[Teddi Knight]

I did not see any reason for the big drop aside from it being a rally over the past couple of days. Wasn’t Friday nice though! I sold the July $65 puts but again, just a handful today

[Teddi Knight]

Nice trade Toby and great that it worked in your favor on the price. Part of the trouble with the original was perhaps selling the $85 put strike which really is a bit too close to the money at the time. The stock closed at $86.15 on June 8. Might want to work on selling a bit further out of the money for added safety.

[Teddi Knight]

The $74 strike is the Canadian option price. The US price reflects the disparity between the two currencies so I would say $60 US is a pretty good strike to match the $74 Canadian.

[Teddi Knight]

Sorry Amy I missed this post. I would have to know your prices and what you sold them for. The XBI is sure to be higher today with the Greek issue looking “resolved”. I don’t know what you did but sometimes I find picking up the shares and then buying back my covered calls and rolling lower and further out keeps the trade profitable but builds more protection for my capital as the shares are usually exercised and often they are exercised early.

[Teddi Knight]

The option premiums reflect the high volatility in the stock. Here are 8 tips to assist in selling put options on volatile stocks like CBI https://www.fullyinformed.com/members/8-tips-for-selling-puts-in-volatile-stocks-chicago-bridge-and-iron-stock-cbi-investor-questions/

[Teddi Knight]

Are you talking about stock buying and selling or options?

[Teddi Knight]

Here is the stop-loss update to the latest UDOW trade this morning https://www.fullyinformed.com/stop-loss-update-for-market-direction-portfolio-trade-for-june-18-2015/

[Teddi Knight]

Hi Jack. No. I pulled my stop but for those who are nervous they may want to take the loss and move out. I plan to buy more SDOW but not yet. My morning intraday comments explain my outlook. As well I started a new trade this morning buying the UDOW but I will be using a tight stop-loss on it. https://www.fullyinformed.com/fed-rally-intraday-chart-analysis-morning-for-june-18-2015/

[Teddi Knight]

Do you have too many shares? I was working on another article for you on the other stocks you mentioned in your previous post to show which ones to keep, which ones to roll, etc. With XBI if you are in a losing situation why not turn them into covered calls if you think they are moving higher. After purchasing shares then close the $240 covered calls and move lower with covered calls to protect the capital. Then sell puts against XBI to boost the income. Barring that calculate out any loss and sell puts to cover the loss since you think XBI is moving higher?

[Teddi Knight]

True Amy, but I do not see this kind of collapse as coming. Turmoil could take the market down perhaps 15% but as we are sellers of options rather than buyers, we can use a variety of strategies to protect those positions in a downturn. I think holding the SDOW as a hedge can work if the comfort level is such that you can add as rallies develop. Today’s market direction outlook was for a rally. That is what we are seeing but whether there is any reason for the market direction to finally break free and move higher during the summer (ie a summer rally), I don’t know what that would be. The Fed this week might spark a bit of a rally as I am doubting any rate increase is in the works. But for the rally to have lasting power we need revenue increases for corporations and at this time I don’t see that on the near horizon.

[Teddi Knight]

It does deteriorate as it is an Ultra ETF and the longer stocks go sideways the more is loses. But trading in the SDOW or UDOW or any leveraged ETF is easier to do when you understand the deciding factors to take into account and how you will manage the trade. I wrote this article to assist you and others in understanding how I trade this ETF and what I will be doing with my current position. https://www.fullyinformed.com/members/sdow-understanding-leveraged-etfs-in-the-market-direction-portfolio-investor-questions/

[Teddi Knight]

Yes a roll-down is a fast way to fix this if youa re concerned. You could also wait, pick up the shares and the next dividend at the end of June and then sell in the money covered calls at $42. That would be my suggestion. I try to max out the return and picking up that dividend makes for a sweet trade in my opinion.

[Teddi Knight]

If your goal is not to be assigned shares ever on Duke then a roll-down is in order. However I think the scare over interest rate rises is overdone.

[Teddi Knight]

I am not sure on the ability to edit. Once you log in I would think several days. The edit feature is right across from the time on the right hand side.

[Teddi Knight]

Normally I try to give it a day or two so that call premiums can fall a bit before buying. That did not work this time and at present I do not have any calls. This latest downturn though I think is overdone and I am not going to be buying VIX Index calls here. I plan to wait for next week to get call premiums lower before moving out into August for my next round of calls.

[Teddi Knight]

I am back doing more of the XBI ETF the past couple of days and preparing for more naked calls to be sold. Here is the latest on XBI. https://www.fullyinformed.com/members/morning-investing-strategy-notes-and-3-trade-ideas-june-12-2015/

[Teddi Knight]

Intel Stock is certainly looking excellent again this morning. The stock is pressuring resistance at $32, but I think it will retest the recent lows. Here are some intriguing trade ideas I outlined this morning and what two of the trade ideas I will be trying to enter today. https://www.fullyinformed.com/intriguing-trade-ideas-for-june-11-2015-to-profit-in-intel-stock-intc/

[Teddi Knight]

Thanks for your reply. From here I think the key is to put in place a strategy to protect the position and work its way to a profit and out if your outlook is the GMCR has limited upside. I will post an article for you shortly.

[Teddi Knight]

Often the calls being bought are for a quick bounce trade. Usually when a stock like BMY drops this amount, option traders will aim for a quick bounce. As options are a wasting asset I prefer the stock trade which while not as profitable still returned a decent gain for the one day. Presently I think BMY is trying to test for a bottom.

[Teddi Knight]

Here is an article which discusses the perils of trading in stocks like GMCR which basically are one trick pony stocks. I hope this helps with not just GMCR but hundreds of such stocks. https://www.fullyinformed.com/the-problem-with-one-trick-pony-stocks-comments-on-gmcr-june-5-2015/

[Teddi Knight]

Thanks Jim
Nice write up. The big point is stock selection which you have outlined. GMCR is a tougher to trade because it really is a “one trick pony” as they say. They need a lot more product lines and a growing base of consumers. They do not have that. Instead we are seeing a saturated market. To get beyond that they need more product lines. This is why I stay clear of companies like GMCR.

[Teddi Knight]

There are a number of support levels in GMCR. The problem you have is not using a stop-loss at the time of original entry, plus the stock was overvalued when you entered it. The next support is at $80 in the stock and you can see this morning a bounce back underway. Since you have shares you could consider waiting until Monday June 8 and then see where the stock is. Then consider selling calls far out of the money to help boost your return. If you look at the 5 year chart you can see that GMCR has had pullbacks before. What you want is to be in the stock during recoveries and not during pullbacks. Right now the stock is in a pullback. This is the time to be selling your calls while the stock tries to find a bottom. Once the stock commences the next recovery, you want to be back selling puts. At present there is no recovery and so stay clear of put selling for now. Hope this makes sense to you. I will have my article up for you shortly, but looking for support is easy when you look at volume.

[Teddi Knight]

I will have your article on GMCR rescue strategies up early next week. With the goal to get out of GMCR you want to watch further capital being risked.

[Teddi Knight]

Yes, the bounce I believe is just a one day bounce.

[Teddi Knight]

Thanks Thomas. My mistake. The trade details are correct and were based on June 11. I just typed the wrong date but the June 19 expiry is the one I sold and I like the $40 call strike. I believe it is pretty solid.

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