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

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.

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?

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.

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.

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

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.

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

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

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

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.

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