Posts Tagged ‘IRA’

September Expiration Results

I took a conservative approach for September and wrote only deep in-the-money calls on stocks that had the edge I was looking for at entry.  Here are the percentage gains for my five trades that are called out today:

TSL –     3.68% 

WFR  -  3.31%

VMW  - 3.10%

CCJ  -   2.67%

CMI  -   2.2%

Total Average Gain = 2.99%

Since I was not fully invested for September, my actual virtual portfolio gained about 1.2%.  I took early positions for October as I found good entry points that worked for my strategy.  I am tracking my virtual portfolio compared to the SPY, which moved from 107.53 at August close to 107.88 yesterday, which is a .32% move upward. So even partially invested I beat the S&P 500 by nearly 1 percent.   

At some point I will calculate how much I would have made if I had bought the stocks outright and I’m guessing it would have been a very nice number since they all went up and every stock but CCJ was up more than 5 percent.  My checkpoints should make for a great stock picking system for straight stock purchases to hold for 3 to 6 weeks.  So why don’t I do that instead?  My trading style is very cautious.  I hate to lose money.  I have tried other systems and found myself vulnerable to buying high and selling low, or getting too nervous and shaken out of positions early, when I could have made a profit with patience.  This month I would have had a hard time fighting off all the negativity in the market to even enter positions unless I had a hedged entry with a covered call.  Since I have a master’s in psychology, my world view is that trading success has as much to do with psychology and emotions as it does fundamental and technical analysis.  I have confidence in my system and feel more secure investing when I know I am hedged and can roll into the next month.  I feel like I have taken back control from the market manipulators by selling options to give myself flexibility and a cushion against whatever crazy thing happens out there.

(Click on my user id to go to the website for complete trade updates.  I monitor comments more closely at the site as well.)

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Always Trade with Your Edge

Always Trade with Your Edge

Courtesy of Rev Todd

As I near the first option expiration next Friday during my one year plot to make 3% a month for a year, I know I won’t make 3% the first month and I am OK with that.  I did not fully invest right away and phased in investments as I found stock patterns that fit my philosophy.  After three weeks I am still not fully invested.  I will probably make up ground by October because I have put in a number of positions already that will make more than 3%, so I’m not going to go crazy trying to hit my target every month.  While I want to make money, I’m going to meet that goal by not losing money and not taking unnecessary risk.  I believe I will still meet my overall goal without 3 percent this month by following this simple advice:

Always trade with an edge. 

What is the trading edge when writing monthly covered calls?  I am trying to take advantage of one of the three certainties in life – death, taxes and premium decay on options.  I don’t know what the stock market or the company I invest in will do. I do know with certainty that when I sell an option I will get paid and the premium will drain to zero by the third Friday of the next month.  I sell monthly options because the premium is compressed to a greater degree than LEAPS (long-term) options.  My first edge is very simple, sell premium that allows for 3 percent in profit per month.  Since my current bias is that the market is ranging, I’m playing it safe and writing in-the-money calls that allow for a 5 to 10 percent downside protection, which seems reasonably safe for now.

I never write a covered call on a stock just because of a compelling premium.  My goal is to make a stable income on the stock every month, not to speculate.  High premiums are a sign of high volatility in the stock, which makes the investment more speculative.  I want a high degree of certainty, so I follow some basic rules, which you can see in every trade alert I post.…
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Three Styles of Buy-Writes in an IRA

A whipsawing market can disturb your sleep to the point where you feel like you spent the night sailing around the Cape of Good Hope in a hurricane rather than dreaming about how you will spend your retirement. I batten down the hatches by writing covered calls in my IRA virtual portfolio. Covered calls enhance returns in a range-bound market and make the IRA ship sail a little smoother in choppy wakes caused by the latest CNBC “USS Dome and Gloom” and “USS BuyBuyBuy” sail at your stern. The Education section at Phil’s Stock World (PSW) gives three great strategies on how to buy-write your way to a more peaceful retirement. I suggest you read the details of each of these strategies as you get the chance, but I will provide a brief summary and what I see as the strengths of each style of writing covered calls.

 
Discount Buy-Write
 
This is the backbone strategy at PSW to build a core virtual portfolio. The strategy is to buy a great stock coming off a market bottom and sell a call and put at a strike price that allows for a 20 percent or better discount on the purchase of the stock. Here is a great example from PSW sent to members on July 7.
 
XOM is a good inflation hedge and so beaten down (back to Sept 2008 spike lows, when oil was $40) that I have to include it.  They have a 3.1% dividend of $1.76 with the stock at $57.46 and we can sell the 2012 $55 calls for $9.20 and the 2012 $52.50 puts for $7.35 for a net $40.91/46.71.  That brings the dividend up to 4.3% and you make another 34% if called away at $55 with your worst case being owning 2x XOM at an 18.7% discount to today’s price.
 
The obvious advantage of this strategy is that you can make a decent income even if your stock drops and you get a 15 to 20 percent downside hedge. Even in a huge market drop, that will pay off leaving you greater capital to work with as you build your virtual portfolio back up. Second, these are long-term writes, often 6 to 18 months into the future. If you don’t have time to monitor your virtual portfolio every day or week, this strategy allows peace of mind while vacationing or just living your life. Third, if you are a PSW


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What “the plot” is all about

What “the plot” is all about

Courtesy of Rev. Todd, Rev Todd’s IRA Plot

Business people looking down at man lying on pavement, elevated view

For several years I have been a wandering stock market pilgrim seeking the holy grail of trading. I started with $2500 from a tax rebate and started climbing the volatile active volcano of penny stocks. I barely escaped the lava and moved through a series of gurus. I journeyed through the lands that were infested with gold bugs; flew (and crashed) with the iron condors, traveled with a trading tribe of “turtle traders” until whipsawed unconscious; and flew too near the sun with Icarus-like option traders.  None of these proved to be the holy grail, since I either had too little cash, too little time or too little patience since I work full-time and cannot devote myself to day trading.

