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Posted by Martin July 08, 2014
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New Trade & Rollover – SELL DEC14 CALLS & ROLL SEP14 PUTS on TASR

New Trade & Rollover - SELL DEC14 CALLS & ROLL SEP14 PUTS on TASR

Taser Int. (TASR) started trading day with a renewed sell off. It opened at $12.88, briefly raised to $13.02 a share and then continued sharply lower. Within an hour the stock dropped all the way down to $11.97 a share.

Weakness I could see on my indicators along with the price action convinced me that it would be a good idea to roll my put positions lower and further in time.

Although yesterday it looked like my put contracts are still safe – have enough time and the selloff wasn’t large and strong, this morning the situation changed.

 

TASR
TASR under a sell off today morning convinced me to roll down my puts to protect my trade.

 

Investors are pessimistic about this company, so I expect more rollovers of my put trades.

This price action convinced me about the weakness in the stock so I decided scale into more naked calls against this stock to generate cash available for protection of my puts.

Trade Detail

Trade 1

STO -10 DEC14 14 calls $0.90

Trade 2

BTC 15 SEP14 13 puts @ 1.45 & STO -17 DEC14 12 puts $1.20 for CREDIT 1.00

Now the stock needs to stay in the range 12 – 14 a share. If that happens I will realize full profit as both sides of this trade expire worthless and I will keep premiums from puts as well as from calls.

If any of the side gets breached, I will roll that leg again down (or up in case of calls) and further away in time.

I will keep you posted on this trade.

Happy trading and investing!
 




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Posted by Martin July 07, 2014
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New Trade – SELL DEC14 CALLS on TASR

New Trade - SELL DEC14 CALLS on TASR

I have a few naked puts against Taser Inc. (TASR) which fell from $20 a share all the way down to $13. I had a few puts at 18 strike and was forced to roll the puts down all the way to 13 strike.

Recently, the stock seemed to stop at $13 a share, but today the stock seems to renew its fall and continued below 13 strike price.

I have plenty of time in my put contracts, so there is no need to roll the options right now. But the stock created a downward setup and it may continue down.

I decided to open a naked call trade against this stock speculating that it will not move higher and also offsetting my put options a bit. In other words I plan on collecting premiums selling calls (see a video about Karen the Supertrader’s strategy of selling naked puts and calls against indexes) on this depressed stock.

I just hope that my indicators are good and that I can rely on what I see. If so and the stock stays below $14 a share this trade will expire worthless and I will keep the premium.

If the stock continues higher, I may pursue rolling this trade higher the same way as rolling puts lower.

Trade Details

STO -5 DEC14 14 $1.10

 

Max Profit $550 When selling calls, the hope is that they will expire worthless, so the max profit is equal to your execution price. Max profit occurs if TASR is below 14 on expiration day, which is December 19 for this option.
Max Loss Infinity In theory, TASR could keep going up, and since you are giving someone else the right to buy it at 14, your max loss is unlimited. However, remember that this trade has a time limit on it. On expiration day, December 19 for this option, if TASR is above 14 you will either need to buy back (cover) the call or you will be assigned -500 shares of TASR as a short position, with an entry of 14.

 
 

 
 

Have a great day and happy trading and investing!
 




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Posted by Martin July 06, 2014
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How To Sell Puts For Max Profits In Shorter Time


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Posted by Martin July 05, 2014
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All time high trading and investing results in June 2014

All time high trading and investing results in June 2014

My trading and investing in 2014 was the best and all time high I have ever reached in the entire history of trading and investing. Mr. Market was helping a lot to reach these results and I understand that falling markets will be the biggest test of my trading abilities. But I will worry about it when that happens.

To say that I have to be prepared for that case when markets start falling. The best way to get ready is to hold enough cash reserves.

If you are a pure dividend investor, you do not have to worry. You can invest all your cash when the markets fall and ride the waves.

If you use margin and buy dividend stocks on margin (which I do) you want to hold some cash.

If you trade options on margin (which in case of selling naked puts is a must) you definitely want to hold cash in reserves. If the market falls dramatically, this cash will protect you against your positions losing value (and in case of short naked options gaining value) so you avoid margin calls.

Some traders recommend 30% cash, some even 50%. My goal is to have 30% in cash, although I feel uncomfortable having so much cash sitting idle in my account. The point is to change my investor’s mind to see such cash as working as insurance. Even though it makes no cash, it will protect my already made cash.

That’s the way you can help protecting your portfolio against involuntary liquidation.

June 2014 was the best month so far I ever had. My account doubled for the year, see my new goal here. My overall growth in this month (adjusted for contributions) was staggering 15.91%. The best growth so far in 2014. My second best month was February when the account grew 10.88%

June 2014
(Our trading account growth since mid-2011. It continues outpacing S&P 500. The chart is adjusted for contributions – contributions are removed from the growth.)

