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Let's Try Again On FIVE...And Friday Q&A

Let's Try Again - Five Below (FIVE) Hello Smart Option Sellers! As the market kind of churns itself, with plenty of fits and starts in both directions, we continue to play the waiting game with our put-sell positions. One of the biggest allies on a put-seller's team is a market that goes nowhere, eating up the time until expiration. Why is this good? Because each day that the stock stays away from the option's strike price, the faster the option price will decay, making it easier to buy it back for a profit. You can't stop time from marching on, and coupled with a market that can't make up its mind which way to go, only helps our cause. With that, we continue to hold our positions as-is and let time decay work its magic. In the meantime, we're going to try again on the buy-back order on FIVE. The company will be releasing earnings next Wednesday (March 21) after the close, so I figured we might as well try to close it down and lock in our gains. Although I'm not concerned about the position moving against us, considering we have $30 of cushion between the current stock price and our strike price, I still would like to try and close the trade. So, here's what you can choose to do: Note: If you have this put-sell position in your account, then you will execute the buy-back order today. If you don't have the position, then you can disregard these instructions. Buy back (buy-to-close) all of your FIVE May 2018 $39 put options for a limit buy price of $.05 per contract, GTC, as a closing transaction (buy-to-close). Once again, this put option is still offered at $.10 per contract with no bid showing. We will be putting in a $.05 bid to see if anyone will trade with us. And, the trade is now designated "GTC", so we'll let it sit there until we are filled. Get those orders in and let us know how you make out. Friday Q&A Q: Hello Lee, I am trying to enter my first contract, and I entered WMT at $55 and .25 put for two contracts, and the order is still open and not yet filled. I looked at the current level and it says it is at .24 now. In your newsletter it says not to enter unless it is at the recommended price of .25 cents, so because it is at .24 should I not lower my bid and just leave it at .25? I am a little confused. A: Hi, thanks for the question. If you have a $.25 offer placed for the put option, and someone offers a lower price such as $.24 or $.23 per contract, then all you can do is wait until those cheaper offers get bought up and then you'll be the next in line at $.25 per contract. Sometimes you will get filled and sometimes not. It's very dependent on which way the stock moves. When I give the instructions for the trade for a "limit sell price of $.25 per contract" - that means you should not sell of offer it for anything lower than $.25 per contract. So no, you should not lower your price. And in the instructions for the Current Portfolio, I do state that you should place your order at the original recommended sell price or higher. For instance, if you are a new member just joining us, you will find that some of our current positions are trading for prices that are higher than our official entry price. If you get into the trade now, you will be getting a better price than the rest of us. But if the option price is currently lower than our official entry price, then all you can do is place your sell order at the instructed price and wait to get filled. It may or may not happen for you. If it doesn't, you'll just wait for the next recommendation. Hope that helps. Q: Thank you so much for your responses. I have placed two orders, one on MRK, and one on LOW, and I was just confused about how to enter the order and what the difference is between using the GTC or DAY feature when selling the put. Should I always use Good until canceled vs. Day? A: 99.9% of our orders are "GTC" (good-til-cancelled), but every once in awhile I will issue a DAY-ONLY order like I did for FIVE the other day. Either way, the instructions will clearly tell you which way to place the trade. Q: Hello Lee, What do you say to the professional traders that say selling premium at .20-.40 is too low to make any money after commissions and fees? They tout to selling .20-.30 delta in order to make any money. A: Well, considering that I believe I fall into the professional trader category, I think I've done pretty well over the years not only for me but for all of you too by sticking to the $.25 - $.35 option prices. Not sure which professional traders are saying that, but who cares! I'm very content with the trades we choose and the proof is in the final results. And with today's commissions of $1 per option contract, those fees are barely cutting into the profits. Selling put options the way that we do it is not a get-rich-quick type of system, and I've never touted it that way. But it's a great way to earn a nice chunk of change each year as one of many types of investments you can add to your overall portfolio. That's all for today. If I see anything urgent as far as a new trade, I will send out another alert. If not, have a great weekend! Continue to contact me here 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!

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