Every month, I release a new video for my MarketClub Options members...
I cover everything from current market conditions and trading lessons learned (good and bad), to stocks on my watch list, questions I receive from members, and more.
These videos are not an advertised part of the MarketClub Options service (which includes the MarketClub Options Blueprint, Option Basics Bootcamp, How NOT To Trade, Options 101 eBook and more), but simply an added value and something I like sharing with members.
I was asked by the MarketClub staff if we could share September's training video with non-members. I hesitated at first - then I thought, why not?! This information applies to all types of traders - buy and hold, fully invested, successful or not.
The short video below highlights: Continue reading "Sneak Peak: Buy and Hold vs. Options"
If you were able to attend our live MarketClub Options Webinar that I hosted in March, you are probably curious what happened to the three 10-minute trades that we placed on AMAT, INTC, and NEE.
Watch the webinar recording below (no registration needed) to see how and why we placed those three trades.
Now here's your update: as of 4-26-18, all 3 trades show a small loss of $125.
Am I embarrassed that the live trades I placed are losing money? Nope!
Because losing money is normal.
A few losing trades here and there are no big deal. In fact, I teach (and follow) a money management formula that allows up to 25 losing trades in a row before it starts to hurt your account.
It is important to me to show how losses like this are par for the course. Ultimately, losses are overshadowed by your gains when you use a time-tested strategy like the MarketClub Options Blueprint.
MarketClub Options | email@example.com
Options can provide an alternative approach to the traditional buy and hold for the long-term strategy. Options can add value to one’s portfolio in a variety of ways, specifically, maintaining liquidity via maintaining cash to engage in covered put options, initiating positions via being assigned shares strategically prior to or upon expiration of the option contract and capturing premium income via closing out the contract prior to expiration as the shares move in your favor to realize income. Here, I’ll discuss these three different scenarios and strategies behind each one with real life examples.
Maintaining Liquidity and Capturing Premium Income
Maintaining liquidity is integral to any portfolio as cash can be deployed in opportunistic scenarios to capitalize on sell-offs or adding to a long position that has corrected to lower cost basis. Covered puts can be implemented as a means to leverage cash on hand to sell contracts that are covered by cash. This cash would be deployed in an effort to maintain this cash balance yet be put to work via an option contract. This cash reserve can be utilized for selling covered puts thus not purchasing the underlying security with the end goal of never being assigned shares and netting premium income in the process. Once the contract expires, the covered cash allocated to the contract will be freed in addition to the cash that was realized from the option premium at expiration. This scenario will allow cash reserves to be maintained while adding cash via covered put contracts. Continue reading "Covered Puts: An Alternative To Buy and Hold"
I’ve written numerous articles on options trading and how one can leverage options over the long-term to mitigate risk, generate income and accentuate returns. Leveraging options to supplement portfolio returns can make a meaningful impact on overall returns, especially over the long-term. Here, I’ll focus on covered calls and covered puts with corresponding lessons learned over the course of the past year with empirical data.
Covered calls are intended to leverage a stock position while extracting value on a consistent basis via selling option contracts against that position and collecting premium income in the process. I liken this to a landlord renting a room for monthly income, however, in this case, one is renting the stock. The option contract is structured with the option seller (stock owner) collecting a premium in exchange for the right for the option buyer to purchase the shares of interest at an agreed upon price by an agreed upon date for a premium (income that the option seller will receive). In this scenario, the stock owner doesn't believe that the shares will appreciate beyond the agreed upon price and thus be able to collect income while retaining the shares and dividend rights. The option buyer believes that the shares will appreciate beyond the agreed upon price and be able to buy the shares at a lower price than the market currently trades.
Covered puts involve leveraging a cash position that one currently has on hand and collecting a premium in exchange for the obligation to purchase one’s shares at an agreed-upon price prior to an agreed upon date. If the stock falls below the agreed-upon price prior to the agreed upon date, then the individual that bought the contract from you will force the obligation (that you agreed to) for you to purchase the shares. In this case (when the stock falls throughout the contract lifespan), the shares can be sold to you (the put option seller) at a higher price than the market. However, if the shares rise in value then the shares will remain with the owner and the put option seller will keep the premium income and the cash earmarked for the potential purchase of the shares will be freed. Why exercise the contract and sell the shares to you (option seller) at a lower price when one can sell the shares on the open market at a higher price? Continue reading "Covered Calls and Covered Puts - Empirical Results and Lessons Learned"
Levering cash with options
I’ve written numerous articles on options trading and how one can leverage options over the long-term to mitigate risk, generate income and accentuate returns. Leveraging options to supplement portfolio returns can make a meaningful impact on overall returns, especially over the long-term. Here, I’ll focus on covered puts, covered in the sense that one is backing his option contract with cash on hand. This strategy generates income in the form of a premium that’s received by the option seller. A topic that’s rarely covered is the different objectives or strategies and what to do about shares that are assigned from a covered put contract. Here, I’ll focus on covered puts and discuss the strategy involved before selling a put contract, objectives when engaging in these put options and if/when shares from the contract are assigned. Continue reading "Initiating a Position, Generating Income or Lowering Cost Basis - Covered Puts"