But the AH chart looks like an end of the world. Blame guidance which made WS over-reacting (as usual).
This is a bad blow to my account. Hope, this shit will recover by tomorrow morning opening although I have very low expectations that it would happen. I think this crap will continue lower. But who knows.
Last Q earnings the company beat expectations and it skyrocketed back to 72 a share. This earnings a slight miss and it swamped. What a joke.
But I should have dumped my shares when it jumped up above $70 a share and not holding the stock! Stupid me!
Because surprisingly, it is not the options in my account which are hurting me now. It is the f** stock!
As you can see, even my puts are still making me money! It is the stock which is now down by almost $2,000 dollars which blew my account now. Another reason for not trading high flying non-dividend stocks. If this happens to a dividend stock, you will at least get paid for holding the stock. With LULU, I get nothing.
Wow! And wow again. If you start predicting the market, this is what you get. I am glad I stopped predicting the market but focus on trading and adjusting those trades.
But sometimes this can backfire too.
Like my US Steel (X) trades which recently the stock acted so violently that all my positions in X were totally destroyed. And I mean out of order.
What happened? First the stock sold hard, so I rolled worthless out of the money calls into the in the money calls so I could pull my deep in the money puts up the hole. But then the stock rallied again making my calls a problem instead of a help.
Now I have to work the calls out of the hole.
But, this is still a part of my strategy. Although it can be frustrating at times.
The next thing I did yesterday was that I somewhat liquidated a small portion of my WYNN contracts.
At the beginning of the month I had 6 strangles against WYNN with January 2019 expiration. Yes, you read it correctly. It is an almost two year contract.
Last year, I made $20,000 on WYNN, but in December 2016 WYNN bit me hard. A few very hard sell offs flushed my 100 strike puts to the sewer. And my net-liq with it.
I was more than $6,000 dollars in a margin call. I had to act. I took some losses by closing a few contracts and the remaining ones I rolled. And I rolled them several time until I ended in January 2019 expiration day.
I ended with 6 strangles and very good strikes – 80 strike puts and 100 strike calls.
I thought, this would safe and wide enough spread so the stock could do whatever it wanted for the next two years.
I still managed to lower my strikes on the puts side even lower, down to 77.50 puts, and rolling calls from 100 to 125 strike. I was also able to close 2 contracts at the beginning of March 2017. I was left with 4 contracts total.
It cost me around $2,600 dollars. I expected March to be a losing month. Yet, I continued trading and made all that loss back! I made the entire $2,600 plus $300 on top of it!
This makes me happy as I haven’t expected this at all.
Yet soon I was hit by WYNN again. The stock, which was trading in 2 years long channel of 100 – 80 price suddenly broke up from that long consolidation. The rally quickly endangered my 125 calls.
I managed to roll the entire trade higher – calls to 140 strikes but I had to roll my puts higher too to 100 strike, 105 strike and 115 strike. This helped me to unload another call contract yesterday for a small loss which is still covered by money I made this month.
It still baffles me as my WYNN trade blocks over $15,000 dollars of my buying power! It is dead money!
Now, I have 3 call contracts and 4 put contracts. Still blocking a lot of cash!
Next month, I plan on doing the same thing as this month. I will close another either put or call contract for a loss and will trade it to offset that loss.
SPX opened down significantly as investors digested Trump’s healthcare failure. At least that’s what headlines were showing this morning.
Evidently, they had great digesting today as the markets recovered most of the losses and went from 0.98% loss to about 0.10% at the end of the day. Let’s just hope that they will not suffer from diarrhea tomorrow.
The Trumpfear seems to be premature and over-reaction.
I took advantage of the move and adjusted a bunch of my trades (see the picture below). This brings my trading results to be positive for March as at the beginning of the month, I closed a trade for a loss hoping I would be able to offset the loss with other trades. It just happened. I realized $2,600 loss on March 1st closing the bad trade.
Today, I am slightly in green. If nothing changes, I should be finishing this month with around $300 dollars profit. Basically going from negative $2,600 to $300 positive. Although, I would love to see the entire amount as my monthly gain, I am happy. I got rid of a bad trade and still finish in green.
