Another week on the way

Hi Traders, Well NFLX disappointed some but when the dust settled if you were using them and left anything over a 10% cushion you were safe. You were worried but safe..
NFLX is getting more and more competition from many directions so be careful when using it. With a PE of 66+ it is still priced pretty high, so leave a good cushion.
I seemed to have broken my own rules once to often. I had a loss on an SPX spread. The return was 1.7% when I opened the weely position. That equates to about a 7% gain in a month. As I said in my book when getting over 6% a month you are pushing your luck. I pushed once to often. No big deal but it serves as a reminder to me to 'follow the rules'...lol
We all will have losses now and then but our goal is keep them to small losses and not very often.
Most the heavyweights have reported but still some out there. PCLN is coming next weeks so I will avoid that puppy..
Pick your positions with care, leave lots of cushion and go for smaller profits...
Good luck this week and month.

NFLX reports..ouch!!

Hi all, Well we are deep into earnings season. Today's announcement by NFLX again demonstrates the importance of avoiding trying to out guess an earnings report. The report may be great but not what the street wanted or expected and zap out goes several billion dollars worth of investors money. It is expected that NFLX will drop around 20 dollars tomorrow morning. If so by mid-day it might be time to dip your toe into the water to test the temperature. There might be some decent puts available when the dust settles. But don't rush and don't try to out guess the market.
Today I opened some put spreads with..
SPX weeklys 1295/1300 puts for 1.75% ROI
SPX WEEKLY 1360/1365 CALL FOR 1.7% Roi
GOOG weekly 545/550 call spread 1% ROI
So there are some decent plays out there but i spent several hours digging for ones that I liked. Maybe tomorrow will find some more spreads or regular puts available. Lets see how the mkt does in the AM.
Jerry

What a week

Hi all, What a week. AAPL announced and blew away the 'guesses'. FFIV also. So a long weekend with lots of time to pick our next weeks positions. If you are doing monthlys then you now have 4 weeks. If doing weeklys, it is start over time for next week. I will be posting all my choices for the coming sessions. There are lots of choices as we work our way through the reports. AAPL, FFIV LULU, GOOG, RIMM, CMG, PCLN, DECK, ISRG, OPEN and others. Just watch for reports and trends, as we have seen, the numbers can jump out of sight if you misstep.
Weeklies have certainly added a new dimension to option trading. We are all still working the bugs out of different way to utilize them. They certainly help with the time part of the equation.
I have yet to get into all of the ETF's and other various items to use but more will be coming as we all learn to use the tools available to us.
I hope the past week/month was kind to all of you. I really appreciate the kind way all want to share what is working for them. There are many ways to play these options and the important thing is to find what works for you with some degree of safety and comfort.
For you younger traders, if you start with 20,000 and are careful and can average 4% a month in 10 years you will be a millionaire. It can be done but with care and running your options like a business will get you there. Not shooting from the hip and trying to out-guess the market. Just plod along and it will happen.
Jerry

Earnings season

Hi all. I hope the past option period treated you ok. If not it is important to examine what went wrong and how you could have changed things. Usually when I examine my mistakes I see...
1. More cushion would have equaled more safety.
2. I was trying to get to high of a return.
3. Playing with a stock during earnings report.
4. Sometimes it is a combo of all of the above, Not quite enough cush, a little to much time left when opening the positions and a slightly to large return expected.
I know a lot of time I seem to be preaching but running your options as a business requires good judgment and certainly caution. You don't need an MBA from Harvard, just common sense and restraint. When I see a position that is giving me 3% in a weekly position, I am looking at the wrong option... You must keep in mind that the trader on the other side of your position probably knows exactly what he is doing. None of us are bullet proof and one serious misstep can ruin you and your finances.
This coming week requires utmost caution. Most of the biggies are reporting in the coming week, or the one after. Even if your stock reports in the second week, a bad report from a similar stock can drag down your stock and force you to close to soon.
Also keep in mind that there are mutual fund companies that have computer rooms bigger than your house and they cannot get 10% annual returns. Most of them have a zillion ivy-league MBA's on staff. So every now and then I have to slap myself to remind myself, good returns are a plus but restraint will carry you into an early comfortable retirement. So plod along and set goals that are reasonable and you and I will be writing on this blog for the next 10 years.

A new week coming

Hi Traders, It looks like all of my trades are going to expire today. I hope you guys are experiencing the same. I do have a few that are close so I will have to keep an eye on them.
Looking forward to next week means that we are working are way into the earning season. Keep that in mind as unexpected bad news can bring down a lot of stocks. So it is the season to use good choice and don't bet on what you want to happen. Bet on what seem to turn the odds into your favor. Settle for less during the next couple of weeks and watch your money grow.
I'm not sure what to think about regarding the possible shut-down of the government. It could be another thing that tries to stop the bull market. So far, wars, earthquakes and gasoline high prices have been unable to dent the bullish trend. But one day it will end, so as I said previously, don't be the one standing up when the music stops. It is the time to be somewhat defensive. There is still crumbs out their...

A good week of trading but some warnings

Hi all, Well it appears all of my positions will expire today. I hope it has been a good week for all of you. I transferred my brokerage at the start of the week so a little down time, but up and running now.
I have to admit after fighting it for years I now seem to be doing more and more spreads. These are only for weekly options and then limited to just a few stocks. The availability of weekly puts made more sense out of spreads than in the past. At this time I am using AAPL, AMZN, PCLN NFLX, GOOG, BIDU. The danger and temptation is to move the strike price too close for my comfort. I will wait until Monday or Tuesday before opening the next weekly spreads. When doing a vert put credit spread, the returns seem small but the lower maint makes up for it. If you are using a 5 pt difference between the two strikes you need 5 pts of maint for each put. If doing a weekly getting around 1 % per week is 4+% per month. So don't be piggish, just pick up the crumbs. They are there also while doing spreads.
As each Put returns less the temptation is to move the strike way too close. My advice is to be careful and avoid what could be a real trap if things go wrong.
The market keeps going up and it makes it easy to sell puts in any form. But one of these days it will turn and we don't want to be the one looking for a chair when the music stops. Make your money but don't get fooled thinking you are a genius in this market. Like the late 90's, a monkey and a dart board can make money selling puts in this market. All we need to burst our bobble is a couple of days of 200-400point drops and it will separate the better players from the would-be players. So do be careful.
The world is a mess with gasoline pushing 4 and problems all over the mid-east. Even though the market has been doing just fine, things are out there going bump in the night.
Good and safe trading
Jerry