New Trade – Coca-Cola (KO) – put selling

New Trade - Coca-Cola (KO) - put selling

As I wrote in my last post, we had an expiration Frioday last week. I had two put selling trades in play which expired that day.

It was a put contract against the following stocks, which would bring me a monthly income:

Demand media (DMD) total gain from this trade: $41.21
Ferrellgas Partners LP (FGP) total gain from this contract: $101.21

February TOTAL: $142.42 (after commissions)

Today, I could open a new options trade. I looked which stocks could bring me the best premium and which of the contracts I could open with my current options buying power. Then I chose Coca-Cola (KO) company.

I sold 1 August contract and collected $115.00 in premiums (before commissions).

Trade detail

Here is the trade order I entered today morning:

02/24/2014 Sold 1 KO Aug 16 2014 36.0 Put @ 1.15

The trade executed and I collected my premium.

If you want to see my trades right when they execute, without waiting for me to report it here in this blog, you can follow my trades at My Trade website. I’ll start publishing my trades in real time. If you use Think or Swim platform, you will be able to copy those trades into your platform and trade them, if you want.

Happy Trading!
 
 




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Posted by Martin February 23, 2014
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New hosting

New hosting

Last Friday and this weekend has been quite busy for me. After many failures of my previous hosting, for example last Friday my websites were all down the whole day and partially in Saturday, I decided to change my host from Hostmonster to Webhostinghub.

I have been with Hostmonster for 7 years and they were great, but lately their services began faltering. Loading of this blog became slow, often their servers were down for many reasons (once they told me they had a fire in the server room, next it was a router failure, then DDoS attack, for which they shut down the entire server for the whole day.

I am not willing to take such unbreliability anymore and I decided to switch.

Right now, my blog is running on a new server with a new host. Hope you will all be able to see a rapidly improved loading time and less timeouts or errors or shut down blog.

Thank you all for visiting my blog!




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Options expiration tomorrow is a payday

Options expiration tomorrow is a payday

Although you receive your premium right at the moment when you sell your put option, you can actually claim that money at expiration of that contract. You have the cash, but it is blocked by the current market value of that contract. That’s why you want your option contract expire as quickly as possible. When the option starts losing value as it is getting close to expiration, it is the moment when you start seeing your money to materialize in your account.

Since I have a small account, I have to trade long term option contracts in order to make it worth it. I wish I could sell a front month and get the money every month, but I do not have enough cash for maintenance for multiple contracts.

If I want to sell a front month option against AT&T (T) for example, then by opening only one contract I can collect circa 30 cents and I will need circa $900 cash (or margin BP) for maintenance to cover this trade.

 
(MORE: Dividend Income Update – January 2014 – Dividend Mantra)
 

And that wouldn’t make sense collecting only 30 dollars (0.30 x 100), since commissions would eat up your gains. To avoid this you would have to open multiple contracts, for example ten of them.

With ten contracts I would collect $300 in premiums (0.30 x 10 x 100), but I would need $9000 for maintenance. And that’s what I currently do not have.

The only way to go around this with a small account is to sell a long term contract. If I sell 5 or 6 months contract in lieu of the front month, I have a chance, that I still can collect $300 in premiums and need only $900 for maintenance.

 
(MORE: January options expiration, naked puts in SLW, POT, RIG, CLF, LINE, GLW & more – Simply Puts)
 

But then I have to wait 5 – 6 months to claim the money to be finally mine.

To go around this obstacle I created my option time ladder. It is a strategy similar to a CD ladder when you sell options contracts so you have expiration literally every month. Yes, you will wait the first period for 5 – 6 months, but after that, you will have expirations every month. So, just keep it rolling the same way as in CD ladder.

And that’s what’s happening to me tomorrow. Not only it is my pay day as I will be able to claim my premiums as definitely mine, but it is also my first expiration in a ladder.

My ladder is not yet completed, but is set well to start my money rolling.

 
(MORE: Covered Calls and Cash Secured Puts – Covered Calls and Cash Secured Puts)
 

I will have two contracts expiring tomorrow:

Demand media (DMD) total gain from this trade: $41.21
Ferrellgas Partners LP (FGP) total gain from this contract: $101.21
February TOTAL: $142.42 (after commissions)

Not bad, considering that I collected $208.45 in dividends this month. With dividends and options, my total income for February is $350.87 and I am satisfied with this result.

