Posted by Martin March 10, 2017
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February 2017 options income


February 2017 trading went well. I opened a few very profitable trades which allowed me to close some “skeletons in the closet” mainly WYNN trades.

That meant taking a loss but I am happy about it because that helped me to reduce exposure in that stock and still be profitable.

Again, I expected $1,605 dollars income in February.

I am happy to see that we were able to make $2,213.10 dollars of option income.

 

 · 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

 

As stated above our trading in January was really great and we made $2,213.10 dollars.

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 February 2017 we made: 48 trades
Total trades in 2017: 94 trades
February 2017 options trading income: $2,213.10 (64.59%)
2017 portfolio Net-Liq (net)*: $4,020.72 (-12.22%)
2017 portfolio Net-Liq (gross)*: $24,520.72 (-2.90%)
2017 portfolio Cash Value (net)*: $23,432.72 (-5.21%)
2017 portfolio Cash Value (gross)*: $43,932.72 (-2.85%)
2017 portfolio Equity (net)*: $31,984.72 (-4.81%)
2017 portfolio Equity (gross)*: $52,484.72 (-2.99%)
2017 Liability/Debt: $20,500.00 (0.00%)
2017 overall trading account result: +23.40%

* 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:


 

Or February 2017 trading was successful and we made enough money to pay off the debt and grow our account.

 

 · Options Trading March 2017 outlook

 

I am still optimistic as far as the entire market performance.

Recently, I have read a report originally provided by Gallup survey and published at Stansberry Research Report citing that currently HALF of Americans don’t own any stocks, at all and that global investors sit on $70 TRILLION dollars cash (source: Blackrock President, Rob Kapito, Reuters)

That is a lot of potential prop for the market.

Many investors and traders I follow became worried lately about the market. They say that the stock market has been rising for 8 years and they think it can’t run much higher.

They think it’s up over the last few months because of the “Trump Bump.” But this is not how bull markets end. Bull markets do not end when so much money is on the sidelines.

Bull markets end when everyone is invested… and there’s no one left to buy. And that’s precisely why they end… because with no one left to buy, prices have nowhere to go but down. (Stansberry Research Report)

When investors, currently sitting on a cash, start panic buying that would be the time to start being conservative and moving into cash. We are not yet there.
 

Nevertheless, our goal for March will be reducing exposure and increasing cash. I must admit that we are still over-invested and that means I am breaking the rules of trading small!

This can be seen on our open trades (Inventory) as we increased our inventory by $6,965.80 from January $34,444.90 to February $41,410.70. This had impact to our net-liq and overall performance since the trades (Amazon failed earnings play) are still on and they will end in six months. Until then they will impact our net-liq value.

However, we have a few trades which are about to end and they will help boosting our performance. Then we will stick strictly to our strategy as described above.

This is important for us as our account currently has a potential of trading for a living; if we could successfully reduce the exposure to our technically dead trades and could move the money to our current strategy.

Out of $44,000 dollar account (cash) we can trade only $15,000. The rest of the money is tied to bad trades we had to roll further away into long term expiration (bad trades in 2016 mostly against WYNN, LULU, and MNK which happened due to a mistake in our allowed trading calculations and I over-traded the account).

Our outlook for March income is however very conservative. I think, I will not be able to reach the goal income for March which is $1,717.35 dollars. I think we will be negative or around zero income in March. The reason is further unloading bad trades (WYNN) early in March and I do not plan on offsetting this loss. But we will see at the end of the month. There may be a good opportunity trade which I may take and offset all the loss.

Last thing I would like to add to this report is that I will posting our trades in this blog too. As of now, I was posting them in our Facebook group and to email subscribers only.

At the end I will then list a summary of those trades here in the report for your review. This will however happen in the March report.

 
What do you think about options trading?




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Posted by Martin March 10, 2017
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Third US Steel (X) strangle trade adjustment


I have three strangle trades with X as underlying. Two of the trades we already rolled into the next week. Now was the time to roll the last one since the stock continued sliding down.
 
 

Here is a trade we had:
 

-3 X Mar10 37.50 calls
-3 X Mar10 40.50 puts
 

As the stock continued sliding and expiration was approaching I decided to roll the trade as soon as our calls closed.

