[Teddi Knight]

This description was very helpful. The quick thinking of selling the $345 put to offset the loss was impressive.

[Teddi Knight]

MSFT

Why this stock?
Pays dividend and well diversified stock. Institutional support.

Trade Plan:
Did not have one, infact I did not have a chart with support levels. Yes I feel sad, mad and bad for not having one. I saw Dr. T’s MSFT trade idea before earnings for $44 puts.

I work in the IT sector so, I was not so confident about MSFT going higher than its current valuation(gut feeling). Post earnings, when it tanked I was watching this like a kid in the candy store. I think $42 is a very good value, so I went and randomly sold 2 puts. The entry was funny as well, at 9:30 a.m and 9:31 a.m, not looking at the chart or even planning on number of puts that I would sell. Not having a trade plan is like having sex with a stranger without protection. Sorry for that example but it sums up how I feel.

Oh wait it gets even better. I see the stock stabilizing and next day 01/28 I think lets buy 100 shares of MSFT at $42. Then I decide not to and sell the Jan 5 $42 put with 2 mores days to expiry.

So, if you see the pattern I am improvising during the market hours without a plan. This is greed in play.

Trades:

1. SOLD -1 MSFT 100 (Weeklys) FEB1 15 41.5 PUT @.34 on 01/27 at 9:30 a.m
2. SOLD -1 MSFT 100 FEB 15 42 PUT @.75 on 01/27 at 9:31 a.m
3. SOLD -1 MSFT 100 (Weeklys) JAN5 15 42 PUT @.25 on 01/28 at 10:37 a.m (I had the opportunity to close it on 01/29 but didn’t as I had no game plan)

Rolled the JAN5 15 42 PUT to FEB1 15 42 PUT
SOLD -1 CALENDAR MSFT 100 (Weeklys) FEB1 15/JAN5 15 42 PUT @.17 on 1/30 at 10:48 a.m

What do I do now?

After pouring some cool water on my head I started to come up with a trade plan, or a rescue plan :)

On 1/29 I looked at my MSFT inventory and started with the 3yr chart with support levels as posted. I already sold 3 puts which sucks, ideally I would have sold 1 at $42 and waited. Then sold one at $40. I have 5-6 puts that I can sell to get into Microsoft. I do not mind owning the stock after doing everything to reduce my cost basis. I will not employ any other puts till I absolutely need to and will do it at the support levels I have listed.

Any opportunity to reduce by number of puts for profit or break even I will employ. If next week MSFT rallies and I can close one put I will. If not, I am thinking about rolling out and reducing 1 put for break even or little profit on the roll.

So, the plan is to roll as much as possible till I cannot roll any further and only employ additional puts only when I think it is absolutely needed guided by price action.

Lessons learned:

MSFT and INTC(I am going to write up shortly on this) were 2 trades I did without a plan, but with emotion. So, lessons learned:

1. Trade what you see and not what you think.
2. Trade with a plan
3. Don’t forget 2.

Attachments:

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[Teddi Knight]

XOM/CVX/RDS are all great integrated oil companies. RDS would have been my choice had there been high open interest/volume in options. XOM in my opinion would be best to play. It has large players in it(buffet stock) and is lower priced to my liking. So, I prefer XOM for options play.

[Teddi Knight]

Like surf49 I am holding my 2/20 41 puts for now. Some of the tech newsletters I follow predict a low on 2/2 and a bounce. I’m looking to add contracts at the 3x level on additional weakness then roll my 41s down or close them in a rally. I am lecturing myself to have patience…

[Teddi Knight]

JFollick definately not fool proof will check it out and let you know appreciate it!

Teddi I am in the US, Ironically I have tried submitting a ticket via the website, I have tried randomly calling via the phone, & also randomly via the help chat. This was all to ensure I get a different & hopefully competent person each time as a test. Clearly all of it failed..let’s see what happens on try #7! :)

[Teddi Knight]

Hi rishi
Detailed posts like this one helps newbies like me learn and gain confidence. Keep them coming please. Thanks

[Teddi Knight]

Not sure what your initial trade plan was before selling the 3 puts.