Lately, I was quite busy and actually not in a good mood, so I wasn’t publishing my trade adjustments against US Steel (X) and Seagate Technology (STX).
I was able to roll those trades quite successfully last week although both stocks were losing after a big selloff in Wall Street.
And tomorrow, it seems we will see yet another selling as fear returned back to the market. It was quite obvious to me that Trump is not going to win nor deliver any of his promises. He thinks it is a piece of cake to govern the country of 300 million people.
However, I was riding the optimism others were happily sharing.
Looks like, after Trump’s loss of repealing Obamacare the same people now are in fear that he might have the same issues to deliver his other promises.
Unless Trump becomes a supreme and only rule of the United States, a sole dictator (who he for sure is and thanks God for the Constitution!) he has to negotiate. And although he makes things look like he is a winner, he actually is not.
He calls himself a great negotiator who masters an art of a deal, but a recent video I saw today following him since 1975 unto 1990 show that he actually was quite bad in making deals.
Watch for yourself and make your own judgment.
So, the optimism seems to be gone for some time and we may see some selling coming.
It may be a good thing. I depends where you are and what your plans are. Mine are well defined. I trade options and invest into dividend stocks. With options I can trade both sides. But I trade strangles and large and violent moves are not very strangles friendly.
Yet last week I could roll my trades however, my put sides are still in the money and in danger. What danger? A danger of assignment. The deeper they get the greater danger of early assignment. If this continues, I will have to start enlarging my expiration time from weekly to two or three weeks. I will see next week. If selling takes over, it will be a sure thing.
As a dividend investor I actually welcome this selling. I will be reinvesting my dividends and buying more shares for less. What a gift!
I still look at my dividend investing from the next 25 years investing horizon perspective. And this selling, or even Trump rally is quite insignificant.
For some time I have been recording events in the S&P 500 chart. Just for curiosity. I do not do it to predict the market, I do not do it to look for reasons and excuses. I do it just as a time stamp. I want to look back and see how futile we investors and traders as a crowd sometimes are:
This “event recording” became my new pet. When I see all the talking heads predicting the disaster and it doesn’t happen I am laughing. And also when they are too optimistic, predicting new highs, market going to the moon and it crashes, I am also laughing.
Tomorrow we may see Trumpfear in the market.
I will be rolling my existing trades lower and manage them through the turmoils in my trading account. In my ROTH I will continue holding my dividend stocks and trade options (Iron Condors, cash secured puts, covered calls).
I wish you all success in coming week. Stay calm and do not panic. There is no reason for it. There never will be and never has.
Last week, I made an adjustment to the Seagate Technology (STX) when the stock suddenly dropped.
Maybe, I was a bit hasty adjusting the trade as the stock seemed to recover the losses. The sell off happened upon a downgrade from some so-called analyst who thought he could predict the future and all those clowns at Wall Street started hastily selling.
Normally, if this was my regular strangle trade I would do nothing about the trade and wait but this was a triple play trade where I didn’t want assignment of the puts at $48.50 a share when the stock dropped to $45 a share.
So I rolled.
I rolled puts down to $48.00 and sold calls at 46.50 strike. By the end of Friday last week, the stock recovered to $47.28…
Maybe, I was too in rush adjusting the trade.
Now my calls were in the money and if the stock continued higher the following week I ran into a risk of having those calls early assigned. That’s not what I wanted.
Thus, I placed a roll trade for Monday morning to adjust the trade once again.
This adjustment however required additional margin requirement. The idea was to leave the existing 48.00 puts untouched. I hoped for them to either expire worthless (should the stock continue higher), let them assign (should the stock stay near the money), or roll them into the next week (should the stock continue down).
Then, we rolled our calls into March 24 expiration and two strikes OTM and sell new OTM puts. Here is the trade and existing trade:
-1 STX Mar17 48.00 put (existing trade to remain) BTC 1 STX Mar17 46.50 call (existing calls to be rolled) STO 1 STX Mar24 48.00 call (new rolled calls) STO 1 STX Mar24 46.50 put (sold new puts to create a covered strangle) @ 38.00 credit limit DAY
If everything goes well, I expect the original put either expire or get assigned this week. If it expires or I have to roll it, I will buy 100 shares of STX outright. Next week, hopefully the calls will get assigned (and we will sell the shares) and the new puts expire worthless. But as of now we have to wait for the results.
