Friday Update

Friday Update Hello Smart Option Sellers! Happy Friday! I'd like to welcome some of our newer members who have recently joined. We're happy to have you with our small family and are excited to help you profit from this great strategy, and to educate you along the way. Cheers! Well, yesterday turned out to be a pretty good day for the markets. As we discussed, the U.S. & China seemed to have reached a "Phase One" agreement, which should allow the next round of planned December 15 tariffs to be put on hold. We'll see if there's any more formal language that gets put out by then (this Sunday). For now, it seems full speed ahead for the markets. But don't get too complacent, because you never know what Trump might tweet. Colgate Palmolive (CL) The good news is that we've now been fully and officially filled on our CL buy-back order at $.05 per contract. Even though CL stock didn't participate in the rally yesterday, it didn't stop other market participants from wanting to trade with us. Here's what we did: Bought back (bought-to-close) all of the CL January 17, 2020 $55 strike put option contracts for an official buy price of $.05 per contract as a closing transaction (bought-to-close). Here are the profit details: We originally established (sold-to-open) this put option on September 9, 2019 for a sale price of $.25 per contract, and now we took gains by buying it back (bought-to-close) for $.05 per contract. With the fill at $.05, it locked in a gain of $.20 per contract ($20 for every contract traded) and a return-on-margin (ROM) of roughly 1.8% in three month's time. If you like to annualize, that's roughly a 7.2% return. You might notice, that although our dollar gains are typically the same for each trade, our ROM can fluctuate quite a bit. The reason being - the strike price has everything to do with how much margin you will be required to hold aside, and thus, will affect your ROM. The higher the strike price, the higher the margin requirement. And vice versa. This is the main reason why I like to focus on lower-priced stocks - typically $50 and under. To understand how the margin works and the calculations involved, here's the breakdown: Whenever we sell an option contract, your broker will require