If I was selling this then here is how I would do:

1. I don’t want to own shares: I would have sold my 300 shares for a loss of:
27.29-17.82 = $947 loss for 100 shares. Since I have 300 shares, my total paper loss would be $2841. Then I would turn back and sell the 3 July 27 puts for 9.6 each. That would net me 2880 and would bring my cost basis down to 27. I am out of stock but back into puts 6 months out. I would roll this further at 3 month mark.
2. I want to own shares and OK with adding more capital(say 4 more puts): I will hold the 300 shares assigned to me and I will wait for timing signals on USO for selling additional puts. I have attached a chart. Based on what I am seeing in that chart(divergence between price and momentum indicators) oil might be hitting a short term bottom. I would not sell all my puts though. I would do 2 now and 2 on retest of this level and market situation at that time. I sell March 20 puts which I could have gotten for $3 today. I would immediately set a limit order to close it for 50% profit. The idea here is to squeeze as much of premium as I can. Then look for a down day and sell again. I call this squeezing the premium. After doing this for 2-3 times I move onto the next month. I am reducing my cost basis this way. If I cannot extract the premium and USO goes straight back down then I will roll these puts forward and use my 2 other puts at the opportune time.

Once covered call becomes an option then I will start using selling covered calls on half my position(so that I have room to adjust if call gets into trouble) using the 10-20-30 MA strategy.

I am sure Dr. T knows other good ways but these are the things I learnt from her and have used in the past.

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[Teddi Knight]

CAT

Strategy:
Sell puts to get into the stock at defendable prices

Why did I select this stock:
Large global company paying dividend with institutional backing.

Trade Plan:
As shown in the picture long term support it at $80. I can sell 4-5 puts to get into a position. Since the general market is soft and CAT is a global play I don’t want to rush all my selling. I want to sell the puts on CAT because I want to own it. I want to own it till I have no other choice. In other words I will roll to avoid assignment as much as I can or if the price is right I will own. Either way I want my cost basis below $80 for CAT. Once exercised depending on the market condition I will sell deep ITM calls to get exercised out for a profit or use the MACD/10-20-30 to sell covered calls to collect more income. I will sell puts when the price is at $80, $75, $70, $65 based on the CAT market situation. I will sell OTM as I can get good premium because of high volatility.

Options sold:
SOLD -1 CAT 100 (Weeklys) JAN5 15 83 PUT @.50 on 01/23
So first put was sold based on Dr. T’s trade idea.
Rolled the option after earnings at $80 definitely looking bearish short term , so I want to give more time and reduce cost basis:
SOLD -1 DIAGONAL CAT 100 FEB 15/JAN5 15 82.5/83 PUT @.23 on 01/27
So I reduced the strike price by 50 cents and made .23
SOLD -1 CAT 100 FEB 15 77.5 PUT @1.26 on 1/27
Went into my next position after the earnings as I felt that the stock might not go much below looking at the price action. I will be watchful and close this position for at least 50% profit. I will work around this price to extract premium till there is none.

Cost basis:

If assigned I will be in CAT for $80 – premium collected which would be around 78.15 after commissions.

Attachments:

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[Teddi Knight]

Hi Dizzle
I can’t believe someone at their company could not help out. Are you in Canada or the USA?

[Teddi Knight]

Are you saying you lost $8.00 on each rolled put?

[Teddi Knight]

Congratulations! Nothing like an easy profit from today’s drop. I sold 500 shares at the close but I am holding the rest over the weekend. I would like to hold longer than a few hours. LOL. This has been quite the month for having to trade the portfolio daily.
I received a lot of emails today from investors who jumped into SDOW. A lot of them got better entry prices by waiting longer than I did. One investor bought 10,000 shares of SDOW. I can imagine the celebrating this weekend! I wonder if he sold out toward the end of the day?

[Teddi Knight]

Thanks for the compliment. I very much appreciate the sentiment. I hope the private forum opens up even more mentoring experiences. Take care and enjoy your weekend.

[Teddi Knight]

I kept my 2/20 41 puts and added additional positions 3/6 $40 puts at $1.00. Will see what next week brings.

[Teddi Knight]

THIS IS WHY I FEEL TWTR IS A NO LOSE SITUATION IF YOU HVE PATIENCE: Either they have great earnings, OR: Costolo is gone which will support the stock price.

