Market & Position Update
Hello Smart Option Sellers! As we start to head into the summer season, no doubt we will see the market doldrums. The adage of "Sell in May and Go Away", really does ring true. The kids are out of school, families take vacations, and we pay a little less attention to the markets. If you look at the long-term chart of stock market action (see here), you will see the flatline of activity during that period of time from May to September. What does that mean for us? For starters, it's a great environment for put-sell positions that we already have in place. Why? Because when stocks meander, all options (both calls and puts) lose value. When it seems clear that stocks won't be going too high or too low, option values drop. This works in our favor because that's how we make a profit. Remember, we want the put option values to decline as we can buy them back cheaper than what we originally sold them for. On the flip-side though, the summer doldrums also makes it a little bit harder to come across quality new plays. But, the good thing is that we still have quarterly earnings that come out in the summer which always provide opportunities for stocks to temporarily drop if they provide unfavorable numbers. If you've been with me a for a long time, you know how I love it when quality stocks drop temporarily. That little window allows us to hop into great new put-sell positions. When stocks drop, put option prices go up. That's when we strike. So, I'll be here keeping an eye out for the next opportunity. Position Update Making money in the markets doesn't mean we have to constantly be making new trades. Just as with any investment, patience is key in seeing the positions through. Good thing for us, most of our trades see fruition in about two to four month's time, so we never really have to wait too long. Currently, we have ten open positions in our model portfolio (and one pending), with all of them in the black. We're just waiting until each position becomes cheap enough to buy back at my "80% Rule" threshold. We have a couple of positions that expire next month in July, but are very close to hitting the 80% threshold. Keep an eye out for alerts from me most likely in the next week on these. For everything else, continue to hold all trades as-is. That's all for today. You can reach us here. Regards, Lee Let's Grab That Cash!