Market Update Hello Smart Option Sellers! Volatility is alive and well! On top of Monday's big gains in the markets that came as a result of Trump and China's 90-day reprieve from tariffs, we had turnaround Tuesday in which the Dow coughed up 800 points. U.S. markets were closed yesterday in observance of President H.W. Bush's passing, but the selling is already happening again today. So is this volatility a good thing? Depends on who you ask. For us as put-option sellers, it works in our favor when we want to initiate new positions as the increased volatility helps to artificially inflate the option prices. We get more money in our pockets because of it. And when things calm down and volatility retreats, it takes the option prices down with it. This helps us again as it allows current put-sell positions to deflate that much quicker (that's good!). So, don't fear the vol! But, just because options are more expensive doesn't mean we should haphazardly step into new trades. We need to be very selective. I mentioned this in recent prior alerts that we need to see a little bit of stability before jumping back in. As good as it is to sell options when they're more expensive, it does no good to do it if the market keeps falling. Since put-sells gain profitability in a rising market, we need to wait for some confirmation that the selling has paused, but yet still act on new trades when volatility is still high. Sound confusing? It's really not. That's what I'm here to help with. So at this time, let's see how the market shakes out and I'll send updates if any action is necessary. As far as our current positions go, all of the stocks in which we've sold put options on still remain above the strike price. That's very important to take note of. At this point, Alcoa (AA) is the closest one to the strike price. Right now it's about $1 above our $28 strike price. Yes, the put option price has gone up, giving us a paper loss at the moment. If it keeps dropping, we will employ our defensive measures by "rolling" the trade to a newer and safer strike price. If and when that time comes, I will alert everyone on what to do. And as long as the stock remains above the strike price, we are in no danger of being assigned early. There would be no beneficial outcome for the put option buyer to do such a thing. Ok, that's all for now. Continue to hold all open positions as-is. Contact me here with fills, comments, questions or concerns. Regards,
Lee Let's Grab That Cash!