Next week, I will be starting my business – Investment Company. The ultimate goal is to start a hedge fund. But I will start small, with Investment Company first, then working on all licensing and once done, start a hedge fund.

Here are new results for TD account only:

 

January 2014 premiums: $156.10 (1.55%)
February 2014 premiums: $139.26 (1.38%)
March 2014 premiums: $746.62 (7.41%)
April 2014 premiums: $421.63 (4.19%)
May 2014 premiums: $803.32 (7.98%)
June 2014 premiums: $230.21 (2.29%)
   
January 2014 dividends: $25.87 (0.26%)
February 2014 dividends: $167.02 (1.66%)
March 2014 dividends: $68.77 (0.68%)
April 2014 dividends: $25.91 (0.26%)
May 2014 dividends: $168.51 (1.67%)
June 2014 dividends: $68.81 (0.68%)
   
Total 2014 income: $3,549.69 (35.50%)
2014 unrealized premiums: $2,364.00 (23.64%)
   
Account balance: $21,331.68 (+15.91%)
December 2013 balance: $10,072.25

You can see my dividend and options income on My Trades & Income page.

What about you? How was your June 2014 and the entire year so far? Post a link to your website or write down your results to encourage other investors!

Have a great July 2014 at the markets and a Happy 4th of July!!
 
 




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Posted by Martin July 01, 2014
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New Trade – SELL DEC14 PUTS on TEVA

New Trade - SELL DEC14 PUTS on TEVA

Teva Pharmaceutical Industries Limited (TEVA) recently offers interesting premiums and 60% chance that it will expire OTM. The trade setup is positive too. I decided to take this trade and sell one December contract to collect nice premium.

I would love to trade shorter time frame, but with a small account as mine I need to take longer terms to collect higher premiums and use options time ladder to spread my options trades among more months.

Also there is a good chance that the option becomes worthless earlier than in December.

Trade Detail

STO 1 TEVA DEC14 50 PUT @ $2.39

 

Max Profit $239 When selling puts, the hope is that they will expire worthless, so the max profit is equal to your execution price. Max profit occurs if TEVA is above 50 on expiration day, which is December 19 for this option.
Max Loss $4750 In theory, TEVA could keep going down all the way to zero, and since you are giving someone else the right to sell it at 50, your max loss is very high. However, remember that this trade has a time limit on it. On expiration day, December 19 for this option, if TEVA is below 50 you will either need to buy back (cover), roll the put, or you will be assigned -100 shares of TEVA as a long position, with an entry of 50.

 
 

 
 

At this point this will be a waiting game. Waiting for expiration, or action in case rolling of the put will be needed.

In case you are not familiar how rolling the put option works, here is a quick explanation. Rolling the put basically means that if the underlying stock (TEVA) price falls below strike price of the option (50) then at expiration day or earlier you want to buy this contract back and sell a new contract with lower strike (45 for example) and longer expiration time (January 2015, for example). When rolling a put, you want to sell a new contract so that you again receive a credit. If it is not possible, you may want to sell two or more contracts to offset the buyback of the original contract.

Have agreat day and happy trading and investing!
 




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Posted by Martin June 30, 2014
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Trade close – Franklin Resources Inc. (BEN) put selling for profit 2.15% and GameStop Corp. (GME) put selling for profit 5.69%

Trade close - Franklin Resources Inc. (BEN) put selling for profit 2.15% and GameStop Corp. (GME) put selling for profit 5.69%

As I mentioned in my post on Friday, I was expecting two more trades to close soon as they would get closer to becoming worthless. It happened today!

On Friday last week, my put selling trade against LINE lost value to $0.05 per contract, so I could buy it back (for free) and keep the entire profit. Today my last two trades with July expiration became worthless and I could buy them back (again for free) and release my margin cash for next trading.

There is no reason, or value waiting until July 18th to let those options expire (which may not happen if the stocks suddenly fall), so why leaving money on the table and risk three more weeks that I may lose them.

A few days ago I read in a book “Mastering the Trade” by John F Carter about a trader who did just that. Her option contract was already worthless and she refused to take the trade off the table. She thought that when a trade is already worth only 0.05 then there is no way the trade may turn bad. Well, it did. Not only the trader lost the entire premium she received, but the trade turned into a much larger loss.

I do not want to be such a sucker and I took those trades off the table as soon as they reached 0.05 value.

That allowed me to keep the entire profit (minus original entry commission and a buyback price). For Franklin Resources Inc. (BEN) options trade that turned to be $96.18 premium (2.15%) in two months and for GameStop Corp. (GME) the trade delivered $174.18 (5.69%) in little less than two months.

I will use the released margin for another trade, which I will report tomorrow. You can follow my twitter account for details.

Happy Trading!
 