 
First, our 37.50 calls got closed:

BTC 3 X Mar10 37.50 calls @ 0.05 debit
 

Once we were cleared and had only puts on, I rolled them:
 

BTC 3 X Mar10 40.50 puts
STO 3 X Mar17 39.50 puts
STO 3 X Mar17 35.50 calls
@ 0.22 credit limit day
 

 
X rolling
 

For now, the trade is safe again until the next week. And again, the strategy to roll this trade is same as before.

If the stock continues lower, our new calls will end out of the money again, will be closed for 0.05 debit and we will roll our puts down again.

If the stock goes higher, we may still roll our puts lower, or we may start rolling calls higher and keep puts where they are. But this will all depend on the stock price action next week.
 
 




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Posted by Martin March 09, 2017
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Seagate Technology (STX) triple play trade adjustment after stock drop


You can predict the market all day long and yet you will end up 50% chance of being wrong. Sometimes you will be wrong right at the beginning of the trade.

And that is a reason why I do not predict the market or stocks’ move.

You plan a trade, set expectations, and everything runs perfect. Until it doesn’t.

STX opened more than 2 dollars down and dropped all the way down to 45 dollars. That wasn’t a price action I would like to see when playing the triple play trades.

I opened a new strangle with 48.50 puts and 50.50 calls and my intention was to let the puts assign and capture the dividend.

After today’s sell off I didn’t like it and didn’t want to be assigned at 48.50 when the stock is trading at $45 a share (although by the end of the day the stock recovered a bit)!

But it happened and these are the events you will never be able to predict. Our 48.50 puts are now ITM and our calls are worthless.

We decided to adjust the trade.
 

First, we closed our calls:
 

BTC 1 STX Mar17 50.50 calls @ 0.04 debit
 

Then we rolled our puts lower and sold new, lower calls too:
 

BTC 1 STX Mar17 48.50 put
STO 1 STX Mar17 48.00 put
STO 1 STX Mar17 46.50 calls
@ 0.15 credit limit day
 

This adjustment would require more attention and more adjustments in the near future.

 
X rolling
 

Our calls are now at the money which is OK with me and I am prepared to roll them if they get in the money.

If the stock starts recovering, I may leave the puts at the new strike ($48.00) assigned next week and just manage calls using strangles and later covered strangles.

If the stock stays where it is or even continues falling during the rest of this week or next week, I may choose the following trade adjustments:
 

1) Abandon the triple play trade and continue treating the trade as a strangle (and avoid assignment).
 
2) Still let the trade go as a triple play, but roll the puts away and lower (not letting them assign); and buy shares outright at a lot lower price.
 
3) After assignment or purchase I would continue as per the original plan and sell covered calls.
 

Some investors from our Facebook Group asked me if I knew why STX dropped so hard today.

I do not care much what’s going on or why the stock dropped so much. I may find out later during the day or next day what caused this but I do not care for the reasons. I care about the impact this could have on our trade, our plan for the trade, and how I will be adjusting the trade.

The balance of this trade is as follow:
 

Original credit received: $117.00
Today’s adjustment credit: $11.00
Expected dividend: $68.00
Current stock price: $46.68
Break even price:
if assigned at $48.00
$46.04

 

Here is the previous post about the trade which we have adjusted today:
 
STX dividend capture – triple play Published 2017/03/07
 




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Posted by Martin March 09, 2017
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X strangle adjustment


Our calls from the next week trade with 38.50 strike got closed for 0.05 debit right now. We are left with 37.00 puts available to be rolled.

We will roll the puts into the next week and sell new calls against it to create a new strangle. Here is the trade we will be doing:
 

BTC 1 X Mar10 37.00 put
STO 1 X Mar17 35.50 put
STO 1 X Mar17 37.00 call
@ 0.54 credit limit DAY
 

We again moved our puts from in the money to out of the money, sold new out of the money calls and collected credit doing so. Our trade is again in good shape for the next week expiration.

 
X rolling
 

I usually open near the money strangle and as the stock moves one direction, I close the untouched side for zero-zero-nothing and roll the touched side down (if puts) or up (if calls). So I am closing winners and roll losers and try to improve them to make them winners next time.

So in this trade, calls were winners (closed them worthless) and rolled puts (loser) from ITM into OTM so i improved the trade.

If the stock continues down next week and the puts will again be losers and calls the winners, I will close calls for nothing and roll ITM puts down to make them OTM again.

If however the stock reverses and my calls become losers and puts winners, I will reverse this process, close puts for nothing, and roll calls higher to make them OTM again (and sell new puts against it.

