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How to Read an Options Table -- Determining an Exit Price for a Stock -- Understanding Downside Risks in Investing -- How Naked Put Selling Works -- 10 Tips for Keeping Emotions out of Investing

July 21, 2017

Options Expiration – July 2017

Filed under: Finance,Stock Picks - 21 Jul 2017

I came into today with two options left to expire for July. At the open, my order for ADI hit. While ADI was trading at $79.55, I bought to close my one ADI July $80 naked put for $0.39 and sold one ADI September $80 naked put for $3.24 and received $284.30 after paying $0.70 in commission. I brought in $339.75 when I made the trade on the July ADI put and after closing the position for $39.35, I have a realized profit of $300.40.

My other July option was on IWM. While IWM was trading at $142.84, I sold one IWM $142 naked put for $2.42 and received $241.32 after paying $0.68 in commission. I’m letting the IWM July $138 naked put expire worthless. I earned $440.89 when I sold the July put and will have a full realized gain of $440.89 since I’m not paying anything to close the single put.

For the day, I have a realized gain of $741.29 from the two July options. $741 is good, but not really hitting my target of getting better than a 10% annualized gain for the year. Low volatility is killing my returns on top of my risk averse approach this year.

You …

July 14, 2017

Closed August TLT Vertical Call Spread

Filed under: Finance,Stock Charts,Stock Picks - 14 Jul 2017

I closed my TLT August 129/132 vertical call spread for a profit today. While TLT was trading at $123.33, I bought my six short TLT August $129 calls for $0.14 and sold my six long TLT August $132 calls for $0.04. The net spread purchase was for $0.10 and I paid $72.71 including $12.71 in commission for the combination option trade. After selling the spread for $292.68 on June 20, I made a net profit of $219.97 by closing it today.

I plan to sell another TLT spread soon, but would like to have the ETF move a little higher first. I also need to replace my two naked puts expiring next Friday, ADI and IWM.

Check out the trade details here on YouTube. I picked up some new software that allows me to draw on the video screen while I’m talking and it sticks my picture in the video.  I’ll mess around with the software in the coming weeks and decide if I want to keep it showing me. For now, I know I need to shrink the picture of me and blink less. Amateur at work!

July 8, 2017

SPY Chart – July 7, 2017

Filed under: Finance,Indices,Stock Charts - 08 Jul 2017

The chart below shows the daily prices for the past three months on SPY, the SPDR ETF that tracks the S&P 500 Index, after closing the week at $242.11, on July 7, 2017.

SPY retreated 2.0% from its intraday high of $245.01 set on June 9 before having a slight recovery and then dropping again. Even while setting a new high on June 9, the large-cap ETF started showing signs of weakness as it dipped below its 10-day moving average for the first time in weeks. Since then, it has had only one day when it has not crossed below the 10-day moving average intraday. On June 16, SPY traded below its 20-day moving average and has had one day since then without crossing below it. Weakness continued as the bearish crossover of the 10-day moving average fell below the 20-day moving average on June 27. SPY took two more days of trading before it fell below its 50-day moving average for the first time in a month and a half. Large-cap stocks rallied …

July 3, 2017

End of the Month Summary – June 2017

Filed under: Account Summary,Finance,Indices - 03 Jul 2017

I eked out another small gain this past month. June wasn’t a stellar month for the S&P 500, but it gained 0.48%, which is good after the gains of the first five months. I finally got closer to being fully invested and have some decent gains I could make by the end of July and August. That potential could be spoiled by ADI or could be improved upon by my QQQ ratio spread. At least I’m fully engaged again and have a chance to pull out a reasonably good second half for 2017.

My account ended June with a Net Asset Value (NAV) of $101,776.61 according to Interactive Brokers (IB) after finishing May with an NAV of $101,367.61. (IB used to list Net Liquidation Values that did not include accrued interest and dividends, but stopped in June.) I had a gain of $409.00 (~0.4%) on paper for June and had $558.84 in realized gains from my three closing trades (two for a profit and one hedge for a loss). I received $32.11 in interest, but no dividends in June since I’m not long shares of anything yet. Quicken reported that I have an account value of $101,36.22, which is the same as what IB says I have after adding in the $40.39 …

June 23, 2017

Wrote Naked Put on WMT

Filed under: Finance - 23 Jun 2017

Walmart (WMT) took a sizeable step lower after AMZN made the offer to buy WFM last week. I thought the drop was overdone, so the following day, I entered a limit order to write a naked put on WMT. It took a few days for the order to hit, but it triggered today. While WMT was trading at $74.87, I sold one WMT August $75 naked put for $2.25 and received $224.32 after paying $0.68 in commission.

