Only the NDX Bear Call Spread trade expired worthless on Friday August 17th. All 3 of the Bull Put trades (RUT, SPX and NDX) were closed out early and rolled to new trades expiring in September. Subscribers who did not close out their Bull Put trades were blessed with a very lucky and unusual event on the morning the Index set prices were set. The Fed action on Friday was long overdue but a real shock that immediately caused the stock futures and opening values to sore in value. In fact the 3 Indexes increased so much that all the Bull Put trades actually expired worthless for those who still had the trades open. This is a very rare event that is like a gamblers success or like winning the lottery. Closing the Bull Put spreads early and rolling to new trades was the correct strategy.
The problem for many subscribers last week was that their stop loss orders were executed during the day on Wednesday and Thursday. This left very little time to execute the new September trades. This is the first month ever that I had to close and roll 3 of 4 open trades. The total return this month was .006% ($85/$13,235). This break even return will only be realized when the RUT, SPX and NDX roll trades expire worthless in September. Since many subscribers had trouble rolling and covering their losses on closing the spreads in trouble I will be refunding all subscription fees collected from July 22 through August 17 next week. The MSFT Put option trade was profitable for the second month in a row. These 27.5 Put options were sold when the bid was .09 cents. These options brought for $3 a contract earlier this month were sold for $9 a contact.
New trades expiring in September will be emailed early next week. I want to see what direction the markets takes on Monday and Tuesday next week. I will continue to focus on selecting very safe trades.
Monday, August 20, 2007
Sunday, August 12, 2007
New Trade Expiring in September
This new trade satisfies many requests from subscribers for a very conservative and safe trade to execute during this very volatile period. This is one trade you can execute and forget about for 41 days. It’s a boring trade with low trading costs. Being more than 200 points away on any credit spread trade is a huge safety net. We can only achieve these distances by trading a 50 point spread on the NDX index. I will send an update on this trade next weekend after the August trades expire. In a weeks time this trade should still be safe and have a 4% return.
The goal of this Iron Condor is to have short options 200 or more points away from the current index value. The 4.2% return is an outstanding return for 41 days. The margin requirements for this trade is $5,000 per contract, so 2 contracts will require $10,000 and earn $400 (4.2%). What is nice about this trade is that only a few contracts earns you a very decent credit premium and return. This means your trading costs are low.
The current probabilities at expiration that the NDX Index prices will finish below the short option, or above the long option, is 2% and 10% based on the current volatility of the NDX Index. Also, both of these short option strikes are more than 2 standard deviations away from the projected NDX index value at expiration in September. Both credits are the midpoints with cents shaved off so your orders could take a 1 to 5 days to be filled. If one side is not filled in a weeks time a replacement trade will be emailed.
The NDX index has to fall or rise by more than 17% and 13% to reach these strikes. This means the NDX Index can make a 10% correction and our trades will still be out of the money and safe.
The goal of this Iron Condor is to have short options 200 or more points away from the current index value. The 4.2% return is an outstanding return for 41 days. The margin requirements for this trade is $5,000 per contract, so 2 contracts will require $10,000 and earn $400 (4.2%). What is nice about this trade is that only a few contracts earns you a very decent credit premium and return. This means your trading costs are low.
The current probabilities at expiration that the NDX Index prices will finish below the short option, or above the long option, is 2% and 10% based on the current volatility of the NDX Index. Also, both of these short option strikes are more than 2 standard deviations away from the projected NDX index value at expiration in September. Both credits are the midpoints with cents shaved off so your orders could take a 1 to 5 days to be filled. If one side is not filled in a weeks time a replacement trade will be emailed.
The NDX index has to fall or rise by more than 17% and 13% to reach these strikes. This means the NDX Index can make a 10% correction and our trades will still be out of the money and safe.
Saturday, August 11, 2007
Update on Open Trades Expiring Next Week Aug 17th
With 7 days remaining to expiration all filled trades are out of the money and have a good chance of expiring. The Federal Reserve finally took action last week to calm the markets and will continue taking action as needed. We could have an interest rate cut in September which will cause the market to stabilize, be less volatile and possibly start rising again. I will continue to closely monitored the open Bull Put trades next week.
The MSFT Put option trade is still profitable. These 27.5 Put options have a bid of .12 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $12 a contact. Please sell these early in the week because the time value of these options will dwindle quickly as each day goes by.
New trades for September will be emailed next weekend after expiration Friday. I will be emailing a new very safe 50 point NDX Iron Condor trade this weekend at the request of a few subscribers who want to be more than 200 points OTM. This is only possible with the NDX index by trading these 50 point spreads.
The MSFT Put option trade is still profitable. These 27.5 Put options have a bid of .12 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $12 a contact. Please sell these early in the week because the time value of these options will dwindle quickly as each day goes by.
New trades for September will be emailed next weekend after expiration Friday. I will be emailing a new very safe 50 point NDX Iron Condor trade this weekend at the request of a few subscribers who want to be more than 200 points OTM. This is only possible with the NDX index by trading these 50 point spreads.
Sunday, August 5, 2007
Weekend Trade Alert Update - August Trades 8-5-2007
With 12 days remaining to expiration all filled trades are out of the money but have to be closely monitored these next 2 weeks. One or more of the SPX and NDX Bull Put trades will need to be adjusted if the market continues to drop. Last weeks drop completed a 10% market correction that many projected the market needed when it was making new highs week after week. Now all the indexes are very oversold. The major event next week is the Fed meeting. Their action (lower rates) and comments will influence investors to buy or sell. I wish they would start lowering interest rates help the struggling housing market and mortgage industry.
Last week the RUT Index price was 27 points away from our short option, and 17 points from our stop loss price. This is why I sent a Trade Alert last weekend detailing the adjusting trade that closed this spread and opened a new 20 Point RUT Bull Put spread expiring in September. I received emails from many subscribers who completed these trades. I have also received emails from subscribers who have not rolled this trade. I have new September RUT trades to roll to this weekend so please send me an email for the details. The RUT index is already 10% down and is very oversold so the Bull Put is a safe trade. But so is the Bear Call.
GOOD NEWS !!!! The MSFT Put option trade is still very profitable now. These 27.5 Put options have a bid of .16 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $16 a contact.
I am only researching Bear Call spreads this weekend and next week. I hope many subscribers had last weeks very safe NDX 25 Bear Call spread filled. The RUT and SPX Bear Call spreads expiring in August are on my watch list could be good candidates later next week.
Last week the RUT Index price was 27 points away from our short option, and 17 points from our stop loss price. This is why I sent a Trade Alert last weekend detailing the adjusting trade that closed this spread and opened a new 20 Point RUT Bull Put spread expiring in September. I received emails from many subscribers who completed these trades. I have also received emails from subscribers who have not rolled this trade. I have new September RUT trades to roll to this weekend so please send me an email for the details. The RUT index is already 10% down and is very oversold so the Bull Put is a safe trade. But so is the Bear Call.
GOOD NEWS !!!! The MSFT Put option trade is still very profitable now. These 27.5 Put options have a bid of .16 cents. These options brought for $2, or $3, a contract earlier this month can be sold next week for $16 a contact.
I am only researching Bear Call spreads this weekend and next week. I hope many subscribers had last weeks very safe NDX 25 Bear Call spread filled. The RUT and SPX Bear Call spreads expiring in August are on my watch list could be good candidates later next week.
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