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Posted by Martin August 24, 2017
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AMZN earnings play


UPDATE: August 24, 2017
 

After I rolled this trade in July, it all looked well until Amazon started selling. And it still struggles to hold the ground.

As of today, the stock dropped to $941.43 and I decided to adjust my trade to keep the stock price a bit more centered in my Iron Condor. So I decided to roll the entire structure down a bit.
 

Again this had to be done in a few steps:
 

Step 1

First, I rolled my puts down and one month away:
 

STC 1 AMZN Nov17 970 put
BTC 1 AMZN Nov17 990 put
STO 1 AMZN Dec15 980 put
BTO 1 AMZN Dec15 960 put

@ 0.95 debit
 

Step 2

Then, I opened a new call spread:
 

STO 1 AMZN Dec15 1090 call
BTO 1 AMZN Dec15 1110 call

@ 2.33 credit
 

Step 3

Then, I closed the old call spread:
 

STC 1 AMZN Nov17 1240 call
BTC 1 AMZN Nov17 1220 call

@ 0.34 debit
 

Total balance of this roll was 1.04 or $104 credit.
 

 




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Posted by Martin August 22, 2017
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STO 3 TECK Sep8 22.00 put


Sold a new put trade today:
 

STO 3 TECK Sep8 22.00 put
@ 0.15
 

TECK @ 24.00
IV @ 36.69%
EM @ +/- 1.55
DTE 17
 
Legend:

IV (implied volatility for this trade and expiration)
EM (expected move or range of the stock in this time frame)
DTE (days to expiration of the contract)
 




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Posted by Martin August 22, 2017
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What’s Your Preference: CFDs or Options Trading?


This question has dogged novice traders for quite some time: Should you trade options or CFDs? The point of departure is to understand the difference between options trading and CFD trading. Both have inherent advantages and disadvantages, depending on your trading preferences. All of these are derivative financial instruments. A derivative trading instrument is one whose price is determined by other factors.
 

Contracts for difference (CFDs), futures derivatives, and options prices are derived from the commodity, index, currency or stock that is being tracked. For example, a gold CFD tracks the price of the precious metal. Since there are so many unique derivative products available, it’s important to be able to quickly differentiate between them and evaluate them on their merits. Be advised that certain trading strategies and practices that may work effectively on futures contracts and options will not necessarily perform well with Contracts for Difference. Traders will do well to read the markets.com review to gauge how leveraged CFD trading can benefit you. Unlike options, you can assume a portfolio with significant asset management with CFD trading.

 

 · One Contract at a Time

 

When trading options, always remember that the option gives you the right to trade a set number of shares (typically 100 shares) by a certain date. It is possible to exercise that option before the due date. With options, the trader is not obliged to buy/sell the asset before the due date. With CFD trading, the buyer and the seller are obligated to settle the difference between the buy price and the sell price on the set date. When it comes to CFD trading, it is possible to select the size of your position from just 1 contract.
This is remarkable given the requirements in typical trading activity on bourses, and brokerages around the world. CFD trading is inherently easy to understand. With options, a premium is paid upfront, and this allows the trader to track the movement of the share/equity for a set period of time. If the trader is wrong, he/she forgoes the premium, and if the trader is right, he/she receives cash back. CFD trading is characterized by put options and call options. A put option indicates that the CFD trader believes the price will decline, while a call option indicates that the trader believes the price will rise.

 

 · What is Your Risk Preference?

 

Depending on which way the trade goes, the premium may be lost. The simplicity of CFD trading is it saving grace. It should be remembered though that CFD trading is inherently risky, and traders should be fully apprised of the benefits and pitfalls of this derivatives trading instrument. Fortunately, the pricing models with CFDs are easy to understand. They simply mirror the performance of the underlying asset. It should be remembered that the risk in options trading is limited, while with CFD trading it is substantially higher.
Luckily, you can trade a single CFD contract at a time, as opposed to a contract which has hundreds, perhaps thousands of shares in it. Options are far more complex to understand and master than CFD trades. Options routinely expire, while CFDs do not. But perhaps the best aspect of CFD trading is the wide variety of financial instruments available – upwards of 10,000 across all asset classes.

