New Trade! Hello Smart Option Sellers! It's definitely been a VERY volatile week. The market started off the week by rallying into Wednesday, as we got that really good snap-back jump after last week's rout. The snap-back was something I was looking for. And as tempting as it was to think the sell-off was over, history told me otherwise. After studying (and living through) multiple similar moves over the years, we still have a bit more back and forth to go through before the dust settles. There was another good sell-off yesterday, and so far this morning, the market is rallying again. It can make for treacherous times filled with angst. I get it. But just know - history repeats itself because human nature doesn't change. The stock market has been the best performing asset over the last 100 years and I believe it will continue to do so. Investors will buy up this market again because that's what people do. It may sound corny and simple, but it's true. We take precaution though with our put-sells by using strike prices that are situated well below the current stock price. We also need to take advantage of these down-moves because it bumps up the inherent volatility in the option prices. That spells more money in our pockets when we sell the put options. What can make things a bit more stressful at this time is that it's also earnings season. Stocks can rally (or drop) in a heartbeat, so we need to be cognizant of that. But I've found a stock that I've been watching for awhile waiting for our entry. And with earnings behind it, it's now time for us to make the move. Alcoa (AA) Alcoa has been good to us in the past, as we've tallied three successful put-sell trades on it. So we're going back for more! AA announced earnings Wednesday after the close and the market was pleased. It rallied roughly $5 per share, which was well needed, as AA was getting into very oversold levels on the charts. Here's the current daily chart:
Before earnings were announced, AA recently fell from roughly $45 per share down to last week's price of $35 per share. That was my cue that we could be getting very close to a low. With the earnings bump from Wednesday, AA stock now sits near $38.50 as I type, so we're going to sell a put option that is over $10 below that level, giving us a solid 27% cushion. Here's what you can choose to do: Sell (sell-to-open) the AA January 2019 $28 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 $.25 bid/$.35 offer, so we should be able to sell these right off the bat for either $.30 per contract (higher than $.25) or $.25 per contract. I would strongly suggest placing your sell order at $.30 per contract to start. DO NOT jam your sell order right at $.25 to start. That scares away the market-makers. Be cool about it. Start at $.30, and if no one bites after a short while, then you can move your sell order down to $.25 per contract. I say this because I know how the system works, and I want everyone to get the best possible fill prices. The option prices (both calls and puts) are VERY dependent on the price of the stock. It's best to keep an eye on the stock price as well before you place your option orders. If you see the price of the stock moving lower, you know that the put option prices should be going higher. People get scared and will want to pay more for the protection that buying put options affords. Why should you sell them those put options cheaper? You shouldn't! Try to get the best possible sale price as you can So get those orders in now and let us know how you do. Oracle (ORCL) Update on the ORCL trade. I heard back from a bunch of you that you have not been filled on the buy-back of our Oracle December 21, 2018 $33 strike put-sell position. That's fine. We will keep the position working and mark it as open until the rest of you are done. At the moment, this option is worth about $.06 per contract, so it's just matter of time until everyone is filled. That's all for now. I'll have another alert later in the day with some news updates. Continue to hold all other positions as-is. Contact me here Regards,
Lee Let's Grab That Cash!