Profit Results & New Trade!

Profit Results & New Trade!

Hello Smart Option Sellers! Happy Friday! Verizon (VZ) We were able to get filled yesterday on our buy-back order which locked in another win for us. And with that gain locked in, we're going right back to the well with a new put-sell trade on Verizon. Wait, what? Yes, that's right. VZ is still at a level in which we can sell another round of put options on the stock using the same strike price with a different expiration date. Let's get to the new trade instructions before going over the results from the buy-back order. New Trade Here's what you can choose to do: Sell (sell-to-open) the VZ October 2017 $39 put options for a limit sell price of $.25 per contract or higher, GTC, as an opening transaction (sell-to-open). Currently, this put option has a market of $.29 bid/$.35 offer, so we will have no problem getting filled at a sale price better than my recommended level of $.25 per contract. Remember, check the current bid/ask before placing your trade to see what the prices are. Try to "work" your offer price somewhere in the middle of the bid/ask spread if you can. No sense in selling the put option at $.29 if you can potentially sell it at $.31, right? Bottomline, do not sell for anything less than $.25 per contract. Note: This trade is for everyone! Profit Results Here's what we did yesterday: Bought back (bought-to-close) all of the VZ July 2017 $39 put options for an official buy price of $.06 per contract as a closing transaction (bought-to-close). We originally established (sold-to-open) this put option on February 8, 2017 for a sale price of $.30 per contract, and now we took gains by buying it back (bought-to-close) for $.06 per contract. With the fill at $.06, it locked in a gain of $.24 per contract ($24 for every contract traded) and a return on margin (ROM) of roughly 3% in four month's time. If you like to annualize, that's roughly a 12% return. For those of you who need a refresher on margin - here's the deal: Whenever we sell an option contract, your broker requires you to maintain a "margin requirement". The margin requirement is just part of your account funds that need to be held aside while the trade is active. You are not borrowing money from anyone nor are you paying margin interest to anyone. The margin requirement is typically 20% of what it would cost to buy 100 shares of the stock at the strike price. In this case: 20% x $3,900 = $780. Your margin requirement at your broker may be slightly higher or lower. Ask them. So our margin requirement is $780 per each put option contract sold. Our profit on this trade is $24 for every contract sold. The return on margin (ROM) comes out to $24/$780 = 3%. The fill at $.06 also allowed us to capture 80% of the full profit potential ($.24 gain/$.30 full potential = 80%). We like to close trades early before expiration when we can capture at least 80% of the full profit potential (my "80% Rule"). This is just smart money management and it allows us to lock in gains and free up money to be put towards new trades. If you haven't closed this trade yet, or didn't get a chance to place your order yesterday, you should do so as a "GTC" order. Great job, everyone. That's all for now. Have a great weekend! You can reach us here. Regards, Lee Let's Grab That Cash!

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