 

 · CFD Trading Simply Makes Sense to Newbie Traders

 

CFD trading is inherently easier to understand than options trading. For starters, the pricing methods are simple to comprehend. There are no time decays and no expiration dates on CFD trading. Various traders have pooled different strategies and options together to make them more attractive. This is not possible with contracts for difference. However, CFDs are unique in the number of trading instruments that are available. Thousands of stocks, commodities, indices and currency pairs can be traded in a CFD format.

These are available from markets all over the world, including the US, Canada, Britain, Europe, Asia, Australia, New Zealand and beyond. In fact, the sheer variety of CFD trading options is unparalleled – no other markets offer as much to traders. Since these are derivative instruments, you’re not purchasing the actual asset – you’re simply speculating on the price movement. Compared to options, where large positions must be purchased upfront, CFDs allow for relatively minimal investments.




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Posted by Martin August 21, 2017
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Before you Discard Your Credit Cards, Make Sure You can Do this 4 Things


It is no longer news that credit cards now have a bad name in the personal finance industry. Many personal finance coaches teach people to close out their credit cards because credit cards are synonymous with the vicious cycle of debt. Of a truth, some credit card companies could charge stifling interest rates topped off with an unhealthy dose of fees akin to loan sharking.
However, getting rid of all your credit cards won’t necessarily make your debt problem disappear overnight. In fact, you are likely to create more financial problems for yourself down the road if you make a rash decision to cut up your credit cards. Before you go ahead to throw away your credit cards, here are four things you need to do.
 

Credit Cards
(image credit: public domain)
 

 

  1. Learn how to make and follow a budget properly

 

Budgeting is a smart tool for staying on top of your finances; yet, it’s a shame that many people don’t know how to budget properly, many of the folks who make the effort to create a budget also have trouble sticking with the budget. A budget ensures that you have enough money to pay off your bills and pay down your debt at a faster pace as well.
Without a budget, you won’t know if the available money will be enough to carry you through until the end of the month – if you run out of money before the month ends, you’ll be left cashless and broke. Since you are planning to stop using credit cards, you’ll also need to start setting money aside for emergency expenses because you’ll no longer have the safety net of a credit card.

 

  2. Keep access to other types of credit open

 

Before you cancel your credit cards, you need to ensure that you have created pathways to access a diversified portfolio of credit solutions. Canceling your credit card would lower your credit utilization ratio and reduce your available credit. A reduction in your available credit can in turn reduce your credit score making it hard for you to access other essential type of credits such as mortgages and auto loans.
However, if you have access to other type of credit such as personal loans, student loans, and auto loans, you’ll have a FICO score based on how you manage those credit. In essence, even though canceling your credit card will reduce the temptation to spend money you don’t have, you’ll still need some other types of credit to keep your finances healthy.

 

  3. Pay attention to your credit score

 

If you don’t have any open credit accounts of for the last two years, you’ll practically be without a credit score because your good credit history will age out of your credit report. Cancelling your credit cards can outright destroy your credit score. However, paying attention to your credit score can help you know when you should begin the process of rebuilding your credit.

 

  4. A secured credit card might be perfect

 

Your credit score will most likely nosedive after you cancel your credit cards. However, you can protect your credit score from taking a hit by using a secured credit card – a secured credit card can also help you get started in repairing your credit if it takes a hit after you cancel your credit score. A secured credit card typically has a lower limit and the secured nature of the card ensures that you can’t get behind a payment. Hence, a secured credit card can technically help you bump up your credit score without actually taking on credit.




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Posted by Martin August 10, 2017
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Why Selling (Tech) Stocks Now Based On Valuation Is Foolish


More and more bears are now coming out of the woods worried about the stock market valuation claiming that “it is expensive”.

Also dividend growth investors who are accumulating stocks in their portfolios for the next 20 or 30 years are joining the ranks of the perma-bears and selling. The latest Wall Street concerns are that the tech stocks which are up +19% year-to-date and thus ready to crash. I have seen bears saying lately: “I’ve seen all this before, I am not buying this expensive market because it is similar to dot.com bubble, 1932 crash, 1987 crash…” or you name it.

