Friday Q&A

Friday Q&A Hello Smart Option Sellers! Nice comeback in the market yesterday. It had been down for a majority of the session and then rallied back in the last hour. Impressive. Plus the market is up again today as I type. Let’s see if we can build on that bump and start building a base here. Before we get to the questions though, let’s discuss a few items regarding our positions, specifically BIG and AA. When the market is in a nice uptrend for long periods of time, you can see how well put-selling works, as a majority of the time, we can close out the trades for a profit without much trouble. This can sometimes lull you into a false sense of security that the strategy can never fail (or any other bullish strategy, for that matter). But we’ve seen in the last two months what can happen when we get a full-on rout in the market – you start to worry and get concerned, yes? Seems like everything is going to bust and we’re doomed to lose all our money. With put-selling, you always need to be cognizant of the fact that you might end up with shares of stock dropping into your account that you’ll need to pay for. You may also feel that this is something that you don’t want to happen, or the fact that you weren’t aware that it was even possible to happen. I’m telling you now, be aware of it, because if the bear continues, we may end up with stock in our accounts. But… That isn’t a bad thing. Because part of the path to riches is building a long-term portfolio of quality stocks. If we are capable of doing that, you can end up seeing great appreciation in the value of your account. Psychologically it’s hard though to buy stocks while everyone else is panicking, especially if stock prices keep dropping. But as I’ve said in a previous alert, no one rings a bell letting you know that the bottom is in. Finding the floor is a process, much of it entails whipsaw action, meandering, fits and starts, etc. But eventually a base is formed, bottom feeders come out and value is found. This is when the uptrend begins again. Are we there yet? I wish I knew. But you have to start dipping toes and nibbling a bit along the way so at least you have a foot in the door when the bottom actually is declared. This is what I’m trying to do with Smart Option Seller, and this is where we possibly are with BIG and AA. I don’t know yet if we’ll have to b