I was reading through the (long) list of retailers that disappointed recently and realized that I can’t recall when I last traded on a retail company. I rarely feel confident enough in retail stocks to be able to invest in them. Funny, I was telling one of my co-workers yesterday afternoon that we were due for a good 200 point drop soon. The Dow fell 147, so I didn’t quite hit the mark. I really do believe this was overdue and is not close to being over. I’m still OTM on most of my puts and half of my covered calls are still deep ITM.
I think/hope we have some more down days over the next couple of weeks to shake out the insanity that’s been running this market like the late 1920s. That will give me the opportunity to get back to selling puts closer to at-the-money and bring in some better premiums.
Even with having no direct exposure to retail, my balance dropped 0.85% today. Not so bad considering the Dow dropped 1.11% and that was the best compared to the S&P 500 (-1.4%) and the NASDAQ (-1.65%). Only 6 more trading days until May expiration and I’ll feel even better. In 6 days I have:
– CMCSA 27.50 call expiring, likely OTM and I’ll rewrite
– MA 105 put expiring, likely OTM and I’ll wait to rewrite on a pullback
– SLB 67.50 call expiring, likely ITM and I’ll wait to rewrite on a pullback
That’s not much realized gain for May, but June should be great if the market doesn’t fall too fast.
Hello,
I have a question. When you calculate return on investment – why are you choosing the strike price*100? You broker will most likely require 20% or much less as collaterial, so return on investment is premium/collaterial annualized. Formula is actually (.2*strike price) – diference between strike price and current price or 0.1*(.2*strike price) – diference between strike price or just $250, whatever is higher. So, I think you should divide the premium not by strike price , but by collaterial, so returns will be at least 5 times bigger. Do you agree?
Also, I want to share with you my experince. I am professional trader for 5 years . And here are couple strategies that I can reveal. Let me know if you find it usefull or not. Here is the URL: http://ezinearticles.com/?Dont-Buy-Stocks-And-Bonds-Without-Discount&id=382439.
Also, can you give me your email? Vadim.
Good question – I’m assuming you are talking about my spreadsheets. It’s all about managing risk for me. I chose strike price*100 because I like to look at my total return based on what I have invested yoo, not just per trade. Doing it this way makes it a combination of both really. Since I almost always stay 100% invested (based on the price of the underlying stock) I like 100 to be my basis. I take that one step farther and (in the “$ needed in reserves” column) I have a *0.5 at the end to bring my strike price to half of the total value. I do this to account for the fact that I try to stay close to 200% invested. That number changes for me based on my feel for the market is why I keep it at the end instead of just changing the *100.
You are correct about the 20%. I haven’t looked at AMTD’s rules for a while on what they require, but I started off running it to the last dollar and got burned on margin calls. I learned from that and decided to try not to go for broke on everything. I made huge returns, but after a few down days the losses weren’t worth the gains I made. Keeping around 40-60% backing helps me weather the bearish days/months.
My email address is – thetrader at mytradersjournal dot com – thanks for catching that. I’ve added it to the “About this Blog” page too. Btw, I can’t access my email from my office so responses will only be in the evenings or weekends. It’s like they expect me to work while I’m here. 😉
Thanks for visiting…