Although at 22 time trailing twelve month earnings the market may seem expensive, selling your stocks on some magic valuation level and fear will actually make you wrong. And you will be wrong until the acceleration of the economy and recent growth slows down.

And it may take for some time. We still may see more growth (and we will) coming pushing this market higher. Remember, there is still more than 70 billion dollars sitting on side and those investors anticipating the crash will capitulate soon and push this market higher in panic buying.

And we can see this trend already happening.

 

 · Luxury Spending

 

Luxury spending is back! Rich people are spending again for some time already (since April in fact). With the US economy heating up and the stock market reaching new highs consumer spending on discretionary goods is picking up again. This can drive the economy and market even higher than you may expect.

A Personal Expenditure Index (measuring everything from spending on pleasure goods such as luxury boats, aircraft, jewelry or watches is up +8.2% year-over-year. Luxury homes sales are up 29% for the same period of time.

As a mechanical engineer by profession I worked for this type of consumers and they are one of the significant economy drivers. Ignoring their behavior and selling your stocks based on fear will cause you missing the boat and losing a lot of great opportunities.

 

 · Dot Com Bubble

 

What happened during the dot.com bubble and why is it wrong comparing today’s tech sector with dot com is wrong?

In 1996 many investors too called for a large correction. They also considered the market expensive at 20 times earnings (similar to what we are seeing today), but the market continued going higher. For the next 3 years we saw the market climbing higher until the trailing PE reached 30. But it was not the valuation which caused the bubble to finally burst. It was a slowdown in the US economy in 2000 which exposed the phony stocks and they crashed along with the entire market.

In 2000 it was economic slowdown, but today, we actually see the US economy accelerating! If you want to be worried of valuation of the stock market, you must be also worried and see the US economy slowing down too. And there is a great chance that this acceleration trend will continue through 2018 and beyond. With this outlook, the stocks may become even more expensive than today.

 

 · Earnings Season With The Highest Growth Rate Since 2011

 

You may have missed it and think that companies reported bad earnings overall. I had this feeling myself when watching just a handful of my stocks. A few such as STX missed and dropped so much that it obstructed a clear view that yes, there were exceptions but overall this earnings season was one of the best so far.

Out of 425 of S&P 500 companies have reported earnings growth of 10.1% and sales growth of 5.5%.

If this earnings growth result stays at this level, it will be the second highest earnings season since 2011 as in that year we saw 11.6% earnings growth.

But there is another quite positive view. It will be the first time since 2011 S&P 500 will see two consecutive quarters of double digit earnings growth (in 2011 third and fourth quarter brought in 16.7% and 11.6% growth).
 

earnings
 

I am bullish on this market and I have been for the last year. There is no change in the economic outlook and there fore no need to panic and sell my stocks because of valuation. I keep investing in dividend growth stocks using DRIP and keep investing. You should do the same. You are in the market for the long haul and not just through tomorrow.
 




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Posted by Martin August 01, 2017
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Increase Your Retirement Nest Egg by Saving Money on These Household Expenses


Retirement planning, unfortunately, is something that most don’t think about until the time is almost near. While some might have a retirement account through their employers, the effort to increase their savings for the future often takes a back seat. For obvious reasons, of course. Trying to sustain enough income to cover your day to day expenses is tough, often making it difficult to find areas to save more.
 

Though money may be tight, there are ways to cut back now which can help you to find more money to invest in your financial future. Here are a few suggestions:
 

1. Bundle your home entertainment services – If you’re paying separate bills for your phone, the Internet, and television services, you could be watching money go down the drain. To save on these services, look for packages or services you can bundle with DIRECTV which would allow you to have your phone, Internet, and television services for one monthly rate.
 

2. Ditch the data plan on your cell phone – If you have Internet at home, you really don’t need an unlimited data plan. There are also a lot of businesses that allow their customers to use free Wi-Fi. To save money you can either lower your data plan or cut it all together and use your free options.
 

3. Make sure your home is efficient – Utility costs can be several hundred dollars per month. This number is higher when the home is less efficient. Consider having an energy audit to find out if you’re letting money blow out the window. Some affordable ways to make your home more efficient would be to add weather stripping to doors, plastic to windows, and insulation in the attic.
 

