Monday, February 18, 2013

MONEY: Option update Feb 18th.

Family day... My family is sleeping so I'm writing an update!

So what did I do?  Take the money and run?  No... I got greedy.

I got called away as I had expected, but then I almost immediately re-purchased the position and wrote a new call based on my parameters.

But fundamentally my strategy had changed.  I have been trying too hard to hold on to the underlying position.  As I've been closing out my call positions and not letting them ride.

I did make a few bucks when I decided to close out.  And as it turns out, that was the right thing to do anyway.  The underlying position shot up 4% the day after I closed my call.  So more potential profit in my pocket.

So... along comes Friday.  Family day weekend and some holiday I have forgotten to look up in the US too which keeps all North American markets closed.  So I closed out ALL my US ETF positions.

They had done so well for so many weeks in a row on their own.

Seconds after I got order-fill notifications, I got an e-mail from my brokerage saying they had finally processed my option-upgrade form so starting this week I'll be able to trade "naked puts."

This when used as I'm planning to drastically reduces my risk exposure.  Using them as I have planned the market can go up and I'll make money.  The market can go sideways and I'll make money.  The market can go DOWN up to 5% (in a month) and I'LL STILL make money!

If the market goes down more than 5% in my 1-3 week time-frame then I will be out of pocket, but I can control how much I'm out by closing out my positions quickly as soon as they go under water.

I'll keep you posted!

Stay hungry my friends!

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