Weekly Newsletter   Challenge account

Posted by Martin June 26, 2017
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STX Aug18 Iron Condor (ROTH IRA)

Our original STX Iron Condor closed today morning for a full profit of $40 dollars. Since the trade is closed, we can now open a new one.

I am placing a new Iron Condor in our ROTH IRA account:

BTO 1 STX Aug18 49.00 call
STO 1 STX Aug18 47.00 call
STO 1 STX Aug18 39.00 put
BTO 1 STX Aug18 37.00 put


@ 0.69 credit limit day

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New Iron Condor with STX in ROTH IRA

UPDATE: June 26, 2017 (TRADE CLOSED)

Today morning, our STX (Seagate Technology) June 30th 40.00 put strike closed for 0.04 debit. This closes our original Iron Condor completely and we can open a new trade (our calls closed at the beginning of the month for 0.02 debit so we only had puts on).

ORIGINAL TRADE: May 24, 2017

I had an Iron Condor in my ROTH IRA account (unreported in this blog) against Seagate Technology (STX) stock.

That trade closed today morning for a full profit. This released our buying power for a new trade.

We are opening a new Iron Condor against STX:

BTO 1 STX Jun30 38.50 put
STO 1 STX Jun30 40.00 put
STO 1 STX Jun30 46.00 call
BTO 1 STX Jun30 48.50 call

@ 0.34 credit limit

STX @ 43.04

Trade executed at 0.46 credit.

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Posted by Luis Aureliano June 26, 2017
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Contrarian Investments for Savvy Individuals

Many traders and investors blindly assume that there is only one way to dabble in the financial markets: conventional stocks trading. Fortunately, nothing could be further from the truth. The more you learn about the financial markets, the better informed you are about your options, and there are many of them. Let’s go back to the traditional form of investing for a second and understand what benefits are available with things like stocks, commodities, indices, and currencies trading.

If you were to go to a land-based institutional broker, that person would charge you hefty fees and commissions to manage your finances – independently of your input. You are effectively entrusting your financial livelihood into the hands of a complete stranger. True, these people are well informed about the funds their brokerages are selling – but they’re in it for themselves, not for you. Monthly maintenance charges, hidden fees, commissions, annual expenses, and other costs await you. There are no guarantees with stocks, commodities, mutual funds, ETFs and the like.

Does this mean that you should avoid any risk -related investments? Absolutely not! Without the risk elements, there would be no reward to speak of. Typically, financial portfolios are made up of a mix of domestic and international stocks, cash, bonds, immovable property and the like. The more diversified your financial portfolio, the less overall risk you assume. The precise ratios of each component in your financial portfolio will vary according to the financial advisor in question. However, conventional wisdom states your risk profile determines your mix of assets. A balanced portfolio is one where the investor reduces volatility by including stable financial assets in the portfolio.


 · What mix of stocks and bonds is best?


Balanced portfolios allow for growth and accommodate short-term price movements, with an eye to long-term gains. The precise mix of this type of portfolio is 60% bonds and 40% stocks. According to leading investment enterprises, your average annual return on such a portfolio can be around 7.8%. As you increase the stock component of your portfolio, so you increase the volatility of your profile. Remember that stocks typically generate substantially more than bonds, so your returns are going to be greater with a stock-heavy profile – provided you can tolerate the risk. The worst year in the history of stocks was 1931 – the height of the Wall Street crash and the global depression that followed.

Growth-oriented financial portfolios are ones that are heavily slanted in favour of stocks, with a minimal allocation to bonds. Recall that bonds generate fixed-interest payments and include things like Treasury Notes (2 years, 5 years, 10 years, 20 years, etc.). If you were completely risk-seeking, you may opt for a financial portfolio that is 100% based on stocks. Your best bet as an investor would be stocks, provided you could whether the storms along the way. There are many other ways to rebalance your financial portfolio, or incorporate additional forms of investment.


 · Growth-oriented strategies to boost your financial portfolio


Richard P. Horton, a Lionexo trading options expert believes that traders will find tremendous benefit in alternative investment options. ‘I’ve seen many traders asking for ways to diversify their financial portfolios. These include speculative trades on stocks, commodities, indices, and currency pairs without actually owning the underlying assets. By forecasting future price movements, you can turn over vast sums of money in next to no time at all, generating significantly more profitability in the process. When you wait for stocks to appreciate, you’re tying up all your available resources in individual trades. This is inherently risky, and is especially detrimental when cash is required. Short-term trades ensure liquidity, and substantial profits can be generated on in-the-money outcomes.’

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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 #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 14, 2017
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New Iron Condor using TECK in ROTH IRA

UPDATE: June 14, 2017

We rolled our June 30th 17 strike into November 17, 2017 expiration and 17 strike. We also added new call side creating a new Iron Condor:

BTC 1 TECK Jun30 17.00 put
STC 1 TECK Jun30 15.00 put
STO 1 TECK Nov17 17.00 put
BTO 1 TECK Nov17 15.00 put
@ 0.25 credit limit

And here is the call side addition:

STO 1 TECK Nov17 19.00 call
BTO 1 TECK Nov17 21.00 call
@ 0.45 credit limit

Total credit received 0.70 + previous credit 0.19 = 0.89 credit.

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:



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Posted by Martin June 01, 2017


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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