Category Archives: Stock Trading

WEDNESDAY, MARCH 23, 2016

Happy Wednesday!

wednesdayYesterday I did not post because I was forced to attend a CE course for my Real Estate license. What a joke. I wish I could go into that, but I will not. I just know it cost me money because I was away from my real job and I couldn’t concentrate on trading.

With the terrorist attacks, oil, the dollar, and what I consider an over-bought market I’m just not sure what the next few weeks will hold. I truly do not see us moving back to 18,000 on the DOW [stock_quote symbol=.dji]. I have been shocked to see 17,500 hold for as long as it has.

I strongly believe, for the remainder of 2016, we are going to see a sideways market more than anything else. We will have ups and downs of course, but for the most part we’re going to sit. For those of us who love volatility it’s going to be pretty damn boring. For those who want to know how to trade a sideways market it’s simple: be the seller of options and let time decay make you money. That’s my plan…

Trading Portfolio Update

On Monday I posted plans to SELL (write) option contracts for APRIL PUT’s for Denbury Resources, JC Penney, and Home Depot. Let’s review where I am currently:

Denbury Resources

[stock_quote symbol=dnr] – On Monday, I SOLD 100 contracts of the APRIL 2016 2.5 PUT for .35 cents per contract with 25 days remaining. There are now 23 days remaining (I actually said 26 on Monday when it was 25 days sorry!) and the option is trading at .45 cents per contract due to DNR losing value this week with oil slipping. I am down $1,000.00 currently, and feel I will be down more today and the rest of the week.

I mentioned Monday that I believed I would be assigned (exercised) on this trade and the probability of DNR remaining above $2.50 by the third Friday of April is slim. So far I was correct and anticipated this. Be prepared and be realistic when trading and you’ll be ok!

JC Penney

[stock_quote symbol=jcp] – On Monday, I placed an auto-order to SELL 100 contracts of the APRIL 11 PUT for .40 cents per contract. I stated I didn’t really care if it executed or not, but I believed JCP was headed lower this week. I was right and my order was executed moments ago for .40 cents per contract (perfect) and the option is trading at .37 cents per contract. I am up $300.00. Updated 11:24 AM

Home Depot

[stock_quote symbol=hd] – On Monday, I placed an auto-order to SELL 10 contracts of the APRIL 125 PUT for $2.25 per contract. The order executed yesterday and the option is currently trading at $2.08 per contract. I am up $170.00.

Freeport-McMoran

[stock_quote symbol=fcx] – You may have forgotten about FCX. I still have the MARCH(4) WEEKLY 8 PUT option having SOLD 100 contracts a couple of weeks ago. I am profitable $1,200.00 and the option will expire this Friday (Saturday actually). I do not see FCX going below $8.00 in the next 48 hours do you? Yay! Another cash-secured PUT success story…

McDonald’s

[stock_quote symbol=mcd] – What can I say. I screwed up. I really thought MCD would dip a few dollars as it has over and over for the past few months. I purchased 100 contracts of the APRIL 115 PUT a week or two ago and was losing my ass. Monday I doubled-down and purchased another 100 contracts of the APRIL 115 PUT on an upward bounce. My cost basis is currently .345 cents per contract and the option is trading at .185 cents. I am down $3,200.00, but not out! I refuse to give up. I will begin buying the MAY PUT options next week and try to pull out of my APRIL’s. What a mess…but this is a great example of trading. It’s just how it goes sometimes.

Nordic American Tanker

[stock_quote symbol=nat] – On Monday, I SOLD 100 contracts of the APRIL 13 PUT for NAT. I don’t think I mentioned this because I trade sometimes after I post and don’t go back and update. I apologize. I SOLD these contracts for .20 cents per contract and I am currently down $250.00. I do not see NAT moving below $13.00 in 23 days. We shall see…

VIX (Volatility Index)

[stock_quote symbol=vix] – On Monday, I made one of the riskiest trades of my trading career, but I just knew I was right. I didn’t mention it because I did not want anyone to follow my lead. This is pure speculation, but I purchased (BUYER) 800 contracts of the JUNE 2016 23 CALL option on the VIX for $1.85 cents per contract. That’s right…I sank $148,800.00 on the VIX believing it will go back up in the next month. If I’m right, I stand to make a substantial amount of money. If I’m wrong, I cannot retire until I’m 70. I am currently down $4,000.00. If you think that’s bad, I was down $14,000.00 yesterday! haha! Here’s to having balls of steal…

