Before I start, let’s remember our asset allocation approaches and what applies to each of us. From the “Getting Started” report “Intelligent Asset Allocation: Better Returns & Lower Risk.”
- cash-secured put selling for building stock positions and generating income…
- covered call writing for trimming positions and generating income…
- LEAP call buying for when large opportunities present themselves, such as after major corrections…
- Swing trading of calls and puts for our R.A.R.E. members.
Option selling is a professional strategy that takes some getting used to, however, if you are a long-term investor with a contrarian streak who likes to add income to the bottom line, this is THE strategy worth learning.
Before making any options trades, read Characteristics & Risks of Standardized Options, study the CBOE Education Center and engage in paper (pretend) trading for an extended period before trading options.
Also, read this article:
Most trades are hidden, however, several recent trades and most older trades have been released to serve as samples. More will be released as the options expire.
Each month at about options expiration I will post a new set of option trades that you can look to make. I will focus on: Selling cash-secured puts on stocks that we would like to own and are approaching support. Covered call writing on stocks that are rallying but hitting resistance, so we can take some profits. LEAPs for gaining leverage on undervalued intermediate term growth ideas. Hedges.
This will be very quick before I head out to play poker, which is sort of appropriate for talking about our volatility trade (VXX). Virtually everybody should have made money on this trade. The question to ask if you still own the calls is what now? Do you take the big profits to close out the week and see what happens or do you let it ride into another government […]
Summary I am selling the February VXX $27 calls for $2.75. This represents a 36% gain in a little over a week. It’s a good trade, but let’s not get greedy, these options move a lot and have a structural disadvantage. I’m essentially playing with house money on the February VXX $32 calls after buying back in puts last week and selling the $27 calls as noted
One of the things that those who are calling for lower oil just don’t understand is that the fracking industry is just not going to flood the market with oil. That means there won’t be this sudden influx of associated gas – gas that comes with oil production. How do I know this. I talk to the oil people. While there is still somewhere between 6,000 and 10,000 DUC wells […]
This is an add-on to the article on winners and losers in the solar space from tariffs. I am a buyer of SunPower (SPWR) stock for an initial position of about 2% of portfolio value. I am a seller of cash-secured puts designed to increase my position to 4%. I am selling the SPWR March $8 puts for about a buck. I am also starting to buy the SPWR January […]
The nature of swing trades is that sometimes things swing against you. That is the case in the government shutdown not staying shut down. Our volatility speculation became a lot more speculative this morning when the Senate voted 81-18 to pass a continuing resolution to end the government shutdown for until February 8th.
I have been watching the drama in Washington D.C. over the budget. I have no real idea whether they cut a deal or not tonight, but it seems the Republicans don’t have the Senate nailed down. If they don’t get all but one of the Republican Senators, right now they’re missing at least 3, then there will be a Government shutdown come Monday if there is no deal by then. […]
Summary Volatility has been remarkably low a long time. The number of days without a 5% correction is close to setting a record. Volatility could return very soon for several reasons. I read a lot so you don’t have to. Sell VXX puts to generate income with your cash and a potential great buy-in price on the long volatility ETF. Volatility has been low for a very long time. I […]
I am a huge proponent of using cash-secured put selling to generate portfolio income and accumulate good stocks at more favorable prices. Whenever we sell a cash-secured put, we are doing so not because of the income, but because we truly would like to own the stock. The income is secondary. It serves to help us maintain optionality and buy with lower net cost basis.
Potash Corp (POT) is merging with Agrium (AGU) imminently. This will create an awesome vertical structure for the new company as Agrium has a large retail network for the combined company’s products. The wholesale distribution of Agrium has the potential to really charge sales of the combined product line.
The oil markets are getting clobbered again because apparently the U.S. has a lot of cheap and easy to get to oil forever, there’s no reason for a risk premium on oil for say a bigger war in the Middle East and because we’ll all be driving electric cars next year.
In my recent Seeking Alpha article I said this: “This time, the only potential downside I see is a secondary offering to raise another quarter billion dollars or so. I expect that soon. However, it will only temporarily hit share prices as people scream, stomp their feet, panic, and sell the dip.” https://seekingalpha.com/article/4074040-citron-wrong-exact-sciences
The energy sector is getting beat up again, especially oil. The charts show a fairly strong support level for oil in the middle $40s which we have discussed before. While there might be a bit more downside if there is strange news out of the Middle East short-term, I think we need to focus on the intermediate term.
I am taking my first positions in Antero Resources (AR). The company is a pure play natural gas play in the Marcellus and Utica shales. It offers a very strong margin of safety and a chance to rise 50% or more in the next 2 to 4 years.
The First Trust ISE-Revere Natural Gas ETF (FCG) is rising as a hurricane heads towards the U.S. While I am concerned of a further sell-off of about 10%, FCG is a position that we need to establish. We can move in that direction by selling cash-secured puts today for a fraction of a position. The upside in natural gas is fairly obvious at this point. A lot of projects have been curtailed […]
The First Trust ISE-Revere Natural Gas ETF (FCG) is down today as options expire. While I am concerned of a further sell-off of about 10%, FCG is a position that we need to establish. We can move in that direction by selling cash-secured puts today for a fraction of a position. The upside in natural gas is fairly obvious at this point. A lot of projects have been curtailed for the next […]
I recommended initial purchases of First Solar and SunPower here: http://kirkspano.ebizontech.biz/investments/277-buy-sunpower-spwr-first-solar-fslr Today I am expanding one of those positions as the solar sector shows capitulation. For those with a position in SunPower or just looking for a good income with growth play, SunPower (SPWR) is showing capitulation today. It could fall a bit more, however, these are clearly prices to want to buy at for the long-term. When asking yourself about […]
Per our talk in the forum, I am buying stock in Silver Spring Networks (SSNI) a play on the smart grid. I am also selling puts to defray my cost or pick up more shares on downward volatility. The company has already worked on some huge projects and is profitable. I believe they will continue to surprise to the upside. I think this is especially true given the energy bill […]
I am currently listening to the Exact Sciences earnings call. The Anthem news is excellent. Revenue is going to be good. Kevin affirms test volume. Points out focus on controlling costs. Looks like company can be profitable by Q4 2016 or Q1 2017. I am buying the January 2018 $8 calls with a limit price of $2.50 for 1% of the Punch Card Stocks portfolio. Kirk Fundamental Trends http://kirkspano.ebizontech.biz/trades