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

Mueller report: How Congress can and will follow up on an incomplete and redacted document

 

Mueller report: How Congress can and will follow up on an incomplete and redacted document

Morning clouds cover Capitol Hill in Washington, April 12, 2019. AP/J. Scott Applewhite

Courtesy of Charles Tiefer, University of Baltimore

The release on April 18 of a redacted version of the Mueller report came after two years of allegations, speculation and insinuation – but not a lot of official information about what really happened between the Trump campaign and Russia.

...



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Zero Hedge

Nearly Half Of Millennials Wouldn't Invest In Stocks Even If They Had The Money

Courtesy of ZeroHedge. View original post here.

As the American equity market roars back toward its all-time highs, a majority of the millennial generation is probably learning the true meaning of FOMO, because as study after study has showed, those who came of age immediately before, during and after the financial crisis were so scarred by the experience that they refused to ever buy in to the equity market. Overall, equity ownership among American adults remains 8% below its pre-crisis levels....



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Insider Scoop

Uber To Sell Minority Stake Of Its Autonomous Vehicle Unit To Japanese Consortium

Courtesy of Benzinga.

Uber Technologies is planning to sell a 14 percent stake in its autonomous vehicle unit to existing investor Softbank, Japanese automaker Toyota, and auto parts manufacturer Denso ahead of its much-anticipated initial public offering (IPO), which is expected to happen in May. Though...



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Digital Currencies

5 Cryptocurrency Tax Questions To Ask On April 15th

Courtesy of ZeroHedge. View original post here.

Authored by David Kemmerer via CoinTelegraph.com,

Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.

...



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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: Thursday, 18 October 2018, 05:33:01 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Why The Stock Market Is Heading For Disaster youtu.be/Gubf0A5pHL0



Date Found: Monday, 29 October 2018, 12:55:07 PM

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Comment: Ross Beaty: We Are Star...



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Kimble Charting Solutions

Silver Bear Market Faces Big Price Support Test!

Courtesy of Chris Kimble.

When silver, gold, and the precious metals industry were red-hot bullish in the 2000’s, investors could do no wrong.

You could buy SILVER at just about any price and it would go higher.

In today’s chart, you can see three large green bullish ascending triangles from the 2000’s that lead to big gains. But that was the bull market before the current bear market.

The tables have turned since the 2011 price top. Silver quickly formed a bearish descending triangle and fell another 50 percent when that broke down. This sent a vicious bear mark...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Biotech

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Reminder: We are available to chat with Members, comments are found below each post.

 

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Assorted cannabis bud strains. Roxana Gonzalez/Shutterstock.com

Courtesy of James David Adams, University of Southern California

Medical marijuana is legal in 33 states as of November 2018. Yet the federal government still insists marijuana has no legal u...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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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. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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