Hope this adjustment would work well.
Here is the previous post about the trade which we have adjusted today:
Many future planner advisers who were trained to sell you their 401k plans to get their share of fees will be outraged if you tell them that 401k plans is a legal way how the financial industry is robbing us from our money and that there are better ways to save money for retirement.
It is stunning how far this industry gambling with our future could go convincing you that you are basically an idiot who cannot take care of his own money so you need them to do it for you.
I bet you have heard many times that Americans have nothing saved, or haven’t saved enough for retirement. While a few decades ago, having saved 50,000 to 100,000 dollars could be enough for retirement, today they tell you that you have to amaze million of dollars to retire. Have you ever tried those retirement calculators online? What was the number they threw at you? One million dollars? Three million dollars?
And even if you save every penny during your productive life, do not buy a house, do not buy a car, do not start a family, but save everything and thanks to enormous, hidden, and compounded fees, and their poor performance you find yourself 30 years later broke, they will be bold in telling you that you haven’t saved enough.
There are many myths people are told to believe about their 401k plans. Some are so outrageous that I can’t believe it didn’t come to me earlier what lies we are told when it goes about our future well being.
Let’s review a few myths and lies we are regularly told to believe and which made me to stop contributing to my 401k.
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.
I trade primarily weekly strangles against dividend stocks. A strangle is a strategy where a trader sells OTM naked puts and OTM naked calls with the same expiration day. It is a neutral strategy, so you want the underlying stock to ideally stay between the two strikes.
It is though a manageable trade even when the stock is not staying in between the strikes. You can successfully trade strangles when the stock goes down in a decent decline or up in a decent upward move.
What hurts strangles a lot is a sudden strong (violent) move either direction. Managing strangles when the prices drops suddenly becomes a hard work. It is doable, but it can be frustrating.
Here are my rules for trading strangles:
I trade aggressive strikes (one or two strikes near the money).
I also trade strikes based on expected move for the given expiration day.
I trade weeklys only (longer terms only when rolling and roll is not possible for the next week).
A stock to trade must be a dividend stock (I want to get paid if I get assigned and have to hold the stock).
A stock to trade must have weekly options (I do not want to give Mr. Market too much time to go against me).
A margin requirement for a weekly strangle trade must be less than $1,000 dollars (I want the most bang for as little money as possible).
A premium for a new weekly strangle trade must be 0.40 or $40 or more.
With the rules set above I trade every week. Every Thursday, Friday, or Monday I open near the money strangle and as the stock moves one direction, I close the untouched side for 0.05 debit and roll the touched side down (if puts) or up (if calls).
Therefore, I am closing winners for profit and roll losers to avoid a loss.
By rolling, I try to improve the losing trade and make it a winner again.
Over the years I worked on my strategy to make it mechanical as much as possible to eliminate any emotions or second guessing.
I know what I want to trade, how I want to trade it, and when to trade it. And I do it every week. And I do always the same thing every week, same trade methodology, and same execution process.
This allows me to ignore any noise in the market and not tremble in fear “what if I open a trade and it goes against me”.
Your new trading account will come with a paper money account and will be immediately funded with $5,000 of virtual money for you to test the options trading and if you join our trading group on Facebook you can get a guidance, ideas, and trading education. Before you commit your real hard-earned money you can use the virtual account to test our strategies, learn, and ask all questions you need to learn options trading.
Once you learn and get ready, start trading live account and earn monthly income similar to ours. And we will be happy to assist you with that.
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
(The red dots on the chart indicate income estimate, blue bars actual earnings.)
In February 2017 we made:
Total trades in 2017:
February 2017 options trading income:
2017 portfolio Net-Liq (net)*:
2017 portfolio Net-Liq (gross)*:
2017 portfolio Cash Value (net)*:
2017 portfolio Cash Value (gross)*:
2017 portfolio Equity (net)*:
2017 portfolio Equity (gross)*:
2017 overall trading account result:
* 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.
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.
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:
Today’s adjustment credit:
Current stock price:
Break even price: if assigned at $48.00
Here is the previous post about the trade which we have adjusted today: