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.)

Tags: , ,




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.…
continue reading


Tags: ,




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


continue reading


Tags:




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


continue reading


Tags: , ,




 
 
 

Phil's Favorites

Does raising the minimum wage kill jobs? The centurylong search for the elusive answer shows why economics is so difficult – but data sure helps

 

Does raising the minimum wage kill jobs? The centurylong search for the elusive answer shows why economics is so difficult – but data sure helps

The fight over the minimum wage continues. AP Photo/John Raoux

Courtesy of Veronika Dolar, SUNY Old Westbury

For decades it was conventional wisdom in the field of economics that a higher minimum wage results i...



more from Ilene

Zero Hedge

Powell's Stock Trades Leaked, Show Multi-Million Sale As Market Tanked

Courtesy of ZeroHedge View original post here.

With leaked trades in their personal accounts already costing two Fed presidents their jobs, and a third - vice chair Richard Clarida - currently on the ropes amid speculation he will soon follow, a few weeks ago we joked that if forces within the Fed want to get rid of all the hawks, they should just leak Esther George - the Fed's last remaining uberhawk - trading record.

If the Fed wants to get rid of all the hawks, they just need to leak Esther George's etrade blotter

— zerohedge (@zerohedge) ...

more from Tyler

Chart School

Price and Volume Swing Analysis on Bitcoin and Silver

Courtesy of Read the Ticker

Many take guidance from news, pundits or advisors. Well sometimes the swings of price and volume are a better measure of what happens next.

The big boys do not accumulate or distribute in single 1 second trade, they build positions over weeks, months and years. They use price swings in the market to build or reduce positions, and you can see their intent by studying swings of price and volume and applying Tim Ord logic as written in his book called 'The Secret Science of Price and Volume: Techniques for Spotting Market Trends, Hot Sectors, and the Best Stocks'.

Tim Ord is a follower of Richard Wyckoff logic, his book has added to the studies of Richard Wyckoff, Richard Ney and Bob Evans.

Richard Wyckoff after years of...

more from Chart School

Digital Currencies

Ethereum's Turn To Outshine Bitcoin Is Coming, UBS Says

Courtesy of ZeroHedge View original post here.

After a stellar start to the year, which saw its price soar to an all time high above $4,100, trouncing virtually all of its crypto peers, Ethereum has stagnated in recent weeks, with its place in the spotlight taken by bitcoin whose impressive outperformance has been the result of now confirmed speculation that a bitcoin futures ETF is coming. It also meant that what has traditionally been a close correlation between the two largest cryptos has broken in favor of the larger peer; it would also suggest that ethereum is trading about $1000 cheap vs bitcoin.

...



more from Bitcoin

Politics

Steve Bannon faces criminal charges over Jan. 6 panel snub, setting up a showdown over executive privilege

 

Steve Bannon faces criminal charges over Jan. 6 panel snub, setting up a showdown over executive privilege

Defiant or following Trump’s direction? John Lamparski/NurPhoto via Getty Images

Courtesy of Kirsten Carlson, Wayne State University

The House committee investigating the Jan. 6 attack on the U.S. Capitol is tasked with providing as full an account as possible of the attempted insurrection. But there is a problem: Not everyone is cooperating.

As of Oct. 14, 2021, Steve Bannon, a one-tim...



more from Politics

Biotech/COVID-19

Ivermectin is a Nobel Prize-winning wonder drug - but not for COVID-19

 

Ivermectin is a Nobel Prize-winning wonder drug – but not for COVID-19

While ivermectin was originally used to treat river blindness, it has also been repurposed to treat other human parasitic infections. ISSOUF SANOGO/AFP via Getty Images

Courtesy of Jeffrey R. Aeschlimann, University of Connecticut

Ivermectin is an over 30-year-old wonder drug that treats life- and sight-threatening parasitic infections. Its lasting influence on global health has been so profound...



more from Biotech/COVID-19

Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



more from Promotions

Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



more from Kimble C.S.

ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



more from ValueWalk

Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



more from M.T.M.

The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



more from Tech. Traders

Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



more from Lee

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.
...

http://www.insidercow.com/ more from Insider





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...

Learn more About Phil >>


As Seen On:




About Ilene:

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