4. Use coupons when shopping for groceries – The cost of food is another household expense that can be reduced. Start looking at coupons as money. Clip coupons and compare them to sales in your local grocery stores to get the best savings. Some stores offer double and triple coupon promotions allowing you to save even more on your grocery bill each month.
 

5. Cook at home instead of going out – The average person spends about $2,000 a year on dining out. Imagine how that would look in your retirement account in 10 years? While you don’t have to stop eating out altogether, try to minimize the number of times you do by cooking at home. Use online recipes and cooking shows to get creative with your meals.
 

6. Refinance your mortgage or renegotiate your rent – Homeowners have the opportunity to refinance their mortgage which can lower the interest rate for increased monthly savings. Though renters don’t have this opportunity, they can talk with their landlord about lowering the rent. Perhaps you’ll be responsible for all repairs less than $200 in exchange for $50 off the monthly rent. This would give you an annual savings of $600.
 

7. Shop second-hand clothes – You need clothes on your back but they don’t have to be expensive. Instead of heading to the mall, perhaps start shopping a thrift stores. You can find some clothing in really good condition for half of what it would cost you at a retail store.
 

8. Bundle your insurance – Bundling, as described above can provide customers with additional savings. There are insurance companies that sell car, life, and homeowners insurance. Shop around to see which company will offer you the best bundle rate for all of your policies.
 

Each of these methods of saving on household expenses may seem small individually, but they add up in the end. When you multiply that by however many years you have until retirement, you will be saving thousands of dollars towards something that benefits your future. By placing these funds into an interest-bearing account or investing in stock each year, you can multiply your savings even further.
 




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Posted by Martin July 24, 2017
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Costco or Amazon? Costco Is Beating Amazon’s Prices


 

This next fact might shock you: In 2016, Amazon accounted for more than 40% of U.S. online retail sales. To be sure, Amazon (AMZN) is changing the game for retailers around the world, but isn’t taking over all of retail.

Just ask Costco (COST).

In the video excerpt above, from a recent institutional call on Best Idea Long Costco, Hedgeye Consumer Staples analyst Shayne Laidlaw explains why the $65 billion discount retailer is actually beating Amazon on price.

In a Hedgeye survey of 2,269 individuals, about 25% of respondents (523 for this particular question) had both an Amazon Prime subscription and a Costco membership. Of that 25%, about 63% said their “primary reason for shopping at Costco” was the “price to value,” selected over options such as “the experience,” “convenience” and “product selection.”

BOTTOM LINE: Amazon is absolutely disrupting the world of retail. But Costco is still thriving in spite of all the hype.




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Posted by Martin July 18, 2017
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Amazon (AMZN) earnings play #2


In February 2017 I have opened a second earnings play to my previous earnings trade which I haven’t reported here in my blog.

The trade also didn’t work as planned so I rolled it into January 2018 hoping the stock would stay within the boundaries of my Iron Condor. It didn’t.
 

ORIGINAL TRADE: February 2, 2017
 

Originally I opened an Iron Butterfly on Amazon (AMZN as an earnings play with the following strikes:
 

BTO 1 AMZN Feb3 885.00 call
STO 1 AMZN Feb3 845.00 call
STO 1 AMZN Feb3 845.00 put
BTO 1 AMZN Feb3 805.00 put

@ 31.40 credit limit
 

The stock however collapsed after reporting and I had no more time to give to the stock to go back up so I could close for a profit.

I opened the trade on February 2nd, the company reported earnings on February 2nd after the market close, and the expiration was on February 3rd. So I had to roll.
 

UPDATE: February 6, 2017
 

At expiration, on February 3rd, I let the call side expire worthless and I rolled puts as follows:

 

BTC 1 AMZN Feb3 845.00 put
STC 1 AMZN Feb3 805.00 put
BTO 1 AMZN Jan19 790.00 put
STO 1 AMZN Jan19 850.00 put

@ 1.37 debit limit
 

As it was a debit trade, on February 6th I added a call side to the trade:
 

BTO 1 AMZN Jan19 1080.00 call
STO 1 AMZN Jan19 1020.00 call

@ 8.17 credit limit
 

This made the entire roll a profitable roll again. See the overall table below.