And here is the original trade which we rolled today.
 




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Posted by Martin March 08, 2017
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US steel (X) strangle trade roll


Another of my strangle trade against US Steel (X) got ready for a roll.

As my calls against US Steel (X) got closed today, I decided to roll the puts into the next week:
 

BTC 1 X Mar3 38.50 put
STO 1 X Mar 17 37.50 put
STO 1 X Mar17 37.00 call
@ 0.67 credit limit DAY
 

The trade executed and we rolled the puts into the next week.
 

X rolling




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Posted by Martin March 07, 2017
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STX dividend capture – triple play


We are opening a new triple play – dividend capture trade against STX (Seagate technology) stock.

The stock has ex-dividend on March 20th so we must become owners of the stock before that day. This goes perfectly with the March 17th options expiration. We can sell naked (or cash secured) puts, collect premium, and let the puts expire in the money, get assigned to the stock and become owners on Saturday, March 18th. We then will be eligible to collect dividends.

The stock pays 0.68 quarterly dividend, so our 100 shares would pay $68 additional dollars.

I decided to sell naked puts but also a naked calls, high enough for the calls to expire OTM:
 

STO 1 STX Mar17 48.50 put
STO 1 STX Mar17 50.50 call
@ 1.17 credit limit DAY
 

We collected 0.92 dollars for the puts side and 0.25 dollars for the call side.

We will let the calls expire OTM (if the stock rallies hard, we will roll them) and we will let our puts expire OTM and get assigned to the stock. If the stock moves higher, we may roll the puts higher too or let them expire OTM and buy the stock outright.
 

STX triple play 1

STX triple play 2
 

 




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Posted by Martin March 04, 2017
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February 2017 dividend income


We are once again at the end of the month. I still feel like the month just started and it is time to report our achievements in dividend investing (and options trading which I will publish in my next post).

This month, we received $87.79 dollars in dividends. I am happy about it for two reasons:

1) It was more dividends than what we received last month!

2) I checked my last year February dividend income, and February is typically my weak month! Last February, I made $57.42 in dividends, this month it was $87.79 dollars!

Definitely, this month was a success!

Another very positive aspect of our dividend portfolio is the dividend growth. Our annual dividend income increased to $1,062.66. This is a great increase compared to $883.48 annual dividend income from 2016.

 

 · ROTH IRA investing/trading strategy

 

Here is my investing & trading strategy I use in my IRA account. If you want to read about this strategy

 

 · ROTH IRA dividend income

 

As I mentioned above my dividend income was better than last year. I made $87.13 in dividends and all dividends were reinvested back to the companies which generated them.

 
Here are some numbers:
 
Dividend Income = $87.79 (account value = $22,205.80 +3.39%)
The account is up 6.88% for the year.

 

 
Monthly dividend Income:

 

 
This month, we purchased 100 shares of Energy Transfer Equity, L.P. (ETE) using triple play strategy. We sold cash secured puts and got assigned to the stock.

Now we are selling covered calls.

 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · ROTH IRA options income

 

As I mentioned above we trade options in our ROTH IRA account to generate income which could be re-invested into dividend growth stocks.

We are in an “accumulation phase” when we deposit our sparse contributions of $50.00 dollars monthly and keep that cash in the account to trade cash secured options with it. This way we generate income from the options.

As of today, we only have approx. $2,843.90 dollars in ROTH IRA available for options trading. The goal in 2017 is to reach $6,000 available dollars for options trading.

 
With that money available for trading, in January 2017, we generated $35.00 dollars income from options 1.23% return on invested capital.

 

 

This month, we traded options using stocks Ensco plc (ESV) and Energy Transfer Equity, L.P. (ETE).

For ETE stock we used a triple play – dividend capture strategy we described in this post. Currently, we purchased the stock to capture the dividend. The dividend ex-day will be in February 3. As soon as we purchased the stock via cash secured puts, we sold a new covered call. If the stock stays below our covered call strike ($19.00) then we should capture the dividend (if the stock stays above the strike we may get an early assignment, although I do not expect it since we trade long term contracts).

With all collected premiums our cost basis is $17.47 per share. We got assigned at $19.00 a share, expecting 0.28 a share dividend and hopefully sell the stock at $19.00 a share. This would leave us with a nice $153 cash or 9.53% profit or 83.98% annualized return.

The play is still under progress so I will be able to report it next month.

