Saturday, July 28, 2007

Weekend Trade Alert Update - August Trades

With 21 days remaining to expiration all filled trades are out of the money but have to be closely monitored these next 3 weeks. One or more of these Bull Put trades will need to be adjusted if the market continues to drop. If the sell off is over we should know early next week but no one really knows what direction the market will take. Last week investors sold their holdings and stopped buying due to concerns with the sub prime lending market, high crude prices and the lack credit availability for some of the companies buying other companies. Since this is very "oversold" market now, the hope is that investors will return next week bargain hunting and buying the equities that lost 10% or more of their value.

The RUT Index price is only 27 points away from our short option, and only 17 points from our stop loss price. I am sending a Trade Alert this weekend detailing the adjusting trade that closes this August spread trade and opens a new 20 Point RUT Bull Put spread expiring in September. The cost to make this adjustment should be very minimal depending on your trading costs. I will be sending additional Trade Alerts to adjust the NDX and SPX Bull Trades if and when the index prices are 20-25 points away from our short option prices. Many subscribers have requested these adjusting trade alerts be emailed earlier. Having a plan of action to adjust a trade in trouble is a conservative risk management strategy.

GOOD NEWS !!!! The MSFT Put option hedge trade is very profitable now. These Put options have a bid of .15 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $15 a contact. This is a very respectable return in a very short period of time. I know one subscriber who is buying 500 contracts as a hedge each month. These 500 contacts are very profitable now and will help offset future losses, previous hedging costs and trading commission costs. Many subscribers are buying 50-100 contracts using 5%-10% of their collected credits as a hedge.

I am researching Bear Call spreads very carefully this weekend and have one very safe NDX 25 Bear Call spread I will be emailing shortly. The RUT and SPX Bear Call spreads I have on my watch list could be good candidates later next week.

Saturday, July 21, 2007

All July Trades Expired on Friday the 20th!!!!!

All Bull Put and Bear Call Spread trades expired worthless on Friday July 20th. This is the 4th month in a row that all spread trades have expired. I am very committed to ensuring this expiring trend continues for the remainder of 2007. My trading strategy is very conservative resulting in safe credit spread trades earning 3%-8% each. I will strive and complete safe Iron Condor trades earning 5%-8%. These trades complement single Bull Put and Bear Call trades earning 3%-5%. My goal for the remainder of 2007 is to earn a respectable 5% each month. This was accomplished this month.

The total return this month was 5.8% ($302/$5,198).  All credit premiums collected totaled $302 (35+40+85+57+85) and $5,198 (925+2,358+1,915) margin was required per contract. If you traded 10 contracts per spread your credits totaled $3,020, 20 contracts $6,040. These are the returns and cash flows I expect to receive consistently each and every month. In July we had two Iron Condor trades completed on the NDX and RUT Indexes. These trades required margin for one side and generated returns of 6.0% (142/2,358) and 8.1% (75/925).

New trades expiring in August will be emailed later this weekend. I will continue to focus on selecting very safe trades and I already have a few Bull Put trades identified. The NDX 25 point Bull Put, RUT 10 point Bull Put and SPX 20 Bull Put spread trades have been very profitable and safe these past few months. With the markets continued to rise I will be executing only new Bull Put trades this weekend. I will only consider the Bear Call trades to complete Iron Condors once the markets have settled down.

Sunday, July 15, 2007

New Options Broker with Significantly Less Trading Commissions

A new option's broker, OptionsHouse, now has the lowest commissions of all the option brokers. They are charging only $9.95 for each trade and nothing for each contact. If you trade 10 contracts, 20 contracts or 100 contracts per leg your total commissions is only $9.95 and nothing more. A credit spread trade is two option legs and costs only $19.90 no matter how many contracts are traded. This is a significant savings if you are trading 5 or more contracts. When you are paying only $19.90 per credit spread trade, or $39.80 per completed Iron Condor trade, you can easily afford the $29.95 subscription fee. I am very pleased that this broker has come along because I want my subscribers to earn a maximum net profit on each trade.

I am setting up a trading account with this new broker this month and will be creating Flash movies to illustrate how to order, protect and close Bull Put and Bear Call credit spread trades on the NDX, SPX and RUT stock indexes.

Saturday, July 14, 2007

Update on Open Trades Expiring In July (20th)

With only 7 days remaining to expiration all filled trades should be expiring worthless on Friday July 20th. We have one open trade with a short option price that is close the Index price. The NDX Bear Call spread is 33 points away from the closing 7/13/2007 NDX Index price. I will be sending Trade Alerts next week along with updates in case we have to close and roll this trade. I have been reading market commentaries after last weeks record close. The majority say the Bulls stepped in and overtook the Bears but the Bears should return. If the Bears return next week and cause a market sell-off our Bull Put Trades will still be very safe and will expire on Friday.

Sunday, July 8, 2007

Update on Open Trades Expiring In July (20th)

With only 14 days remaining to expiration all filled trades are safe and should be expiring worthless on Friday July 20th.

We now have two Iron Condor completed on the NDX and RUT index's. Completing the 20 point SPX Iron Condor trade is difficult with the SPX index rising week after week. I will continue to research safe Bear Call trades next week and if the SPX index has a few down days I should be able to order and email a safe trade. If I can complete 3 Iron Condors I will achieve a 6% total return for the month. The projected return on al l open trades listed below is 5.7% ($302/$5,323 required margin).