Yesterday 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:
[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!
[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
[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.
[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…
[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!)