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Posted by Martin June 23, 2017
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United Steel (X) trade adjustment


UPDATE: June 23, 2017
 

X is moving up (although I still believe that in the next ER they will miss badly again) but decided to roll my calls higher.
In my previous trade (see below) I sold 18 strike puts to roll the calls up. Those puts were bought back for 0.05 debit today morning and there fore I can sell new puts and roll calls higher again:
 

BTC 1 X Oct20 17.00 call
STO 1 X Jan19 18.00 call
STO 2 X Jul21 19.00 put

@ 0.49 credit limit day
 

X @ 22.28
IV @ 56.81%
 

(The trade executed)
 

The company reports earnings on July 25th and thus I opened this trade with puts expiring prior to that event. I will be then waiting after the ER for the next adjustment.
 

 


 




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Posted by Martin June 20, 2017
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AGNC covered call (ROTH)


UPDATE: June 20, 2017 (TRADE CLOSED)
 

I didn’t expect to get early assigned on this but it just happened. At least, I do not have to wait until expiration to get assigned.

Today, I bought back 100 shares of AGNC @ 22.50 a share.
 

This closes this trade cycle. I do not plan trading any more options using this underlying as there are no premiums. This whole trade was in fact a bad idea. So not anymore.
 

 


 




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Posted by Martin June 16, 2017
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TECK strangle trade


UPDATE: June 16, 2017
 

Our July14 TECK 20.00 calls closed for 0.05 debit. Still holding the 16.00 puts.

I am waiting a bit longer (about a week until expiration) and then attempt to roll the puts unless the stock recovers).
 

UPDATE: June 12, 2017
 

 




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Posted by Martin June 16, 2017
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TECK strangle #3


UPDATE: June 16, 2017
 

When I was opening this trade I felt confident that this is a safe bet. Apparently not. Mr Market can be very challenging trying to take your money away. That’s why it is important to have a strategy for days when the market goes against you. And believe me, it will be most of the time!
 

As TECK continues down on lowered guidance, our July 7th 20.50 calls closed for 0.02 debit today (remember, after I open a strangle trade, I immediately place a closing GTC order, which executed automatically once the conditions are met).

Since our calls closed, I decided to roll the put side lower the same way as I did yesterday with June 30 trade. Here are all trades review:

 
BTC 1 TECK Jul7 20.50 call @ 0.02 debit
 

and here is the roll:

 
BTC 1 TECK Jul7 16.00 put
STO 1 TECK Jul7 15.50 put
STO 1 TECK Jul7 16.50 call
 

@ 0.12 credit limit day
 

After the old call closed I rolled the above put down a bit and added a new call creating a new strangle. I expect one leg will have to be rolled again later on (I will wait closer to expiration for the next roll).
 

ORIGINAL TRADE: June 8, 2017

 




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Posted by Martin June 15, 2017
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TECK strangle trade #2


UPDATE: June 15, 2017
 

As calls got closed a few days ago and puts slipped in the money (ITM) I decided to roll puts down and sell new calls against it:

 

BTC 1 TECK Jun30 16.50 put
STO 1 TECK Jun30 16.00 put
STO 1 TECK Jun30 16.50 call

@ 0.26 credit limit
 

Although now the trade has a very narrow window for both legs to expire or be bought back for nothing (and actually I do not expect it much) I am OK with this trade.

If the stock continues slipping down, the calls may get actually closed again and later on, if we see a recovery, the puts can get closed. This will not be a bad idea necessarily.

 


 




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Posted by Martin June 08, 2017
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New Iron Condor using TECK in ROTH IRA


UPDATE: June 08, 2017
 

This morning, our call side of this Iron Condor has closed for 0.02 debit:
 

BTC 1 TECK Jun30 22.00 call @ 0.02 debit
 

We still hold the put side waiting for it to either end or be rolled.
 

ORIGINAL TRADE: May 22, 2017
 

 




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Posted by Martin June 06, 2017
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Buying monthly dividend income Motif


I decided to take a small experiment and buy my monthly dividend income motif tomorrow morning using margin. I will only use a small portion and buy for the minimum of $250 dollars only.

Will the dividends be able to pay for the loan?

This trade should answer the question in real time.
 

Here is my motif:
 

 

 

If you are interested in buying this motif as an entire portfolio (with this motif you can buy all shares in the motif with as little as $250 dollars and buy fractional shares similar to when you purchase mutual funds, but in this case, the motif is in fact your own mutual fund and thus you do not pay hefty fees to the fund manager – unless you decide to pay to yourself.
 

If you do not have a motif account, you can open one here and have one month free investing!

 

Or would you prefer investing into a classic DGI portfolio?
 

If you like dividend growth investing (DGI and do not want to spend time building your own portfolio one stock at a time but be rather diversified with 30 stocks right away, you can buy my DGI motif like a mutual fund and keep investing small amount of money every month (buying fractional shares) no fees, no limits, invest as little as $250 per trade:
 

 

 
Do you have any questions? Do not hesitate to contact me!




