We're starting a new feature for Seeking Alpha's Premium Research Service.
Using basic options techniques in a $100,000 Portfolio, we're going to aim for making 5-10 trades per month that will make a $5,000 net profit each month. These will be, for the most part, short-term trade ideas that we will track in a virtual portfolio that will be replacing the $25,000 Portfolio at PSW.
Why $100,000? Because, in general, we'll be trading blocks of 10 contracts and that means the trades can be scaled down for smaller portfolios and also because there will be day trading and margin trading that is not appropriate for smaller portfolios. I will do my best to discuss the implications for smaller portfolios but, as a rule of thumb, If we are trading less than 10 contracts in the 5% Portfolio, then it is NOT APPROPRIATE for a smaller portfolio.
Also, there will be trades that are longer-term, though our focus will be to look for in and out opportunities, staying cashy and flexible as much as possible so we can take advantage of opportunities as they come along.
Keep in mind these are going to be aggressive, high-risk, high-reward trade ideas and should only be played with GAMBLING MONEY that you can afford to lose. For the bulk of our stock allocations, we prefer long-term, "BE THE HOUSE - Not the Gambler"-style trading, where we SELL premium to give ourselves a statistical advantage in our trades.
In our Long-Term Portfolio, our goal is to make steady 15-20% annual returns while our Short-Term Portfolio is more aggressive and opportunistic, with the mission of also protecting the bullish Long-Term Portfolio with bearish hedges. The 5% Portfolio will be self-contained and the key to making money with aggressive trades is sound risk-management.