That doesn’t mean I do not want to strive for more of course.

Once the option contracts expire tomorrow, I will be opening new contracts in the next empty months, see the print of my calendar as of today:

Calendar

As you can see, my next empty months are June, July, and August. Those are the months I will try to fill and collect as much in premiums as possible.
You can see my real time calendar in the calendar page.

How was your February financially?

 




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Posted by Martin February 18, 2014
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Janet Yellen wants more inflation, although she already has it


 

Janet Yellen told us at her first testimony in front of the lawmakers that she would likely continue in tapering as long as at least two criteria will be met.

The first one was employment rate dropping below 6.5% and the second was inflation rate. As per a few of her mentions the FED is targeting inflation at least at 2%.

For more than a year, the Fed’s policy committee has said it wouldn’t consider a hike in the short-term interest rate until unemployment dipped to 6.5 percent, as long as inflation didn’t exceed 2 percent. Today, with the jobless rate already down to 6.6 percent, Fed officials including Yellen are saying the 6.5 percent rate is not a “trigger” for raising rates. Christian Science Monitor? – by Mark Trumbull

As Real time Economics commentator Victoria McGrane points out: “She [Yellen] was a longstanding proponent of the Fed adopting a 2% inflation target, and was closely involved in the decision to do so in 2012.”

If we are supposed to believe it and Yellen and her cohorts are telling us that the inflation is that low, I must say, they are lying, or totally out of reality.

From those reviews it is apparent that government with Yellen believes that the US is currently experiencing inflation lower than 2% !! (per US Inflation rate website usinflation.org released on January 16, 2014 the official declared inflation was 1.5%).

Looks like those officials haven’t been shopping groceries or other necessities as middle class Americans are struggling every day. Otherwise they would experience themselves that the inflation is a lot higher than what they are telling us.

Watch the video above to find out a struggle by a mom of two teenage boys trying to keep her ends meet while when shopping realizing that basic things such as ground beef rose by staggering 16.8%, chicken by 18.4%, or college tuition up between 6-8%.

Where is the problem? It is a rigged measuring method. As is typical for politicians to make themselves look better they take any approach and any method to hide the reality and feed citizens with inaccurate data.

Typically inflation is calculated using CPI (consumer price index), which in the past tracked prices of food and energy. Today, these items are ignored:

In the U.S. food, along with energy are stripped out of our CPI, and the result is a more tame inflation reading. Notably, 30 years ago when Ronald Reagan entered the White House, it was precisely the spike in food and energy – ignored today – that had Reagan and others so concerned about inflation. “Low” U.S. Inflation Is a Function of Clever Calculation, by John Tamny

As our government has us for idiots and sheep we are supposed to believe in a recovery initiated by bigger spending instead of saving, bigger debt instead of paying it off, rising consumer prices, which would stimuli economy by encouraging spending, and zero interest rates destroying savers and truly encourage spending over savings.

Where did they get the idea that rising prices will encourage spending from is beyond my layman’s economy understanding. Since when rising prices encourage spending? Who would be willing to pay more money?

See what Peter Schiff has to say about this stupid policy of our FED and government:

 

 

In order to survive our government, as investors we need to look for investments which would protect us against this reckless policy. What are you doing to protect your hard earned cash?

 




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Posted by Martin February 17, 2014
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Democrats: Let’s Ban Profits!


 
At first, I wanted to post this video in my sidebar videos, but then I decided to post it here as a new post. It’s because this video deserves a short comment. Or actually not, no comments at all.

Watch for yourself what idiots are overtaking this country and turning it into a land of retarded idiots. I cannot say more about it.

When people realize, that thru the hard work, freedom, equal opportunities and free market they will prosper and as they will prosper, the entire society will prosper?

Some will never realize it.

America, no matter how screwed it may be, is still a country of freedom and equal opportunities which are unseen anywhere else. Believe me. I lived on both sides of the world and still remember and compare.

And here is the paradox.

As governments slowly, drop by drop, are taking our freedom, free market, and opportunities away thru regulations and laws, people fail to see it and blame somebody else. Usually they blame corporations, entrepreneurs, employers, businesses for all sorts of reasons and problems. The most common is that employers are paying them less and keeping all the profits for themselves and do not share and do not pay their fair share. And as much these people complain, that much they mistakenly turn into a government for help. And government wants to help by adding more regulations, more laws, and more restrictions. And those restrictions further limit freedoms of others (businesses, corporations, and entrepreneurs) so they stop hiring, trying to pay even less to save their business. But people do not see this vicious circle. They wish for more “help” from the government.