Update! As of right now (11:18 AM March 23, 2016) I am even with the option trading at $1.85 per contract. I still find it funny that you can recover a substantial amount of money in just a few hours. I’ve been doing this a long time and I still get giddy when things like this happen. That’s how I know that trading is what I was always destined to do. It never gets old and I’m having fun watching this trade. It’s a lot of money to “play” with…but that’s why we play this game right? If you look at the chart for the VIX over the last 3, 6 and 12 months you will see that it is hovering around the bottom. Just a 30-40 cent bounce up would profit $24,000-$32,000. Tick tock…

SELLER vs. BUYER

I want to start doing this so I (and you the reader) can see the percentage of trades that are profitable and those that end in losses based on being the SELLER vs. BUYER. I did this yesterday (while in my class) and listed all trades over the past month and ALL of the trades as the SELLER made money and ALL of the trades as the BUYER lost money. I don’t think it could be any clearer…

DNR – SELLER – LOSS (new trade – should end profitable)
JCP – SELLER – PROFIT (updated 11:24 AM)
HD – SELLER – PROFIT
FCX – SELLER – PROFIT
MCD – BUYER – LOSS
NAT – SELLER – LOSS (new trade – should end profitable)
VIX – BUYER – EVEN (God help me!)

MONDAY, MARCH, 21, 2016

IT’S MONDAY!

MONDAYAnother week of trading and mak’n that dolla! Honestly, I do not plan on doing much this week. It’s the first real week of Spring and I’m doing pretty good for the first quarter. I’m probably going to take some time off and watch the market from the bench. If I see something incredible happen or a good “deal” I will pounce, but I’m just going to relax. Sometimes you MUST take a mental break and just watch and listen…

With that said, I am and will be continuing to acquire shares of certain stocks / companies that I like and want to hold for the longer-term. I will create and submit auto-orders (set and forget) and let it all ride while I do things such as tan and mow the yard. The stocks I’m wanting to acquire include the following:

Denbury Resources

[stock_quote symbol=dnr] – I mentioned several weeks ago that I wanted to acquire somewhere between 20,000 and 50,000 shares and hold for many years. I am gradually attempting this by selling cash-secured PUT’s within a 30 day expiration as monthly income as well. This morning I SOLD 100 contracts of the APRIL 2016 2.5 PUT ($2.50 strike) with 26 days to expiration for .35 cents per contract. The total premium is $3,500.00 or $134.62 per day! DNR is an Oil & Gas speculative play – be careful.

I believe I will be assigned (exercised) on the above trade. The likelihood that DNR will be above or stay above $2.50 per share by the third Friday of April is slim. Knowing this, I chose the higher premium of the $2.50 strike and expect to acquire the 10,000 shares at expiration. After the premium my total per share cost will be $2.15. I can live with that…

JC Penney

[stock_quote symbol=jcp] – I was proud of last weeks trade and did indeed end the week profitable $3,200.00 as predicted and did not get exercised given the fact my strike was $11.00 and JCP closed higher than that on Friday. Good job and I’m feeling good about JCP overall. Therefore, I have an auto-order to SELL 100 contracts of the APRIL 2016 11 PUT (same strike as last weeks MARCH trade) for .40 cents per contract (thinking JCP will dip more over the next week or so). The total premium will be (if executed) $4,000.00 as well and required $110,000.00 in cash collateral (cash-secured PUT). Maybe it will execute, if it doesn’t no big deal. JCP is a retail sales play (and CEO restructure).

temptationNever, ever, ever SELL an option without having the CASH (PUT) or STOCK (CALL) to cover the trade position. Otherwise, you are trading NAKED and this is very, very dangerous to your financial future. Follow Peter…ignore the temptation…

Home Depot

[stock_quote symbol=hd] – It’s Spring! It just wouldn’t be right NOT to buy or attempt to buy Home Depot! Love Home Depot – both the stock and the business. Therefore, in my trading portfolio, I have an auto-order to SELL 10 contracts of the MAY 2016 125 PUT for $2.25 per contract (thinking it will dip more today or this week). The total premium will be (if executed) $2,250.00 and required $125,000.00 in cash collateral (cash-secured PUT). Maybe it will execute, maybe it won’t. I’m not concerned. I would be fine with entering at $125 per share and I will be fine simply collecting a premium for trying. I doubt it will go that low during April, so it’s really just easy money if executed. HD is a housing market play and time of year.

Notice – I am not pressured or trying too hard. I don’t really care one way or the other if some of these execute. This is the joy of being UP for the quarter or month. I’m fine, I’m making money and I’m not trying to “force” a trade. That’s when you can get into serious trouble.