 

 · Our dividend investing outlook

 

The stock market rallied even more since January. The more the market rallies the more investors become nervous and predicting stock market crash. More and more I see people talking about the market to be too expensive.

But are the stocks really expensive? And even if so, how much can you be sure that the stocks cannot be even more expensive?

Many investors who are afraid about the market today however forget underlying fundamentals. Is the growth justified?

In my opinion it is justified. The US economy is growing at aggregate EPS growth rate of +4.90% rate. The last earnings season showed that all sectors except energy grew:

Consumer Discretionary +6.29%
Financials +5.85%
Health Care +7.95%
Technology +8.58%
Consumer Staples +6.54%
Industrials +5.45%
Materials +5.27%
Energy -4.86%
Utilities +4.63%
S&P 500 +5.58%

Can this expensive market be more expensive?

Yes, it still can be more expensive. On the way up, we will of course see many consolidations and pullbacks. But as of now, and the growing US economy, a large crisis and sell off is unlikely.

Here is another view at the market.

Let’s take a look at today’s S&P 500 TTM P/E the current multiple is at approx. 22 PE. According the the chart below, the stock market reached a lot higher levels in the past such as 30 PE multiple in 1999 – 2001 or 28 multiple PE in 2009 -2010.

 
S&P 500 P/E
Source: Bloomberg
 

The bottom line is that EPS growth data point to higher market growth. The US economy is also growing and that may be the catalyst for further growth of the market. There fore the already “expensive” market may become much more expensive!

Let me know what you think!
 




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Posted by Martin March 03, 2017
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X trade adjustment


We have a three trades using US Steel (X) as underlying stock. The stock is not one I would normally buy as a long term investment, but it is a great stock to trade options against it.

As of today, we have 3 March 10 inverted strangle contract, 1 March 10 strangle, and 1 March 3 strangle. This post is to show rolling the last strangle into the next week.

 
Our X trade is in ideal spot to be adjusted. So we will be rolling into the next week. Since both legs are in the money, we will be rolling both legs together:

 
BTC 1 X Mar3 38.00 put
BTC 1 X Mar3 37.50 call
STO 1 X Mar10 37.00 put
STO 1 X Mar10 38.50 call
 
@ 0.65 credit limit day

 
To roll this trade, we collected $65 dollars credit and now we have the following trades expiring next Friday:
 
(3) X March 10 40.50p / 37.50c inverted strangle
(1) X March 10 38.50p / 40.00c strangle
(1) X March 10 37.00p / 38.50c strangle
 

 
X trade adjusmtent
 




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Posted by Guest February 20, 2017
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How To Make The Most Out Of Your Budget For 2017


There are so many ways in which you can make the most out of your budget in 2017. From scrimping and saving all the way to investing there is something you can do in the New Year which will change your financial situation.

First of all you need to set yourself a budget and organize your finances in a way that makes it easy for everyone. For example draw up a list every month, bills, childcare, car maintenance, home maintenance, food, extras and savings. Make sure you have the right amount set aside for your family for those needs. Once your money is organized in the right way then you can go about making the most of it.

 

 · Bills

 

Saving on bills isn’t easy but try to go with the cheapest phone company, electric company and heating company. Get offers from various places and change your contract. Sometimes this could save you an awful lot every year.

 

 · Maintenance

 

Every home and every car needs upkeep and sometimes it is more expensive than others. If you have sent your washing machine it to be fixed several times the previous year then think about investing in a new one. The same goes with cars, appliances and everyday things which you use.

 

 · Food

 

Most families throw away 60% of the food they buy. Find offers and promotions on household items and produce which you need and think about saving on them. Make smaller dinners, cook fresh produce which is cheaper and forget those TV dinners which are expensive and unhealthy.

 

 · Savings

 

When it comes to savings this is where you can make the biggest dent in your budget. Don’t just let your savings sit in one place but instead think about investing that hard earned money and turn it into even more money.

One of the most popular ways of investing savings is into online trading. Go with a trading platform like CMC markets who can teach you everything you need to know. Have a look into currency trading which is the simpler of choices or think about buying shares and stocks into various up and coming companies.

Although online trading holds its own risks there are plenty of advantages to it as well. In effect if you trade right, sensibly and with common sense you could be looking at doubling your savings in a minimal amount of time. You do have to be prepared for losses so make sure you have the cash to spare in case you get hit with something unexpected.

