4/19 Daily Summary

My portfolio allocation for this month is working well for me, I've noticed some recent market activity and the market conditions on IBD have changed for "up trend under pressure", so I'd say let's keep an eye on this recent market activity. So far I have not pulled the plug on any of my positions, will only close them out if the market conditions worsen. Here is the break-down of what I have on this portfolio:

-Gold: This position is a Cash-secured put on GLD, sold the May 140 Put. These will eventually get assigned and I plan on holding a portion of my portfolio in Gold for a while. Bottom line I do not trust the current market and government's approach of printing money to pay for their own debt.

- Cash Secured Put: These are stocks I studied in the past down-cycles and they usually go down less than the market when we have a sell off. They're also stocks I feel won't go away any time soon.
PG : Sold May 62.5 PUT
KO: Sold May 67.5 Put
WMT: Sold May 52.5 Put

-Synthetic Covered call: In addition to the stocks I selected to play cash secured puts, I''m using this section of my portfolio to play break outs on the IBD top 50 stocks. IBD publishes a really good list of stocks with strong sales and earnings, they maintain a good grip on these stocks, their accumulation ratio, fundamentals, etc. Good way for me to stay plugged in without having to do all the research on my own.
WMT: Long Jan/11 45 Call, short May 52.5 Call
PG: Long Jan/11 50 Call, Short May 62.5 Call
ORCL: Long Jan/11 25 Call, Short May 34 call (break out play called on IBD)
SOHU: Long Jan/11 65 Call, Short May 100 call (break out play called on IBD)

Cheers!

4/7 Daily Summary

No major change Today, I've started to put together a few charts to show (in my true fashion) what I'm doing and how my positions are doing on a daily basis. I'm still working it out, but this shows how I'm allocating my portfolio in MAY and APR option cycles. Tomorrow I plan on exiting the APR positions and roll into the MAY contracts.

The chart above is for the MAY positions
The chart above is for the APR positions.

4/6 Daily Summary

Hi everyone, it seems not a lot of movement in the past few days, that's only on the surface, in reality we are gapping around and fading up-side movements.. I'd say there is some sort of fear coming back. As one of our readers, Doodelzack, pointed out the NASDAQ is re-balancing by reducing its weight on Apple and adding more MSFT. In addition to this, we have the Federal budget stand-off that might lead to a government shut down (according to IBD, NASDAQ dropped 4 and 3% in the last 2 times the government closed its doors).. This plus some noise around the FED having to hike rates may be causing some volatility in the short term, so let's all stay alert to that..

I have been taking it easy on my trading, creating a portfolio with a bit of Gold, some cash secured Puts and Synthetic Covered calls.. I'm doing a lot of backtesting as well as building the positions slowly on my portfolio. Bottom line is I'm looking for something with a lot less adjusting and a longer term perspective due to my time constraints.. Not to mention keeping it simple is always good.

4/4 Daily Summary

Not much market activity Today. I've started some cash-secured put positions for the MAY expiration cycle. As I have mentioned earlier, my plan now is to take a simpler approach and trade a basic strategy for a while, this will allow me to continue trading while on a reduced schedule and also allow for more time to bring my wife along to the trading/investing strategies so we can work the business together.

3/29 Daily Summary

No NDX Iron butterfly in place right now, the covered calls are working out ok with this recent up move.

3/28 Daily Summary

No major market change Today, I'm interested to see what happens next, are we going to find some footing here or come back down? Volume doesn't seem very convincing..

3/24 Daily Summary

First and foremost, let me go out and say it: I'm glad I'm not in the APR butterfly right now.. Look at this 30 day st. deviation chart, for about a month we have had 1 large day just about every other day.. This means a lot of adjusting to stay in the trade, in fact, the position I considered entering this week would be already undergone a cut and roll.

I'm in the process of re-evaluating all my trading, pros and cons, and the fact that with the newborn baby I want to spend some time with my family. I'm a firm believer that your trading style needs to match your lifestyle and personality. With a new baby and additional responsibilities at work, I'm finding the simple cash-secured put/covered call strategy a blessing from the sky.. :)

A reader posted a few good questions on my last posting, so let me repeat them here and address them to all:
What type of returns do you look for in your naked puts?
About 1 to 1.5% over the value held in margin. For a current position, I've sold the 72.5 vall on COST for about .70c, it is a bit below my goal, but since I was assigned COST last month, I wanted to start writing the calls anyway.

Overall, I'm looking to get about the same or better results as the market, with reduced volatility by selling the calls and puts to bring money into the bank when the stocks are moving side-ways.

Why naked puts over just buying the stock?
I start with selling a naked put, then I let it be assigned into stocks. Once I own the stocks I start selling the covered call. First of, you need to select the stocks you would like to own right away. Then, but selling extra premium with options you bank some money every month and reduce your down-side risk on the stock.

Isnt the margin and downside risk almost the same yet your participation on the upside is capped?
Yes, it is, the upside is capped, but I'm not looking to do this strategy on fast-moving stocks. My goal is to select a few stable stocks that I won't mind owning and keep selling premium every month, so while it seems the upside is capped, because you "refresh" everything, you essentially bring money every month regardless of what the stock does.