Trade Results - Aloca
Trade Results - Alcoa (AA) Hello Smart Option Sellers! We were easily filled on the AA buy-back trade from yesterday. Here's what we did: Bought back (bought-to-close) all of the AA January 2018 $31 put options for an official buy price of $.05 per contract as a closing transaction (bought-to-close). Here are the profit details: We originally established (sold-to-open) this put option on September 28, 2017 for a sale price of $.25 per contract, and now we took gains by buying it back (bought-to-close) for $.05 per contract. With the fill at $.05, it locked in a gain of $.20 per contract ($20 for every contract traded) and a return on margin (ROM) of roughly 3.2% in a bit under three month's time. If you like to annualize, that's roughly a 13% return. To understand how the margin works and the calculations involved, here's the breakdown: Whenever we sell an option contract, your broker will require you to maintain a "margin requirement". The margin requirement is made up of funds that are already in your account and will need to be held aside while the trade is active. You are not borrowing money from anyone nor are you paying interest to anyone. Some people can confuse the margin requirement with "trading on margin". They are completely different things. We are not trading on margin when selling put options. 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 $3,100 = $620. Your specific margin requirement at your broker may be higher or lower than that. If you are unsure, just ask them. So for this trade, our margin requirement is $620 per each put option contract sold. Our profit on this trade turned out to be $20 per each put option contract sold. Hence, the return on margin (ROM) comes out to $20/$620 = 3.2%. Also, the fill at $.05 allowed us to capture 80% of the full profit potential ($.20 gain/$.25 full potential = 80%). When selling options (puts or calls), your full profit potential is capped at what you initially sell the option for. In this case, that amount was $.25 per contract. We like to close trades early (buy-to-close) before expiration when we can capture at least 80% of the full profit potential. This is called my "80% Rule". This is just smart money management and it allows us to lock in gains and free up cash to put towards new trades. Congrats on another winner. And, our other AA put-sell position is moving in the right direction as well. Most of you should have been able to get into this trade easily over the last few weeks, probably at better prices than our original entry. Keep holding for now. Bitcoin Update Yes, how about an update, considering some of you are asking. Bitcoin keeps going up! It came within a few ticks of hitting the $20,000 mark the other night, and is currently trading near $18,000 as I type. Both the CME & the CBOE have successfully launched their bitcoin futures contracts which I believe has given legitimacy to the concept that bitcoin is here to stay, as well as many of the other cryptocurrencies. Other coins such as Ethereum (ETH) and Litecoin (LTC) have both hit new all-time highs very recently. I continue to add to my positions in many of these other coins, and I see very bright days ahead for them. I know the big question is - is bitcoin in a bubble and when will it burst? Will it even burst? It's so expensive, how long can it keep going up? All valid questions, many of which I don't have the answers to. What I do know is - is that there is still so much money sitting on the sidelines that has yet to enter this market, and over the next year or two, that money will push all of these coins to heights that are so unimaginable right now. If you think bitcoin is expensive at $18,000, then wait until it hits $50,000 and then $100,000. But make no mistake, we WILL see big volatility of ups and downs. The price of bitcoin these days is making multiple thousand-dollar swings intra-day! If you can't stomach those kinds of moves, then it might not be right for you. As I've said before, if you want to get involved, only use your most speculative "fun" money and enjoy the ride. This thing is here to stay. If you want to grab a stake, you can sign up at Coinbase. Use this referral link to get started. If you do, we both will receive $10 worth of free bitcoin after you've bought your first $100 worth. If any of you have bought bitcoin or some of the other coins, please share with me. I'd love to hear your stories. You can contact me here That's all for now.
Regards, Lee Let's Grab That Cash!
Current Portfolio 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. 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 no enter any order unless the current option price is at, or higher, than the official recommendation. If you are unsure or have any questions, please ask us!