Make the most out of your budget in 2017 and look into ways that not only you can save money but make money too. It isn’t just about buying the cheaper pair or trainers but it is about being able to afford the expensive pair and the cheaper pair. Many successful millionaires literally have taken a dollar and turned it into a billion. This is through the choices they have made, the stocks they have bought and the investments in which they have used their money for. You can be like that too. Set yourself a goal, start to do the research and instead of looking at banks with the biggest interest rates start looking at trading platforms that have the most stocks available to buy.

If you aren’t sure about what online trading involves then think about joining a forum or even having a consultation with a mentor who can help you begin your trading journey. Aside from the fact that you can make the most out of your savings this way you can also make the most out of yourself. You can achieve and learn along the way and set up skills which you probably didn’t even think you had. Take on online trading today and never look back again. At the end of the day, there are two options available, you either lose it or you win it. Don’t forget it isn’t like gambling but instead it is making money through your logic, your choices, your research and your skills.

Have a look into different platforms that offer free trials if you don’t want to invest some of that cash just yet. Make a change for 2017 and be the change




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Why Investing in an Organic Farm is Profitable

Why Investing in an Organic Farm is Profitable

Why Investing in an Organic Farm is Profitable

 

The organic farming industry is one the fastest growing industries around the world. People who now know about the disadvantages of eating chemically treated foods are converting to the traditionally grown vegetables and fruits. Inorganic farming is not just harmful to the consumers; it is also adversely affecting the environment. This is because the non-organic growth of food does not allow the soil to naturally rehabilitate to grow food. Hence, more artificial fertilizers and pesticides are used, and the food grown out of those chemicals is highly toxic. Environmentalists are fighting hard to take a stand on farms like these to drop these unnatural methods and instead adopt the natural way of planting and growing crops.

On the contrary, the organic food industry seems to be grabbing everyone’s attention. Organically grown food is more expensive, sometimes as much as twice the price of inorganic food. Nevertheless, the industry has seen a rise in business and the market is growing at about 15 percent per year, in sharp contrast to the overall growth of food market which is only 3 percent per year. An even more interesting fact is that people are looking for online sources to purchase their daily foods instead of going to the farmer’s market.
Rising food prices and the growing demand for biofuel oil has attracted investors into investing in organic farms. A whole variety of investors wants to marginalize their profits by putting their money in this desirable market sector. Hedge funds, pension funds, private equity and much more have been involved to benefit from the farming business. Be it the organic meat industry, organic dairy or the organic crop industry, you will find a growing market for any of these produces.

Judy Lessler is an owner of Harland’s Creek Farm in Pittsboro, in North Carolina. She and other farmers in her community have had difficulties making a sale to the local subscribers. The farmers take advantage of the Community-Supported Agriculture (CSA) model to reach customers early in the year. These customers subscribe and pay early in the year which gives way to the farmers to have enough money to grow and maintain their crops. When the crop is ready for harvest it is delivered to the customers who had subscribed for the foods.

United Natural Food (UFNI) is one of the top distribution companies for natural and organic foods. It supplies its produce to major supermarkets and has built a trusted name for itself. Its sales have recently gained momentum and are expected to have a steady growth rate. Any stock broker looking to double the amount invested with a few years may look into buying its shares.

Similarly, Iroquois Valley farms are a finance company, which owns several private farmlands. It purchases the property and then leases out to the interested people to farm the land in an organic way. It owns a total of 30 organic farms which are spread all across the USA. This company typically encourages organic farming and does not in any way promote inorganic and artificial methods. This is why it only accepts applicants looking to run their farm in an organic way. The investors can buy in shares and reap the profits until their investment limit lasts. The land can then be sold to another potential buyer for the current land value.

Sprouts Farmers Market has been dubbed as having the best growth rates in the retail world. It has had great progress in the market and has enhanced its weekly sales average from $32 to $35. Although, as of now its sales are $17 million annually, but statistics point to the fact that if the company continues to grow steadily it can be $20 million yearly in the next 4 years. Any investor looking to gain higher profits and investing in a growing company can look to invest in this ever-growing business which has the really high potential of giving back to its investors.

Inorganic farming has become a business since the idea of artificially grown crops was put into practice. It is only a matter of time that the organic farming sector will see a rush of prospects from businesses hoping to buy a share in this part of the business. Organic farming’s main features are “natural” and “health” which is why it can be seen as a business that will only attract more consumers and more profit with the passage of time.




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