 




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Posted by Martin February 14, 2014
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Peter Schiff: “I think we’re in a depression”; Roberts, Admati and Whalen talk banking


 
Comcast is gobbling up its main competitor Time Warner Cable. The $45-billion-dollar deal gives Comcast the potential to completely reinvent the media landscape. By wiping out its major rival, Comcast would have 33 million cable subscribers, and just as many broadband users, giving it huge leeway in setting market prices, negotiating licensing fees, and deciding what shows you can watch. Erin Ade reports.

Afterwards, Peter Schiff is back on at Boom Bust. It’s no secret that investor and financial commentator Peter Schiff thinks the US Dollar is going to fall off a cliff and that he also thinks interest rates are going to skyrocket. But what does he make of the latest US economic figures? And what is his view on the outlook for the economy and investing? Schiff explains to Boom Bust’s Erin Ade.

Then, we give you a few of the best clips from this past week’s interviews, all of which concern banks. First is Paul Craig Roberts on bank bailouts, administered via quantitative easing. Then, Anat Admati gives a fresh take on the health of banks. And Chris Whalen finishes on how executives at large US banks have avoided accountability for the financial crisis.

Wrapping up with “In the Margins”, Erin Ade and Edward Harrison look at viewer feedback, answering questions from you, our viewers. We thank you for your comments and questions.
 
Boom Bust
 
 




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Last week markets performance – should we be worried?


SPY

 
Last week in Wall Street was somewhat stable and without any excessive hiccups. Yet it still was driven by fools. The recovery from the recent correction, if we can call it a correction, has been steady. As you can see in the chart above, we experienced a strong V shaped recovery.

A week ago, investors were selling stocks sharply and buying government bonds (as if they were supposed to save them) and this week they were selling bonds and buying stocks as they (probably) realized how foolish they were.

As Eric Jackson said in his interview for Breakout that what we just have experienced, was a great evidence of unreasonable irrationality of investors out there frantically selling one sort of assets and buying another sort of assets right after the storm and not prior to it. Dividend investors and value investors know this and they stay calm. They do not sell whenever a market shows a sign of weakness. On the contrary, many start buying.

It is a reason, why so many investors lose money at Wall Street rather than make them.

I must admit that in the past I acted the same way. Whenever a market coughed I started selling hoping to buy later at a lower price. Jesse Livermore, a legendary trader of the late 19th and early 20th century called such investors “suckers” and he happily deprived them from their money in bucket shops (small trading street brokers).

Other than that, markets were calmed down by Janet Yellen’s claim that she would continue in tapering of the QE. I think nobody believes it anymore; except talking heads. But will she really do it? Some commentators out there fail to acknowledge that she added a few conditions to tapering – positive data. Will we have positive data such as employment, GDP, etc.?

If you are a common citizen who live off his hard work, you know, how hard it is to make your living. If you are a politician, banker, an employee of a large brokerage as a trader, or a Hollywood star, you are probably out of touch of reality and do not understand, that we are far from recovery.

The markets are propped by QE and cheap money and not the real strong and sustainable economic data. And if QE ends, the rally dies with it. Should we be worried that something bigger is waiting just right behind the corner?

Once, I have heard that economic crisis come and go in cycles. We have circa 7 years of prosperity followed by 7 years of crisis, and so on. Where are we though? In which cycle?

The goal of every investor should be to make money, but also to protect them. Protect his gains and his principal. As a dividend investor my principal is not as important as my gains – dividends.

Make sure they are safe and you will prosper.

And what about my options? During falling markets, selling puts can be a bit of frustrating (worst case scenario, you will be assigned your long wanted dividend stocks). Lowering your strike price deeper out of the money can help you significantly in mitigating that frustration.

My accounts did very well last week and jumped up in value, check my charts on My Holdings page.

I have received nice dividends this week ($150.00 in all combined accounts) and next week we will be heading towards expiration Friday when two of my option contracts will expire worthless (unless a catastrophe happens). With that, I will be able to claim another $142.42 income from collected premium.