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Posted by Martin June 02, 2017
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My watch list for June 2017 options trading


Many people keep asking me what stocks I use to trade and how do I choose them.

I try to explain to them that my stock selection is simple. I have a trade plan and part of the plan is also what stocks I want trade.

Over the years I learned not to focus on all 50,000 stocks or so but have a certain criteria the stocks must meet in order for me to trade them. I do not trade expectations, stories behind the stocks, predictions, or wishful thinking.

Many times in the past I tried to create a story. I tried to find a reason for trading a certain stock. I tried to interpret fundamental data to back up my story creation and then tried to find a technical data by chart reading to further strengthen my theory of why I should trade a certain stock.

And guess what. I was almost always wrong. But I so convinced myself by creating a story and then finding data further supporting my conviction that I actually deceived myself into a trade I knew nothing about but my own chimera. And as soon as I opened a trade, it went in the right opposite direction. I lost money. And I was totally disappointed.

Does this sound familiar to you?

If yes, then why you keep doing it? Do not do it!
 

When people ask me why I trade a certain stock I usually have no answer to them besides that they meet my criteria.

First, I started with a prime goal of trading options against dividend stocks.

Why dividend stocks?

Because if I get assigned to the stock, I will be OK to buy such stock and hold it as long as I will be able to sell it again and during that time I will be collecting dividends. Thus it is a win-win situation. Right?

However, not all of 50 or more dividend stocks in my dividend growth stock watch list are optionable and not all of them have options meeting my criteria to trade them.

So I narrowed my 50 stocks watch list to about 19 stocks which are good to trade them. Of course, this doesn’t mean that I trade them all. I trade only a hand full of them. I regularly scan them to make sure they meet my rules. I take out those which do not and add those which do.

And after those stocks are identified then the whole trading is just pure mechanical trading. It’s like one, two, three… trading. And I trade those stocks again and again as long as they keep to meet my rules.

 
And here is my watch list for June 2017:
 

Symbol
ABT
ADM
BAC
BMY
COP
EBAY
ETE
M
MDLZ
MGA
MOS
MU
NUE
OIH
STX
TECK
WFM
X
YHOO

 




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Posted by Martin June 01, 2017
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May 2017 options income


May 2017 is over and it is time to report how we did with our options trading.

My plan for April 2017 was to make $1,966.19 dollars of income.

This month we weren’t able to reach the goal as we received only $1,475.59 dollars of option income.

Overall, May 2017 showed us a stagnation in our trading account. We struggled to grow the account despite opening new trades as will be seen below. Our equity grew, our cash value grew, but our net-liq went down this month. Also our income lacked behind the plan.

 

 · Options Trading Strategy

 

Over time since I learned trading options I went from trading spreads, single naked puts, later added naked calls and landed on trading strangles. Many people are afraid trading strangles. They do not know how to protect themselves when having naked calls trades. I was afraid too until I found out that it is not as dangerous as others say.

I am not saying that there is no risk, but if you know how to handle the risk, you will be able to navigate through strangles with no fear.

Over time I developed my own rules and strategy. You can review it in this section.
 


 


 

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 · Options Trading Results

 

Our trading in May 2017 disappointed as we struggled to grow the account and made only $1,475.59 dollars which was only 6.12% monthly revenue on invested capital (ROC).

Last year we could achieve 10% ROC or more. Our account average is at 9.45% ROC (better than in April) but still lacking to maintain the original growth.

However, we increased our investments by adding more new trades (we invested approx. 8.17% more of available cash this month) and our equity grew by 3.53%, this had no impact on our net-liq as the net liquidation value actually dropped by 2.63%.

We have a few trades ending soon and if Mr. Market stays calm in the next two months we should be able to close a few significant trades for a profit, such as our Amazon earnings play trade. This should have a positive impact on our net liquidation value and we should start seeing some growth again.
 

Below you can see all data and progress in our trading account:
 

Month-to-moth trading results

Trading results
 

(The red dots on the chart indicate income estimate, blue bars actual earnings.)
 

In May 2017 we made: 27 trades
Total trades in 2017: 207 trades
May 2017 options trading income: $1,475.59 (43.07%)
2017 portfolio Net-Liq (net)*: $3,895.19 (-8.48%)
2017 portfolio Net-Liq (gross)*: $24,104.72 (-2.63%)
2017 portfolio Cash Value (net)*: $31,660.19 (7.34%)
2017 portfolio Cash Value (gross)*: $51,869.72 (3.75%)
2017 portfolio Equity (net)*: $35,913.19 (6.54%)
2017 portfolio Equity (gross)*: $56,122.72 (3.53%)
2017 Liability/Debt: $20,209.53 (-1.42%)
2017 overall trading account result: 18.46%

* The numbers marked as “net” and “gross” are results with loan (liability) included (gross) or excluded (net).
 

