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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

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:

June 1, 2017

End of the Month Summary – May 2017

Filed under: Account Summary,Finance,Indices - 01 Jun 2017

I pulled out another small gain in May and the broken record continues as I lament being under-invested still. On a positive note, I finally filed for divorce last month and it’ll be final in two weeks from today. I’ve held back on some of my personal investing as I’ve been distracted with filing paperwork, but it’ll be over soon and I plan to be able to refocus. While I still believe we should get a correction this summer, I’m less certain than I was earlier and know I need to take more risks than the small exposure my account has currently.

My account ended May with a Net Liquidation Value (NLV) of $101,343.31 and a Net Asset Value (NAV) of $101,367.61 according to Interactive Brokers (IB) after finishing April with an NLV of $100,970.02. I had a gain of $373.29 (~0.37%) on paper for May, compared to the 0.33% gain for the Dow and the 1.16% gain for the S&P 500. I had $189.22 in realized gains from My IWM May $138 naked put, my only closing trade. I received $30.00 in interest, but no in dividends in May since I’m still not long shares of anything yet. Quicken reported that I have an account value of $101,336.32, …

May 19, 2017

Options Expiration – May 2017

Filed under: Finance,Stock Picks - 19 May 2017

My single expiring option for May finished in the money, so I decided to roll it out to July before taking the assignment.

While IWM was trading at $136.43, I bought to close one IWM May $138 naked put and sold one IWM July $138 naked put and received $283.60 after paying $2.20 in commission for the two legs of the calendar spread. IWM ended up closing at $136.00 on the day and which meant I did a little better than I would’ve if I had waited until the very last second of the trading day.

I posted my video of the trade here:

May 16, 2017

Sold ADI Naked Put

Filed under: Finance,Stock Picks - 16 May 2017

For the first time in the 10 years that I’ve been writing My Trader’s Journal, I made a trade on Analog Devices ($ADI). While ADI was trading at $80.60, I sold one ADI July $80 naked put for $3.40 and received $339.75. I think the downside risk to ADI is no lower than $75 and probably not that low.

I detailed my trades in this YouTube video posted here:

May 9, 2017

QQQ August Ratio Spread

Filed under: Finance,Stock Charts,Stock Picks - 09 May 2017

Volatility is so low right now that it’s barely worth selling options. The NASDAQ Composite hit a record high again and I opted to sell a ratio spread on QQQ with the belief that QQQ will move slightly lower before expiration in August. If I’m wrong and QQQ climbs further, I still make a few bucks since I received a tiny credit for this ratio spread. If I’m right and QQQ ends exactly at $133 at expiration, I’ll gain more than $1,200.

While QQQ was trading at $138.26, I bought two QQQ August $139 puts and sold four QQQ August $133 puts to pay for the long puts. I received $8.33 after paying $3.67 in commission.

You can see my commentary here along with my QQQ chart – QQQ Ratio Spread

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