Twitter (NYSE:TWTR) chairman Jack Dorsey and fellow co-founder Evan Williams let employees know at a recent meeting they and the board are “super supportive” of embattled CEO Dick Costolo, Kara Swisher reports. Dorsey also recently defended Costolo on (drumroll…) Twitter.
Sources state this show of support comes amid “growing worries about potential attacks from activist shareholders.” The WSJ ran a column in November highlighting shareholder discontent with Costolo, and Twitter’s shares spiked on Dec. 22 amid speculation Costolo could be on his way out.
Swisher reports “a number of former employees are getting pinged by hedge funds about Costolo, who appear to be doing extensive research on him.” Stephen Mandel’s Lone Pine Capital is said to be among the firms.
Working against would-be activists: Twitter can issue preferred shares with special voting rights (i.e. a poison pill) without shareholder approval, and shareholders can’t call a special meeting to make changes. Working in their favor: Twitter (unlike Google or Facebook) doesn’t have a dual-class share structure.
Twitter’s Q4 numbers (due in six days) could either ease the pressure facing Costolo or heighten it.

[Teddi Knight]

Teddi here is what you said
“How could you argue against the $40 put strike. That is exactly what I sold as well and I rolled my $44 puts from yesterday forward to earn even more premium”
I don’t see any update your trade. what did you exactly do and how can you get higher premium if you roll it down?

[Teddi Knight]

Hi Dizzle,

Today I tried changing the Observation Period to 21 and got very reasonable results. These oscillators are definitely not fool-prooof and timing the entry still seems like more of an art than a science. Give 21,7,21 a try and let me know what you think.

[Teddi Knight]

I like the looks of Apple Stock even if this is the start of a bear market. It has all the makings for successfully trading weekly options. Thanks for your post and best of luck always.

[Teddi Knight]

If you do not want stock you have to close. It really is that simple. If you are willing to own stock but want it lower, then roll down and out. Microsoft is in a strong downtrend now as are many tech stocks. The market will fall further and the 2000 level cannot hold in my opinion. Stocks are going to be lower next week but the volatility will remain. So pick a strike, you like and consider building a position around that strike. Also consider selling naked calls which I am starting to do today in many stocks. Investors are getting more and more worried. Stocks will fall to the 200 day at least and then a new assessment can be done.

[Teddi Knight]

Funny you mention FB…..sold some puts today; decided the premiums for DECK were not as much as I made last night, so I will be happy to trade another. DECK has a gap between 60-65 and it’s likely to fill that at least.

[Teddi Knight]

Once again, my $41 calls expire worthless; STO strike $41 Feb 6 @ $1.25

If I lose it, there will always be another.

[Teddi Knight]

Hi Teddi, we really appreciate the response. The forum looks great btw!

This is actually Patrick responding now. Don’t worry about missing the e-mail, its patrickreed1@gmail.com for the record though. I will post with my gpa’s account on here occasionally if that’s ok :p

Gpa and I have really hammered our day trade strategies down. Pretty similar to pennies, but we are mostly using nasdaq futures (/NQ). He has been doing more work/research on trading and I am very patient for a particular pattern/setup with the 5 min Ichimoku Clouds. I did an internship with Andew Keene over summer so watching him trade really helped me refine my rules when trading.

I have been dedicating a lot more time to reading/researching your investing strategies and trying to build some more consistent monthly income. I feel 100x better now that I am comfortable rolling/repairing if a trade goes against me. I plan on starting an AAPL bi-weekly program soon as well.

Anyways, thanks again as always for the incredible information and write ups. I consider you a mentor and feel very fortunate that my gpa has introduced me to you.

Take Care,

Patrick

[Teddi Knight]

Thank you for posting this. It’s an excellent learning opportunity for me. Please continue sharing your experience with these USO trades.
…..Linda

[Teddi Knight]

To update this trade….
I rolled the short leg down to $90 from $91 and out to Feb 6th. This reduces my capital at risk by $1.00. I received a net credit of $0.35 on the roll. Between the original trade and the roll, my cost basis is now, if assigned, is $89.39 (current stock price is $89.24). We will see what happens with the stock price over the next week. Depending how close the price is to the strike next week, I will either take assignment and sell close to the money calls to close out the trade, or roll the puts out and down.

Tom

[Teddi Knight]

I’ve had GILD for quite a while and just continue to sell calls against the position and work the cost basis down.

[Teddi Knight]

I’ve called multiple folks there the same issue. Have you had good luck using those settings?

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