I don’t expect WMT to fall much more and see strong support close to $73.30 and just below $70 as you can see in the chart in my video posted here. If WMT drops that low and I see support, I might sell another naked put at a lower strike to dollar cost average my price a little.

June 20, 2017

Sold August TLT Vertical Call Spread

Filed under: Finance,Stock Picks - 20 Jun 2017

After a hiatus since my last TLT losses, I’m back in the 20-year treasury ETF with a better strategy. As I did when I first started trading TLT years ago, I hedged this trade so I don’t repeat the same idiotic mistake from last summer. The non-hedged income was great until TLT hit a new all-time high and I got spanked. I’ve learned from my mistake and traded back in line with a better handle on risk this time.

While TLT was trading at $120.30, I sold six TLT August $129 calls and bought six TLT August $129 calls for $0.50 per combination. I received $292.68 after paying $7.32 in commission. Along with the hedge that I didn’t have last summer, I sold fewer combinations to begin my trade and will consider adding more if TLT goes up much more and then looks to be finished with its ascent.

You can see more of my trade details and the TLT chart I used here on YouTube:

June 19, 2017

Closed UWM Naked Put

Filed under: Finance,Stock Picks - 19 Jun 2017

Sometime last week or the week before, I entered a limit order to take a profit on my UWM naked put. While UWM was trading at $121.05, I bought to close one UWM July $100 naked put for $0.35 and paid $35.34 including $0.34 in commission. At $0.35, I had only 0.34% of upside potential, which is 3.64% when annualized. UWM would’ve had to fall 17.67% for me to take a loss on it. While that’s very unlikely, it’s possible and for $35.34. I decided to remove the risk and look for a more profitable trade. Hopefully, I get to that trade tomorrow. I have a limit order on a TLT call vertical spread, but might change it to a ratio spread, even if it’s just an odd ratio, such as six short and four or five long calls to hedge it. I know I won’t go into it naked like I did last year, but want to take advantage of the elevated TLT price.

For this UWM trade, I walked away with a realized gain of $394.41. I’d like to sell another UWM naked put far out of the money again, but would prefer to make that trade on a …

June 14, 2017

DIS and MDY Naked Puts

Filed under: Finance,Stock Picks - 14 Jun 2017

Coming into this coming Friday’s option expiration, I have two MDY June $290 naked puts left to expire. Being more than $9 out of the money, I opted to leave them in place and let them expire worthless. While I’m still nervous about what’s to come for the markets, I opted to sell one at the money put to replace the expiring two out of the money puts. While MDY was trading at $320.26, I sold one MDY September $320 naked put for $8.50 and received 849.74 after paying $0.26 in commission. I’ll sell another MDY put later probably or might choose another stock or ETF.

I traded on DIS for a while, but after my last shares were called away at $110 in February, I kept my distance until today. Actually, I placed the order a day or two ago and it just hit today. While DIS was trading at $106.21, I sold one DIS August $106 naked put for $2.60 and received $259.32 after paying $0.68 in commission. If this put is assigned, I’ll have a cost of $102.41 after exiting four month ago with a sale price of $112.44 including the covered call premium. I’ll be happy to …

June 12, 2017

XLF and MDY Option Trades

Filed under: Finance,Stock Picks - 12 Jun 2017

The ratio spread I had on MDY was almost worthless going into this coming Friday’s expiration, so I decided to sell my long put for a $10 gain instead of letting it expire completely worthless in a few days. While MDY was trading at $319.95, I sold my long MDY June $310 put for $0.13 and received $11.90 after paying $1.10 in commission. I still have two MDY June $290 puts that I could get out of for $0.05, but I don’t think MDY will drop $30 before expiration in four and a half days, so I left them in place and saved a few bucks.

I tried to trade XLF last week, but my limit order didn’t hit. So, I lowered it this afternoon and while XLF was trading at $24.24, I sold to open two XLF September $24 naked puts for $0.73 each and received $145.61 after paying $2.39 in commission.

Here’s a video of both of these trades on YouTube:

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