 




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Posted by Martin June 27, 2014
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Trade close – Line Energy (LINE) put selling for profit 3.68%

Trade close - Line Energy (LINE) put selling for profit 3.68%

Today, I closed a trade against Line Energy (LINE) which I opened at the beginning of May (05/07/2014) with expiration in July – next month. I sold 1 put contract with 28 strike and July expiration for 1 dollar (or $100 collected in premiums).

Today, this trade was worthless (it actually cost 0.05) and I could buy it back for $5 and close it and keep $95 in premiums. Thanks to TD Ameritrade 5 cent feature I paid zero commission.

Great trade. I could close it three weeks before expiration, keep almost entire profit and release my margin for next trading.

I have two more trades which may lose value next week. It will be GME 34 strike July contract and BEN 50 strike July contract. Then I might be able to open another trade. But that will depend on my available cash as I am raising cash to stay small and have enough reserves for trade adjustments.

Happy Trading and investing!




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Posted by Martin June 27, 2014
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Is my struggling finally over?

Is my struggling finally over?

If you had a chance to read my “Curious history of a sucker” you know that I started investing back in 1996 and took many endeavors in losing money.

I shrank my $30,000 dollars account to $4,000 in commodities trading, I lost another circa $15,000 in stock trading. But at that time I didn’t care much. I was making a large amount of money every year and these losses were smaller compared to my income.

But one day I stopped that madness and decided to start over.

In 2006 I returned to investing and trading. But I wasn’t successful at all. For next five years I was again losing money. This time I was determined to survive it and try again and again.

I was reading all books about trading and investing I could find. I was learning about great traders like Nicolas Darvas, Jesse Livermore, William O’Neil, Warren Buffett, Benjamin Graham, and many others.

I learned a lot, but I still wasn’t successful and I still was losing money. Five years I was struggling.

Then a light at the end of the tunnel showed up. Three years ago I started investing into dividend growth stocks and trading options. I started small and slowly. I tried not to over extend my options trading but I tried to extend my dividend stock investing as much as possible.

And it looks like I finally broke through the struggle and started making money. I finally started seeing my accounts growing year after year. I started seeing my losses shrinking. And I can see my losses from 2006 all the way up to today disappearing.

I wish this wasn’t a dream or just a temporary good luck. I wish, this was a pattern towards successful investing and trading, and that I will be able to generate ever growing income consistently and forever.

I like posting my results and trades for you, my readers, to see. I want everybody to see, that it is possible to start small (with just $2000 account) and grow it big.

My portfolio

I decided to convert my investing into a real business. I will be starting a management company and going for all required licensing to be a certified advisor and money manager. I will be transferring all my available money and trading accounts to my business account and continue running my investments as a business.

I wish you a success in your investing/trading effort. If you are just starting or already investing and successful I am happy for you and encourage you to endure to the end. I testify that the end will be fruitful and it will make you rich (and not only monetary).
 
 




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Posted by Martin June 24, 2014
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New Trade – BUY NOV14 CALLS on GLW

New Trade - BUY NOV14 CALLS on GLW

Corning Inc. (GLW) received an upgrade today and rallied in the morning. That put this stock out from a quite long squeeze into a rally. It was a first day when my indicator showed and entry point. So I decided to scale in another call trade out of my 3 planned trades.

I planned to take three trades to try my new long call strategy. I am risking $240 and my potential profit is unlimited.

You can review my previous trades here.

These trades are about my new indicators I put into my trading tools recently. I tested them in paper account for a few months and they seem to work well and generate nice signals. This can help me to use long call or put strategies and increase my gains. I can also abandon this strategy later if it won’t satisfy my expectations.

So this trade, with the previous two trades are my test trades.

When buying options, you typically want as long option as possible to avoid time decay. If you buy 150 or more days to expiration option (be it a call or put), the time decay is very slow and stock movement can change the price of the option. If you buy 56 or less days to expiration option, the time decay will eat you alive. For short time options, you want to be a seller, and you want to be buying long time options.

That’s why I bought November contract, hoping this stock will shoot up and I will close with profit. Although the end of today’s trading with GLW was horrible and the stock returned all morning gains.

Trade Detail

BTO 1 GLW NOV14 22 CALL @ $1.30

 

Max Profit unlimited There is no max profit on calls. In theory, the stock could keep going up forever. But remember, your profit is limited to the move the stock can make before the call option expires. Profit occurs anywhere above 23.30. With 1 contract, you will profit $100 per point GLW is over 23.30.
Max Loss $130 A call option gives you the right to buy the stock at the strike price. If the stock is below the strike price on expiration day, it will be worthless. So, max loss occurs if GLW is $22 or less on expiration day, which is November 21 for this option.

 
 

 
 

What do you think, will GLW spike up or there is no potential at all?

Happy Trading
 




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Posted by Martin June 23, 2014
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13 years old Alex knows about options trading more than me – watch this:


 

 




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