Trade Results For AT&T And Friday Q&A
Hello Smart Option Sellers! AT&T (T) Wow, amazing we're already in September. Wasn't it just June? Time flies, but we're still here "grabbing that cash"! We were filled on yesterday's new put-sell trade on T. Here's what we did: Sold (sold-to-open) the T January 2018 $31 put options for an official sale price of $.26 per contract as an opening transaction (sold-to-open). If you had your order in yesterday, then you should've had no problem getting filled. All the trades occurred between $.25 - $.27 per contract, with $.26 per being our official mark. As I type this morning, the current market on this put option is $.25 bid/$.26 offer, so if you haven't placed your order yet, you should be able to sell it at $.25 per contract. Remember, do not sell for anything less than $.25 per contract. Friday Q&A I'm going to dedicate today's Q&A session to questions that have come in for the Warren Buffett report that I wrote, because quite frankly, those are the only questions that are coming in! If you don't know what I'm talking about, you can have a look for yourself using the link in the section below. This report uses one of the strategies that I outline in my book, and quite honestly, I'm not sure why everyone isn't using it yet. It has the capability of saving you thousands of dollars on your stock investments, which in turn reduces your risk by thousands of dollars. And not only that, it can easily triple your returns. And lastly, I outline a super easy way to use this strategy to piggyback Warren Buffett's investments. I mean, come on! Not only am I showing you how to follow the greatest investor of all time, but I'm showing you a way to do it for thousands of dollars less while reaping triple the returns. If you haven't considered reading this report yet, I highly suggest you do it soon. My goal is to help all my members save money, make money, and have fun doing it. The link is below near the end of this alert. Q: Hi Lee. When doing DITM calls and starting maybe a year out and as deep as possible, do we then play with shortening the time line until we reach a Delta of 1.00 with a time lime as short as possible? For instance if we have a Delta of 1.00 a year out and we still can find a Delta of 1.00 at 7 months out do we go for the 7 mos position to shorten the turnaround? Or is time more important for success so we always want to stay a year out or so? A: Before I answer these questions, I want to be fair to those who spent the super cheap $10 to buy the report, so I can't give all the details away here. But I will answer them just enough so the readers can understand the strategy better. When doing the DITM strategy, the goal is to be in the play for as long as possible because this is a stock you want for a long-term hold. The less turnover the better.
But, the longer the expiration, the more expensive the DITM will cost.
It's a balancing act between the expiration date, the 90% delta, how much you want to spend, and how close you can get your cost-basis in relation to the current price of the stock.
You will always be able to find 100% deltas in every expiration period - even weekly options. That's only one part of the equation.
As long as you can find the longest-dated DITM call option will a 90%+ delta and cost-basis within a few dollars of the current price of the stock, you will be fine. You'll most likely have to compare a few strikes and expirations to find the right one. And quite honestly, you might find a few that meet your needs. You can always mix & match.
Hope that helps. Q: Thank you for this great report, very smart long term strategy, about it I appreciate your comments about a couple of issues: About the Expiration date, besides the filling price, Could generate a big difference at the outcome if I choose June 18 or January 19? Once I open the DIM call contract, Selling covered calls Could be part of the strategy? With today's sell off, nowadays could be good time to enter into this strategy? A: #1 - The biggest difference you'll find between a January 2018 and a January 2019 expiration date is the cost of the option. More time = more money. Meaning, you're paying for a whole extra year of time, so the option will cost more. This is the same with any option, for any stock, for any expiration period. Now, will it affect the outcome of the trade? Of course, but it will only affect it by the difference in what the option costs between those two expiration dates. If the stock goes up, the option will go up in value for both January 2018 & January 2019. If the stock goes down, the option will go down too. It all boils down to where the stock ends up trading at the end of the expiration period. This will determine your profit or loss. As I mentioned in the previous question, in order to choose the right option contract for you, you need to find the balancing point between price of the option, the expiration date, and how close you can get the cost-basis to the current price of the stock. #2 - Yes, you can absolutely sell covered calls against this new position. But it won't technically be a covered call, because that can only be done if you hold the actual stock. What you're thinking of doing will actually be a call option spread. Buying the DITM and selling a shorter-term call option. That's a spread, but same idea. #3 - Any time there's a sell-off in the market and the stock on your radar falls in price, then getting in at a cheaper price is always desirable. But who's to say the stock won't keep falling? You don't know. But if you're in for the long haul, then you stick to your guns if you believe in the stock, and buy it.
With the strategy in the report, you already have a huge built-in cushion because you'll be saving thousands of dollars, hence, your downside is slashed by thousands too. Thanks for the questions. Q: Hi Lee, Very much enjoyed reading the manuscript on buying call options and actually have entered the foray into buying call options. My questions is this: at what point do you make a determination to close the call option even if you have an extended expiration date? What are the mitigating factors that you should look at? Thank you so much for your service and teaching! A: Hi. You would only close the option position when you make a determination that the stock has reached its maximum potential. Why close it before then? This is called "having an exit strategy". What do you typically use when you want to close out a stock position? Do you have a trailing stop? Do you have a hard stop? A mental stop? Will you buy put options to hedge the trade? I can't advise on when to sell a position, as only you can decide if/when the stock has reached your profit point. That's the only way. Good luck! That's all for today. Have a great weekend. If you have any other questions, comments, concerns or praise, you can always reach us here Continue to work all other trades as instructed and continue to hold all other open positions as-is. See the Current Portfolio below for current prices & instructions. Quick note on the Current Portfolio - if you are a new subscriber and don't have a position yet on any of our trades, make sure you enter your order at the original recommended sell prices. Do not enter any order unless the current price is at, or higher, than the official recommendation. If you are unsure or have any questions, please ask us! Warren Buffett Report I continue to get good feedback on this new report, so I'll keep this notice going for the time being so everyone has a chance to see it. If you need the link again, click here to read about it. Regards, Lee Let's Grab That Cash!