when to close a losing position, other than to say my rule is if the premium doubles (usually the ask) , I usually immediately close.
So, when to close a winning position.
One of my basic guidelines is when the remaining amount left is not earning me more than 1% on my maintenance used. I generally close it.
But, when closing a winning position I have several other guidelines.
1. I only close if I have already found a better use for my maintenance. I don't want to have closed it and then go looking for a new position. Have a plan before making a move.
2. If there is only a few days left, unless you are going into the next weekly or moving into the nest month, it usually pays to let it just expire. This comes under the heading of 'You don't want to jeopardize a wining position for a more risky one that probably doesn't pay all that much more.
Some of these are of course not written in stone but basic guidelines. They fall under the adage of - let your winners run and cut your losses.

Commission cost

HI put sellers. A common question I am often asked is "Is the trade worth it when the commission cost are so high"
I, as well as most traders hate commission cost but it is past of doing business. I very seldom eliminate a trade because of the commission. Example; it is the last couple of days of a trading month and I see a trade that might make me 100 dollars. But the commission cost might 25 so I net only 75. Yes it is 25% of the trade but what are the options? I can say no thank you, and pass on the profit of 75 of bite the bullet and take in the $75. I certainly don't like it, but I am not going to pass on the the money to 'show the brokerage.' I also keep an ear out for any brokerage that offers better rates.
Otherwise, it is part of the cost of business.
Jerry

A great holiday

HI all, my family had a great Christmas and I hope all of you enjoyed the holiday.
Regarding options, I am TRYING to follow my own advice and stick with my current positions. There is still 4 weeks left in this period so it is just to soon to roll up. All of them earned over 3% when I opened them so doing nothing for the whole month would not be all bad. However, within a week or two opportunities will show up and I will tweak 'em a little.
currently I have --
AMZN trading around 182.5 I have the 145 put
CMG 228 180
NFLX 185 135
These all seem pretty safe at this time but mutual funds and other ETFs might be adjusting their holding so there could be some shuffling.
Jerry

Rolling up questions

Hi traders. A common question that come up is regarding when and if to roll up to a higher strike. I mentioned some of these thoughts in the comment section so forgive me for repeating them.
1. Nearly all my losses come from either rolling up to soon, or to an incorrect strike... NEARLY ALWAYS!!!

Try to fight the feeling that it is always correct to roll up. Never forget that to roll up you use more maintenance. This is off-set some as you also get more premium. But, often it is a near wash and yet you have endangered what was probably a safe position. If you are working with limited available maintenance and assume you have 10 puts s with XYZ stock, now when you roll up you can only do maybe 8 at the higher strike. You hardly made money and yet you now have to sweat some.
2. Try to keep in mind when you opened the position you were a happy camper. Now you want to tweak it some? Be sure to think it thorough.
3. A lot of this gets us back to GREED. We all suffer with trying to make the most we can, but this can be a dangerous game so always use caution. I am very familiar with the problem.
4. I now have AMZN monthly puts that started out around 3.5% profit. They have dropped a bunch as AMZN has moved up today. Now only one day into the month and my maintenance is sitting there only earning me 1.5% So this is a definite candidate to roll up. I usually give serious thought to rolling when my maintenance starts only earning around 1%. If you opened the position earning 4% and now you are down to 3%, my advice, don't roll up yet.

Dropping stock - dropping premium

Hi Traders, one nice feeling you get when trading with lots of cushion is the way a stock can fall in price and yet your premium is also dropping.
EX: CMG / I have the Jan 180 and on Friday the stock was trading around 238. today the stock dropped around 3 pts and yet the premium had dropped from .60 / .80 to .55 /80. This lets you close or continue to watch the positions at a possible break even level. Where put sellers get a bad name or in trouble is when they go for the big bucks and use a close strike price. After the opening this morning they are already underwater and struggling. This is especially true in the longer options months such as this current month.
Use caution, use cushion and avoid reaching to far on the opening of a position.
Good trading
Jerry

Use caution with new positions

Hi traders. As I mentioned in one of the comments sections, I advise all to use caution with the coming January positions. Not to scare you or say the sky is falling etc. Just a note of caution as the mkt has come a lone way with the NASDAQ at or near highs not seen in a long time. The DOW has also had a good run. The VIX (volatility index) is low and that usually means traders are comfortable and complacent. That is usually when Ca Ca hits the fan. The Santa Claus rally might be over soon. Also mutual funds adjust their positions for tax reasons and normal adjustments to their portfolio.
So the advice I offer is for you to take lots of cushion and settle for smaller returns until we get a better picture of the market.
I am not opening any positions where I get more than 3% ROI on maintenance.
There Is 5 weeks for this options period so plenty of time to roll up as the month progresses. Don't rush things.
Good trading all and prosperous and hapy year ahead.