My all combined accounts are up by +7.41%

What about you? How do you protect your gains so you do not give them up when markets slump?
 
 




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Posted by Martin February 13, 2014
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Yellen’s plan for boosting the weak jobs market is no plan again


 
Our impotent government along with FED has been feeding us with fake job data since 2008. Everybody knows it, but nobody does anything about it.

Where are all those “shovel ready jobs” Obama was feeding the nation during 2012 election? Did he mean shovel ready hamburger flipping at McDonalds?

Our nation is suffering from goofed up recovery. We will pay a dire price for “too big to fail” theory and a fatal Keynesian misunderstanding of economy and beliefs that spending and increasing debt would improve our economy. Since when taking more debt to pay the old debt did ever help you or your family? What, then, makes our politicians to believe it will help the country?

It is a great example showing that our country is led by dilettantes who have never held a job, created a job, or run a company.

As Peter Schiff says, “we didn’t undergo a real recovery, but only postponed the catastrophe”. We just kicked the can further down the street, took away a future from our kids and spent it today on something what will fail anyway. Well, not you or me, but our politicians.

If you think otherwise, then why the job participation is slumping? Why job creation is worse than mediocre? Why we have a hidden inflation (just compare prices of a gallon of milk now versus 3 years ago)? Or why housing prices are drifting lower or stagnating?

In the video above, Jim Rickards is right pointing out, that our job market has different problems and that Janet Yellen is again, like her predecessor, going to use a wrong cure.
 




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Posted by Martin February 13, 2014
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Caution ahead: Market bounce is breeding overconfidence


Today, I found an interesting video. It is not interesting because of the announced overconfidence on the markets that all the dividend growth and value investors probably know of, but there was one very interesting point about market participants’ behavior, which sparked my attention.

Many times, I was stunned by how irrational investors can be and how stupidly they can act when trading and investing in the markets.

If you ever wondered why sometimes markets react so wildly, Eric Jackson in this video explains it clearly. As he mentioned, last week investors were moving from the stock market into bonds, just to move back from bonds into stocks this week.

Such moves must be extremely expensive! Aren’t they? No wonder that investors usually lose money or are unable to beat S&P 500 index over time and their performance is mediocre.

So, the task is to act as a contrarian. Sometimes, you need to stomach those scary looking moves investors perform out there and stay calm, wait for them to stop overreacting, and then start buying your stocks.

I try doing it that way. When I see panic spreading around, I do not buy right away. I usually wait a few days. If you have time watching markets during the panic period, you will be able to notice and feel when the panic starts slowing down. Some other tools such as VIX index, or Greed & Fear index will help you to gauge the intensity of the fear and when it is slowing down. Then, I use my contingency orders to trail my stocks of interest down and buy at a major reversal from the bottom.

What about you? Do you watch market closely during panics out there to get best price and best value for your buck when buying stocks on sale or you do not care? Share with us your strategy.




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Posted by Martin February 11, 2014
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Paul Craig Roberts on the US economy and paper versus physical gold


In today’s headline story, all eyes were fixed on Fed Chairwoman Janet Yellen, who delivered her first public remarks to the US House Financial-Services Committee. In addition, in a lawsuit filed on Monday, the non-profit group Better Markets has challenged the constitutionality of the $13 billion JPMorgan Chase mortgage settlement with the US Justice Department. And in Washington, Republican leaders in the House of Representatives agreed to advance legislation, raising Washington’s borrowing authority without conditions. Erin Ade reports.

Then, Erin conducts a wide-ranging interview with economist Paul Craig Roberts, an Assistant Secretary of the Treasury in the Reagan Administration and a co-founder of Reaganomics. He has voiced his concerns about the strength of the US economy, US politics, and US civil liberties. Roberts also believes the US is playing fast and loose with the monetary system and the value of the dollar. He speculates that, as the German Bundesbank has begun repatriating its gold from overseas out of storage in places like the Federal Reserve, the Fed will not be able to make delivery because it doesn’t physically possess the gold. Similarly, Roberts does not believe Gold ETF funds have enough physical gold to back their exchange traded fund shares.

Wrapping up our money theme, in today’s “Big Deal”, Erin and Boom Bust producer Edward Harrison discuss the outlawing of Bitcoin wallet apps on iOS, Apple’s mobile platform, and the rise of ePayments in the mobile world.

BoomBust




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