Trade Update - GPS
Trade Update - Gap Inc. (GPS) Hello Smart Option Sellers! Despite my little memory lapse about our prior GPS put-sell position, we were successfully able to enter the new GPS put-sell trade yesterday (and some of you today). All of the trades executed yesterday (and today so far), went across the tape at $.25 - $.28 per contract, so we'll take the official mark at $.26 per. Here's what we did: Sold (sold-to-open) the GPS December 21, 2018 $21 put options for an official sale price of $.26 per contract as an opening transaction (sold-to-open). If you have not placed your trade yet, make sure to work it "GTC" at $.25 per contract or higher. Option Pricing Let's talk about option pricing for a moment, as many of you write to me about how fast the put option trades move out of range. I'm very aware of the fact that our trades move fast, and that sometimes not everyone can get onboard. There are a few reasons for that. Most of you might think it is a function of having too many people cramming into the same trade at the same time. That is certainly part of the equation - in the very short-term - but it's not the overpowering reason. One of the biggest culprits of the option prices moving out of range quickly is due to smaller volume size compared to stock prices. Most stocks will have thousands, and tens of thousands of shares, on the bid & offer. Option markets are just not as deep. There are usually only hundreds (and sometimes thousands on very popular stocks) on the bid & ask at all times. And once those volumes are taken out, the bid & offer prices start to move against us. Option market volumes will never be as deep as stocks. Supply and demand will dictate, and if we have too much supply on the sell-side, the bids start getting lower. We all see that happen. Not much we can do about it. But when the initial wave of our orders gets done, you will start to see the option prices creep back to where they should be. My recommendation for this situation is if you feel you are late to the party (and that's if you read my alert hours after I send it), then it's probably best to wait a day or two until the initial push of orders has subsided. If the stock price starts to move lower at that point, the put option price will jump back up and you'll most likely get filled. So it's imperative to keep your order working GTC. Now, my other "issue" with the option trades is when some of our members don't heed my instructions on how to "work" their orders. It's crucial to not scare away the option market-makers and jump right all over the bid price. We need to place our offers near the high end of the current bid/ask market and let it sit for a bit. Then slowly and incrementally move the offer down if no one bites. If we all start jamming in the sell orders near the bid price, it tips off the market-makers that anxious sell orders are coming through. They will then back off and start lowering the bid prices. We don't want that! I know this is easier said than done sometimes, but I urge everyone to have a little constraint when placing their orders. It will benefit everyone and allow us to get higher sale prices. But, at the same time, if I'm correct with my directional assessment of the stock and it starts to move higher, the put option prices will decline at that time. So, we're sort of in a pickle. If Lee thinks the stock is going higher, the put option prices will decline, so I better get my put-option sell order in there quickly at a cheap price so I don't miss the trade. Sound familiar to your experience? I get it. Best we can do is - react to my text alert, get ready for the email to show up, place the trade within the bid/ask spread, lower your sell price if it doesn't fill after a bit, and go from there. If you miss the initial wave, keep your order working GTC. And if you never get filled, well, I'll have another new trade coming in soon after that. With yesterday's GPS trade, the initial bid/ask on the put option was $.27 bid/$.32 offer at print time. I thought for sure we could all get filled at $.26 - $.29 per contract at worst. But then the stock started moving up, our sell orders started coming in, and the put option bids started getting lower. A chain reaction. At the end of yesterday, the put option went out with a $.23 bid/$.24 offer. I hope none of you tried to sell at $.24 per. That was a no-no! But now with the stock market lower today and GPS stock back down by $.80 per share, the put option price has moved back up to $.25 bid/$.27 offer. That's a bit more inline and most of you should be filled by now. So, patience can pay off. Let's have more of it. Housekeeping Note Some of you who are my former Instant Money Trader members may have recently gotten an email from Dent Research about a new free e-letter (The Rich Investor) that I'm collaborating on with them. Since your name & email address history resides on the main Agora servers, this is how they were able to send it to you. I've partnered up with them to write the free e-letter because they are a highly regarded group and I like the intelligence and service they provide to their members. They have a very smart bunch of guys and gals. If you don't want the free e-letter for any reason, you can always unsubscribe. Now, I also started up a small put-selling newsletter with them too, so they could market to a select group of their best customers. The newsletter is called Instant Income Alert and it is their version of Smart Option Seller. I run it for them and use the same trades as we have. I don't foresee any issue with volume (specifically as I mentioned above with the option pricing) as their small group won't have an affect on the market. In case you're wondering - I'm not leaving Smart Option Seller and nothing about your current membership with me is changing, including your membership pricing. Everything is staying exactly as it is now. You don't need to subscribe to Instant Income Alert as you will not be missing out on anything. How could I ever do anything to worry my wonderful Smart Option Seller members!!! I'm here for good! Sorry for any confusion this may have caused. Please contact me if you have any further questions. Well, that's all for now. I'll have a small Q&A alert for tomorrow as I will be out of the office on Friday. Continue to hold all other positions as-is. Contact me here Regards,
Lee Let's Grab That Cash!