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You did extremely well, especially for your first venture into the trade ahead of the non-farm payroll numbers. Kudos for sure!!
Thanks for your questions. The DPZ trade had an expiry date of Aug 4.
https://www.fullyinformed.com/members/dominos-pizza-stock-dpz-3rd-trade-alert-and-idea-for-mon-jul-24-2023/Are you still in this trade? Can you explain a bit more to me about it and I can also update my trade for you. The stock shot higher after earnings and I sold out of the long calls.
Thanks for your questions.
I am working with a million dollar account for Put Selling. Therefore I like to have at least 5 positions in a trade. However if the stock is in an uptrend according to the Put Options Selling Tool Analysis, I increase the size. Once the Put Options Ranking increases to 70 and above I like to have at least 15 or 20 positions. Remember that I always watch for a chance to close every trade early.
To do that I start immediately as soon as the trade is setup and filled, to offer to buy to close. For example, I sold a put for $0.75, I then offer 30 or 35 cents to buy to close and I leave the good to date about a couple of days before expiry. I then adjust the offer to close lower and lower as the trade works its way closer to expiry. As soon as it is closed, I immediately look for another trade to keep my capital working as hard as it can to bring in more profits.
Does this assist you?
Thanks for the question. Obviously no need to do anything with these, LOL.
Yes, with the market change during the pandemic it was advisable to move to cash secured puts for the higher protection they provide.
On the USA Portfolio, I sent out an email in 2019 asking whether investors wanted more info on trades or for the portfolio to be maintained. I could not provide all. Overwhelmingly investors wanted more trades and trade ideas. As a result I discontinued the portfolio posting. I was told by members that they keep track of their own positions and saw little value in my posting the daily changes, trades, closings, etc to the online portfolio.
Hi Alvin;
The primary trend for the day is what I am watching and which I use to stay in a trade for longer.
The USA Portfolio is all Put Selling trades normally those that are from the watch list and those Trade Alerts during the day.
For the type of trading you are seeking, especially since you are working, I suggest the Retiring Easy Portfolio and the Million dollar Challenge Portfolio. These you can trade a few times a month.
I like to start at 50% of the profit made and then decrease from there as the trade unfolds.
It really comes down to what your goal is. If you NEVER want shares no matter how short or long the period, then I can see reasons for closing when the stock falls below the put strike shown. I found that often I would take a loss on such a trade only to find the stock come roaring back in the next rally. For this reason the stocks I trade are ones I would own shares in if there was never a chance to roll-down or roll out, which is very rare. Almost any trade can be rolled further to avoid stock being assigned. I think the better goal is to only trade ins stocks you are comfortable with. Qualcomm Stock (QCOM) is a great example.
You could look into these. I thought IB had a decent paper trading account. Since you are using IB you might want to look into it as the learning curve would be negligible.
E*TRADE: E*TRADE Paper Trading.
TD Ameritrade: TD Ameritrade paperMoney Virtual Stock Market Simulator.
Interactive Brokers: Interactive Brokers Paper Trading Account.
TradeStation: TradeStation Simulated Trading.
Webull: Webull Paper Account.Yes but I am not expecting a down market.
I usually wait until the expiry and then roll when needed.
Yes there was some data being added from CBOE. You must have tried the tool during the updating but everything is good.
I plan to hold and then roll if needed before expiry
Last is the ultra 3X or 2X ETFs. You can buy these during periods of uncertainty in the hopes of profiting in any pullback in the hope of recovering losses in your portfolio. The key is that these are 2X and 3X ETFs that try to return to the investor two times and three times the movement in the market. For example, you are holding a large number of tech stocks. You could buy the SQQQ, the bear ETF NASDAQ. The hope here is that if the index falls 10%, you earn 20 to 30 percent. That should cover the losses in a decline and possibly add in some profits.
To sum up, if the goal is to protect profits, then nothing works as well as using a trailing stop-loss at 5% to 10% below where a stock is trading. It costs nothing to put in place and it does not need much monitoring. To decide on the percentage, consider how much of a decline you are willing to suffer and put your stop-loss in place. As a trailing stop, it can be automatically adjusted as the stock rises. This means there is little monitoring on your part.
The other strategies I believe are best used if the goal is to own the shares for years in the future.
Since the first two strategy are active strategies requiring monitoring and trading, many investors turn to put options on a sector. For example, you want to protect a tech holding. In simple terms if 25% of your portfolio is in tech stocks you have to decide if you plan to hold them or trade them. If you plan to lock in profits, then you should use trailing stop-losses and follow a stock higher with your stop-loss. Then when stocks pullback you are sold out of your position and the profit is locked away. You can then re-purchase your stock once the correction or bear market ends or when stocks are low enough that you would enter them again. That’s the style used if your plan is to profit from your stocks as they climb.
If an investor wants to hold onto stocks for years then it is better to buy put options in an ETF that covers the sector. For example, if you were holding 20% of your portfolio in semiconductor stocks, you would buy a percentage of put contracts serial months out and at a price point where you would be happy, should your stocks fall. Normally you take a percentage of your sector. For example if you had 200,000 tied into into tech stocks, you could use the SMH ETF to try to profit from a decline in your portfolio. Remember that this would be for investors who understand that stocks could easily lose 25% to 45% of their value. This is why if your goal is to protect profits made, you need to use stop-losses which lot in the profit in a downturn. A 5% stock loss would protect a stock against a 5% decline in the stock.
Buying put options works but remember that the stock value still declines. Therefore on one hand your stock looses value and the put increases in value. There is however still a loss in your portfolio. Just to repeat, if the goal is to protect profits made, then a stop-loss works. Everything else basically tries to replace a portfolio that has declined in value. In simple terms the concept is your portfolio loss is $25,000, your put options increase by $25,000. You do, however still have a loss in the portfolio.
Therefore a stop-loss does what its name implies. A hedge through buying puts, or ETF puts, tries to replace portfolio losses.Hi Anna;
For my VIX Index strategy, it is not designed to protect a whole portfolio so that wouldn’t work for you. It is designed to profit from a spike in volatility such as the market pulling back.
The SPY ETF Hedge strategy is designed to build a cash cushion to protect a portfolio. In simple terms if a million dollar portfolio fell 10% it would lose $100,000. The SPY ETF hedge attempts to earn 15 to 20 percent of the value of my portfolio. I try to build up a cash cushion of up to 20%, which would cover a 20% loss to my entire portfolio. Remember that in most instances a bear market is followed by a bull market which recovers much of the losses. However I have found by earning several thousand each day can easily add up to 20% of my overall portfolio.
Yes, apologies. The ex-dividend date was June 15.
I have not forgotten your request. I’m just a bit swamped at present but I will get something posted for you shortly. Thanks for your patience.
i’ll write-up some ideas this weekend for you.
Hi Anna;
Yes both the VIX and especially the SPY ETF Intraday are active strategies. The SPY ETF in particular has to be followed throughout the day.
Can you explain what you are trying to setup as far as reasons are concerned. Your topic said Creating A Hedge which usually means trying to protect a portfolio. Is this what you are trying to do?
If not, are you then trying to profit from a potential decline in the index, a specific group or sector, or an individual stock?
Teddi
Thanks for your questions:
Here are some ideas:
Hi Mark
Thanks for the update on the symbol. I rolled the trade out a week to June 9 expiry and down to the $119 put strike. You can review the details here:
https://www.fullyinformed.com/members/1st-watch-list-trade-alert-for-tue-may-30-2023/
It was fixed a short while after I replied to you. Apparently CBOE who provides quotes for all exchanges had some issues.
Thanks. I will get tech support to take a look. I see Canadian stocks are still showing up.