 
UPDATE: July 18, 2017
 

The above roll was successful and the stock price was hoovering above 850.00 strike price for a long time, until today. Later Amazon started its strong rally and haven’t stopped since then except a small sell off in June.

Today, as the stock reach 1025.00 a share, I decided to roll again. The reason for rolling was that if the stock continues higher, it would be difficult to roll the calls. So I wanted to roll earlier rather than later.

Remember, here we are trading spreads – Iron Condor – and these are difficult to manage. Once the spread is fully in the money, it may be close to impossible to roll for a credit unlike strangles.
 

And here is the roll again in two steps:

 

STC 1 AMZN Jan19 1080.00 call
BTC 1 AMZN Jan19 1020.00 call
BTO 1 AMZN Jan19 1160.00 call
STO 1 AMZN Jan19 1100.00 call

@ 10.26 debit limit
 

After I rolled my calls, I now rolled the puts side higher to collect enough credit to offset the debit on the call side trade:

 

STC 1 AMZN Jan19 790.00 put
BTC 1 AMZN Jan19 850.00 put
BTO 1 AMZN Jan19 1020.00 put
STO 1 AMZN Jan19 960.00 put

@ 17.60 credit limit
 

The resulting trade is now $730 credit. Below see the overall trade results:
 

Original trade: $3,140.00
February 3rd puts adjustment: -$137.00
February 6th calls addition: $817.00
July 18th calls adjustment: -$1,026.00
July 18th puts adjustment: $1,760.00
TOTAL TRADE BALANCE: $4,554.00

 

Let’s see if the trade can stay positive by January and we will not need to roll again.
 




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Posted by Martin July 12, 2017
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New STX Jul28 Iron Condor (ROTH IRA)


UPDATE: July 12, 2017
 

Great! I just found that STX will be reporting on July 25th instead of August 2nd as was indicated in my broker’s platform. So, now this trade is a total different story as I will now be holding through earnings and I could get busted should the stock move violently up or down.

 

ORIGINAL TRADE: July 10, 2017
 

STX is reporting earnings on 08/02 and I decided to open a trade which should end before earnings, so this trade will end before the report and I will not be holding it through the earnings. Well, at least this is the plan and I hope it will all go according to the plan.
 

For tomorrow morning, I am placing the following trade:

 
BTO 1 STX Jul28 44.00 call
STO 1 STX Jul28 42.00 call
STO 1 STX Jul28 35.00 put
BTO 1 STX Jul28 33.00 put
 

@ 0.26 credit limit
 

Below see the picture of the trade:
 

STX Iron Condor
 

Why July 28 expiration?
 

  • As I mentioned above, the company reports earnings on August 2nd and I want this trade to hopefully end before expiration. Also I selected 17 days to expiration to be able to go further away from the money and collect a decent credit.
     

How did I choose the short strikes?
 

  • When I trade conservative trades I use expected move. TOS shows you the expected move for every expiration (and if your platform doesn’t, it can be calculated) in the upper right corner of each option chain expiration. For July 28th the expected move is +/- $2.753 dollars each direction. That means that the stock may fall by $2.753 or go up by $2.753 by July 28th. It is not a 100% guarantee, but there is a chance that it may happen. Most of the time the stock stays within this range, so if you choose your strikes out of this range, you would be playing a safer bet.

  • In this trade, I rounded the expected move to $3 dollars and then subtracted from the current price of $38.39 a share to get the short put strike and added it to the recent price to get the call short strike.

 

Why $2 spread width?
 

  • I chose this arbitrarily as I wanted to limit my cash at risk to $200 dollars only, therefore I choose $2 dollars wide spread.

 
How will I be managing this trade?
 

  • Since there is a chance that tomorrow morning this trade opens for only 0.26 credit (the range for the trade was 0.17 to 0.34 credit but I moved the slider to the center which is what the trade is likely to get executed) I plan on not to be buying those legs back and let them expire. If I see the stock moving too close to one or the other side, I may choose to close the opposite short leg for 0.02 debit so I can roll the endangered side higher or convert it.
     
     



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Posted by Martin July 09, 2017
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June 2017 options income


Another month is behind us and it is time to write another report about trading options for income.