 

 

We are presenting you our month-to-month business performance review:

 

In May we traded only a few trades, mostly roll overs of trades which didn’t go well.

That was the main reason behind our net liquidation value stagnation. Many bad trades being moved and rolled and running out of available cash to trade. However, we opened and maintaind the following trades:
 


Amazon (AMZN) was our earnings play we opened originally in February 2017. The play didn’t go as expected and the stock basically crashed. We opened only a bull put spread and when the stock smashed below both of our puts I decided to roll the trades rather that closing them for a full loss.

And I do not complain. It was a great trade and I still believe, this trade will end as a great winner. The best trade in 2017, in fact.

After I rolled the put spreads, I added calls converting the trade to an Iron Condor. This could have been a mistake as the stock recovered sharply and since then continued higher. I had to roll the entire Condor several times to keep the call side out of the money. In the end, I converted one call spread into a put spread so I do not have to do anything with it anymore.

I still have a second call spread which will give me a bigger headache in the near future and if the stock continues this impressive rally, I might do the same conversion as I did with the first trade.
 
Here is the trade review:

 
AMZN earnings play – TRADE OPEN
 


In May we opened two new strangles against Teck Reasources (TECK). It is quite cheap to trade this stock as the entire strangle requires only around $200 buying power. As long as it continues offering an interesting premium (and volatility) I plan on trading this stock.

In fact, I plan on creating a ladder using this stock and open strangles with expiration in every week.

 
Here are the trade reviews:

 
TECK strangle trade – TRADE OPEN
TECK strangle trade #2 – TRADE OPEN
 

We also have trades against STX, X, ESV, BMY, WYNN,LULU, and MNK which I haven’t reported regularly in this blog and I plan on doing so later as these trades end or I open new ones.

 

 · Our Options Trading April 2017 rank

 

In April 2017 (last month) we ranked #1 in dividend/options income in Easy Dividend ranking chart run by Christopher (Chri) from Austria which was a great place to achieve and I am proud to reach such place.

It is because I do not expect ranking well for May.

I will be happy if we achieve a fifth or sixth place for May 2017. But the results for May are not yet available, so we have to wait.

You can review the Revenue Community chart in April 2017 – Community Edition results here.

 

 · Options Trading June 2017 outlook

 

We expect the stock market to go higher in the next month as the US economy keeps improving. It may be a choppy move though as there are many expectations on Trump delivering his promises on tax cuts, for example, which may not happen. That may send the stocks down.

But as we could see in the recent past every selloff got immediately bought back as could be seen in the following chart:

 
SPX trend
 

I expect this trend to continue and I also expect the market showing some decent swings. And that’s what I like to see as it is what will make you money. And investors know that the economy is growing and they will be ready to buy in every move down.

As Robert Shiller himself mentioned that this market can go even higher. More than 50% higher. If so, we may see S&P 500 reaching 3,500 level in the future.

You can continue reading my outlook for the next market move in my previous post about our dividend investing results.

 
What do you think about options trading? Do you trade options to generate income as a main trading strategy or just a dividend income supplement? Tell us about your trading and results!




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Posted by Martin May 30, 2017
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ESV – a trade which gives me a headache


Last year I opened a put trade against Ensco plc (ESV) stock. Back then, it looked like a no brainer trade.

The trade provided a good premium and it seemed I would be out quickly.

Since then the trade went south and I have a hard time to get out.

Originally, I sold 11 strike puts. After a few weeks the stock went down and I let the puts assign. Since then the stock traded below $11 and there was only a short time window when it reached $12 again and, fortunately, I got rid the shares selling them.

I should have closed my positions too.

But that is all in the land of coulda, woulda, shoulda. I didn’t do it but rather decided to play this trade until the very end.

And I kept rolling this trade and also adding calls.

 
As of today I own the following trades against ESV:
 

-2 ESV Dec15 9.00 put
-2 ESV Dec15 11.00 call
 

and

 
-6 ESV Jan19 8.00 put
-6 ESV Jan19 13.00 call
 

Today, the 13 strike calls closed for 0.05 debit. Since the stock continues down, I decided to roll the puts lower:

 
BTC 6 ESV Jan19 8.00 put
STO 6 ESV Jan19 7.00 put
STO 6 ESV Jan19 7.00 call
 
@ 0.10 credit limit
 

 
Ensco ESV
 

The credit received is nothing extra and the overall trade will most likely end with zeroes, but the main goal for this trade was to lower the puts down even if the credit will be insignificant. The other positive I see here is that I could keep the trade in January and we didn’t have to roll it into the next available expiration day which was January 2019 and that is something I didn’t want.

Now we have a straddle and if the stock goes down or up I will roll it gain be it either puts down or calls up.

We will see when we get there. Now it is a waiting time.
 




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