In September of 2008 I discovered covered call writing. Once again I took a beating as the market underwent cardiac arrest in the ICU, but I noticed that while mutual funds were down 40-50%, I was “only” down 30% at the bottom and I recovered all my capital by the following February. I could also sleep at night and didn’t have to be glued to the screen. In the 1st quarter of 2009 I had 14 of 14 successful trades, made 15% writing covered calls, and followed that with making 14% in the 2nd quarter. Sounds like the holy grail, right? However, the VIX was at a peak and the premiums were more magnificent than the pearly gates and heavenly streets paved with gold. Then I got greedy. I succumbed to the sirens promising 100% a year and once-in-a-lifetime investments in breakthrough technologies.  I started to lose money again. 
 
I stumbled into PSW a few months ago and the buy-write strategies and hedges made sense to me. I started making money again. I didn’t find a holy grail, a messiah, nirvana, or the Kingdom of God, but I did start getting my daily bread. Oddly enough I make more money by being conservative than by taking risks.
 
So how did “IRA plot” come about? I assure you I am not affiliated with any Irish revolutionary groups, though I did spend a summer in Belfast. I’m talking about the Roth kind of IRAs. I recently took over managing my new wife’s IRA and my mother’s IRA. Not all the strategies at PSW work in IRA accounts. While Interactive Brokers allows me to sell cash covered naked puts, I cannot buy


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Phil's Favorites

"Just because you're buying stock, doesn't mean you're an investor"

 

“Just because you’re buying stock, doesn’t mean you’re an investor”

Courtesy of 

Josh here – in the mid 1960’s, investors decided that there was a group of fifty growth stocks whose outlook was so bright that it didn’t matter what price you paid for them, as long as you were buying. By the early 70’s, they were learning a critical lesson about starting valuation – McDonalds, Coke and Procter & Gamble did indeed have a very bright future, but that didn’t prevent them from being cut in half. Investors in these names would have ...



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Zero Hedge

Sino-US Tit-For-Tat Visa Restriction Spat Erupts Over Tibet

Courtesy of ZeroHedge View original post here.

The Trump administration said on Tuesday it would impose travel bans on Chinese Communist Party (CCP) officials that are restricting foreigners' access to Tibet. Then, in a classic tit-for-tat, China responded Wednesday with visa restrictions on Americans, reported Reuters

On Tuesday, US Secretary of State Mike Pompeo slapped an unspecified number of CCP officials with visa restrictions, ...



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Biotech/COVID-19

5 COVID-19 myths politicians have repeated that just aren't true

 

5 COVID-19 myths politicians have repeated that just aren't true

The purveyors of these myths aren’t doing the country any favors. Brendan Smialowski/AFP/Getty Images

Courtesy of Geoffrey Joyce, University of Southern California

The number of new COVID-19 cases in the U.S. has jumped to around 50,000 a day, and the virus has killed more than 130,000 Americans. Yet, I still hear myths about the infection that has created the worst public health crisis in A...



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ValueWalk

100 Days Since The Roll Back Of Fuel Efficiency Standards

By Anna Peel. Originally published at ValueWalk.

“100 Days Since…” Trump Rolled Back Fuel Efficiency Standards While Public Health, Economic Fallout Accelerated

Q2 2020 hedge fund letters, conferences and more

The Rollback Of Fuel Efficiency Standards

WASHINGTON, D.C. – One hundred days ago today, the Trump administration finalized its rollback of fuel efficiency standards — a s...



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The Technical Traders

Credit/Investments Turned Into End-User Risk Again

Courtesy of Technical Traders

Continuing our research from Part I, into what to expect in Q2 and Q3 of 2020, we’ll start by discussing our Adaptive Dynamic Learning predictive modeling system and our belief that the US stock market is rallied beyond proper expectation levels.  The Adaptive Dynamic Learning (ADL) modeling systems attempts to identify price and technical indicator DNA markers and attempts to map our these...



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Kimble Charting Solutions

Here's Why QQQ and Large Cap Tech Stocks May Rally Another 10%!

Courtesy of Chris Kimble

The long-term trend for large-cap tech stocks remains strongly in place.

And despite the steep rally out of the March lows, the index may be headed 10 percent higher.

Today’s chart highlights the $QQQ Nasdaq 100 ETF on a “monthly” basis. As you can see, the large-cap tech index touched its lower up-trend channel support in March at (1) before reversing higher.

It may now be targeting the top of the trend channel at (2), which also marks the 261.8 Fibonacci extension (based on 2000 highs and 2002 lows). That Fib level is $290 on $QQQ.

If so, this upside target for $QQQ is still 10% above current prices. Stay tuned!

This article was first written ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 14 March 2020, 05:51:16 PM

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Comment: Crash in perspective - its Bad, and not over!



Date Found: Saturday, 14 March 2020, 07:49:29 PM

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Comment: The Blood Bath Has Begun youtu.be/bmC8k1qmM0s



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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.