I am excited that I found option trading as a good income tool and addition to my dividend investing. But this tool must be used wisely and every trader must learn how to trade options, how options can make him money or how a trader can lose money. Once you know it, you can build a strategy and a plan which will help you make money and avoid losses.

It took me some time to learn it. And I still do learn. But this time it is not mechanics of options trading, but I am learning how to use my money in account effectively and avoid being caught in a loss and a margin call.

And lately, my account got dangerously low on available buying power due to a few mistakes I made last year. And those mistakes are still hunting me even today.
 

So what is it?
 

A biggest mistake I made (and I have seen many novice traders do) is over trading.

It is so tempting and easy to invest more when your trades go your way and you see your buying power growing with it.

One day you have $5,000 dollars available to invest, the next day you suddenly see $10,000 dollars available. How tempting it is to take a few more trades!

I created calculations in my spreadsheet to be my watch dog but I made a mistake in calculating how many trades I can take. And I opened too many trades and I am still having trouble to manage them. Not that I am, losing money, but anytime the trade has a hiccup, my buying power dangerously shrinks and that makes me very uncomfortable.

So, I decided to change my trading strategy for the rest of this year. I will write about it below at the end of this post.
 

My plan for June 2017 was to make $2,103.83 dollars of income trading options.

Since I already changed our income strategy, we no longer pursue income trading options for the rest of this year. And in June our trading was driven by this new goal.

That’s why this month we haven’t reached this goal. We received $1,293.42 dollars of option income only.
 

However, I am perfectly fine with the results. Honestly, I haven’t expected them at all.
 

 · 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.
 


 

 

 

 

 

 · Options Trading Results

 

June 2017 was a very bumpy month for our company. At some point the value of our account skyrocketed (the net-liq almost reached $27,000 dollars) just to lose it all the last few days before the month end. The loss was so deep that our net-liq dropped down to $22,000 dollars and our buying power shrank down to $200 dollars!

That was so dangerous and a game changer.

I knew we were over trading our account and I was not able to force, discipline myself, as our company trader, to follow the given rules of how many trades we can have open at a time.

This was yet another warning from the market to stop playing this hazardous game and follow the rules!
 

Nevertheless, our trading in June 2017 finished that bad given how dangerously bad our account looked at one point during the tech stocks sell off. We made $1,293.42 dollars which was 5.58% monthly revenue on invested capital (ROC).

Our average monthly revenue dropped to 7.87% from last month’s 9.45% ROC.

However, we increased our exposure in the market by adding more trades (we invested approx. 8.07% more of available cash this month) and our equity grew by 2.76%.

This had negative impact on our net-liq as the net liquidation value actually dropped by 3.90%.
 

Last month I wrote about a few trades ending soon. These were mostly in tech stocks. One of the largest position was in Amazon (AMZN). Thanks to the sell off at the end of the month I adjusted the trade. Later it seemed to be a mistake. If I waited, I would have been probably OK. Now, I adjusted the trade and if the stock starts rallying again, the trade I was looking forward to close in July may not close and I will be forced to drag it for another month or more.

But that is a nature of trading. We do not know the future and we sometimes react based on the current situation and market moves. Not always this is a correct approach. You should wait patiently for the development and accordingly to your plan.

 

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 June 2017 we made: 18 trades
Total trades in 2017: 227 trades
June 2017 options trading income: $1,293.42 (37.75%)
2017 portfolio Net-Liq (net)*: $3,832.19 (-1.62%)
2017 portfolio Net-Liq (gross)*: $23,165.26 (-3.90%)
2017 portfolio Cash Value (net)*: $34,461.19 (8.85%)
2017 portfolio Cash Value (gross)*: $53,794.26 (3.71%)
2017 portfolio Equity (net)*: $38,336.19 (6.75%)
2017 portfolio Equity (gross)*: $57,669.26 (2.76%)
2017 Liability/Debt: $19,233.07 (-4.83%)
2017 overall trading account result: 16.11%

* 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 June we traded only a few trades, mostly roll overs of trades which didn’t go well.

I still struggle finding the best way to post the open trades and write about them in some meaningful way, so it will be easy to follow for you, our readers.

If you have an idea or recommendation on how you want to see our trades, please let us know what should we post and how should we present our trades to you.
 

This month, I will try to present all our open trades to you in the spreadsheet below, so if you follow our trades either in our Facebook group or via our emails, you can be comparing what trades we have and what trades we either opened or closed every month.
 

Here is the spreadsheet for June 2017:
 

Trade Summary 07-2017
(The image shows open trades through June 2017, if you wish to see up to date open trades, click on the image or here.)
 
 

The main reason behind our net liquidation value stagnation or even drop was too many open bad trades. We are still rolling those trades and manage them as I hope to finish them as winners one day. But they consume and block our buying power.
 

Some traders will tell you that such strategy of defending bad trades is not worth it and that they would rather close a trade for a loss and redeploy their money elsewhere.

Well, I was there myself. I have done that. In 2015 I did exactly that. I was closing bad trades and wanted to redeploy my money elsewhere.

I finished doing this piling one losing trade on another, collecting losses, and wiping my account out. I lost $28,000 dollars doing this.
 

So, I am not convinced about this strategy and my plan is defending the trade as much as possible no matter what others say or think about what this strategy would do to my AR%, net-liq, revenue %% or whatever else. Once a trade becomes a losing trade, I apply repair strategies and I do not care whether my AR% is 120% or 0.0000001%. I am repairing the trade. I am no longer expecting the trade to make money for me. I just want out for break even or original credit. Period.
 

Below are my comments about our existing open trades:
 


Amazon (AMZN) is a bitch! It keeps hunting me. I opened this earnings play in February 2017 and I am still in it unable to finish it. I traded Amazon in the past for a client on his account and I made tons of money. But back then, Amazon was the exact same bitch as today.

I collected great credit trading this stock, but it was not an easy money. Amazon will not give the premiums for free, it will sell its skin dearly.

As our trade in Amazon neared to expiration a tech stock sell off sent the price so low that our put spreads became ATM and at some point even ITM. What looked like a no brainer trade was suddenly a nightmare.

So, I adjusted the trade. I rolled puts down and opened a new call spread creating a new Iron Condor (the trade hasn’t been reported in the review below yet).

Now, this bitch is rallying again and it seems the call spread will continue hunting me again.

 
Here is the trade review:

 
AMZN earnings play – TRADE OPEN
 


In June we only closed a TECK trade and we still sit on the rolls or new trades from previous month. No new trades were opened.

 
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 New Options Trading objectives

 

As I mentioned above, I decided to change the strategy of our options trading. To be exact we are not changing the strategy, it still is the same, but our objectives or goals we want to achieve are now different.

Since we have so many opened trades in relation to our account and any serious sell off can dangerously damage our account and liquidate our trading (and eventually put my dream of trading for a living to an end), I decided not to focus on income for the rest of the year, but to raise cash available for trading.
 

This means, that for the rest of the year we will:
 

  1. We will not open any new trade.
  2. We will only maintain existing trades – roll, adjust, convert.
  3. We will close existing trades only.

 

The goal is to close as many trades as possible and raise buying power and eventually net-liq to match our cash value and equity value.

 

 · Options Trading July 2017 outlook

 

I expect the stock market to be volatile in July. We still may see some pressure when bears would try to overcome the market but I think they will not succeed and that the US macro data would steamroll them back to defeat.

The recent selling and 5.3% correction of QQQ will most likely stay as is – the correction and not a beginning of a new trend. We still may see some pressure though.
 

But if we believe that the US economy is in fact accelerating it is logical that we want to be on the long side and not bears. The recent good job numbers (amid almost a full employment) indicates that there is still plenty of room for growth and that growth is picking up.

In a few years ago we were complaining about Obama administration changing the rules on counting employment rate excluding people who stop looking for jobs. These people are now coming back to the labor pool and that would push the labor numbers higher even more. And you can see it all over the place that companies are hiring and in fact struggling to find workers.
 

So why all are concerned and the consensus is that the stocks are expensive and due for a catastrophic bear market, I believe this is just a dip you want to buy.

 
What do you expect from the stock market in July or the following months? What do you think: Is the US economy accelerating or decelerating?
 

Just look at recent data on durable goods, capital expenditures and corporate profits. Here are the key charts:

 
 


 
 




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