Master Income Update -
Thursday, 30 Sept 2010
Good morning,
This morning the fresh new weekly options have been birthed – and
there’s some compelling new set-ups out there to talk about too (that
don’t have weekly options…but the reality is a tiny few stocks
have weekly options traded on them!)
Anyway – keeping in mind we are around the corner from an earnings
month (October), the big leading names have sure been a rallying.
But what’s nice with weekly options is we can be premium sellers
through a month like this, and opt to leave the week along where
actual earnings will be announced.
I’m looking at AMZN here, I have this week’s 155 calls already sold.
The stock trades for right around $158. On this one I’m looking to
roll into next week’s $160 calls (and also adjust my puts upward
a strike. I current own put in a 1 to 1 ratio with my stock/calls…
these puts are the Jan 140 (2011) puts.
Since there is still $.30 to $.40 in time value priced into these
155 calls that expire tomorrow…I will look to do this roll tomorrow.
But today I am rolling out of half of my BIDU into next week.
BIDU has simply been a beast. So here’s what I’m doing..
BIDU trades right here at $102…
I am rolling out of (again, approx 1/2 my position), buying back this
week’s 95 calls and selling next week’s 105 calls.
On the put side, I’m adjusting approx 1/2 my puts, selling the Jan
80 puts and buying Jan 90 puts in their place. Basically on approx
half my position I’m tightening up the put protection underneath, and
I’m going for more time premium on the calls.
I’ll deal with the other half tomorrow.
Both FAS and FAZ are movers today (would you believe that the market
suddenly adjusts its opinions on banking/financial institution stocks
just like that…on a whim?!)
Remember that economic reports were due out today and tomorrow…and
a GDP one was released approx 30 mins. ago.
Anyway – FAZ has taken a hit here, down $.35 cents or so. It looks
like I’m going to have tomorrow’s 13 calls (and definitely the 14 calls)
expire worthless.
What I’m doing (because there’s brand new weekly options as of this
morning) – is I’m going to sell brand new Week 2 Oct FAZ calls right
here…these are going for apprx $.57 cents.
This will mean I am overwritten on my FAZ for part of today, and then
tomorrow. If there needs to be more said about this tomorrow, I’ll
bring it up.
Over on the set-up side – CHKP just yesterday gapped up on big volume,
and it completed, or showed for the first time, what I call the “ideal
set-up” — that is a stock putting in a new 52-week high for the first
time in months.
If you look back…CHKP stalled out in April. Then it corrected.
It saw life on July 13th. But yesterday marked the first time it’s
climbed out of this mess. And I love a set-up like this as the start
of a potential, big, bad new uptrend.
A lot of times I like getting long here with 4-6 month out, in the
money calls. Hopefully you get a nice period of growth, only to turn
around and become a premium/call seller down the road, sitting on top
of a nice piece of treasure at that point in time (remember, you can
exercise call options anytime you wish and convert the calls into
stock…after all…you have the “right” to do so!)
I also like the $1 incremented (or very close to) option strikes.
Another one doing this action just today is OPLK…the only trouble
is it doesn’t have the kind of volume a CHKP has…and consequently
it sounds like crickets when you go and look at the option chains.
I am going to pick up some Jan 34 calls on CHKP this morning.
Over and out, –P
Master Income Update -
Wednesday, Sep 29, 2010
Hello there!
Just a reminder that brand new weekly options become available
tomorrow morning (Thursday) – the new weeklies are for the week
after this one…
That’s always nice! If you listened to my interview with Jeff Augen,
he calls it “8 days a week”! (selling an option from Thursday to
the next Friday is 8 days as opposed to the 7 days from Friday to
Friday!)
Both FAZ and FAS continue to be very nice stalwarts in this new world
of weekly options that we find ourselves in. Both command nice
premiums on a weekly basis. And both are a check on eachother (as
they’re exact opposites of eachother).
I will no doubt be doing some new selling on these come tomorrow, and
that creates an “overwrite” position…meaning, for a day and a half
or so…I’m oversold against the securities I own, but it’s all in an
effort to take advantage of the time decay.
Time decay in 2 ways:
The time decay of the option already sold as it heads into it’s final
days. And 2) the time decay for the new options sold as they head
over the weekend!
I’m not doing any new trading today. I hope this finds you well (and
strap on the chinstrap for tomorrow!)
–P
Master Income Update -
Monday, 27 September 2010
Good morning,
This morning it’s BIDU that has a fire lit under it. BIDU trades
up $4 or so – in the high $101′s to $102′s.
This one just hasn’t had any quit. GOOG, AAPL, NFLX and some other
techs are battling the slight red in the Nasdaq too, all trading
higher today.
As for BIDU, there’s still some time value priced in there which makes
me stick with our sold $95 calls for the time being.
AMZN is down a little bit today – but this one moved on Friday to
make the calls we sold $5 in the money. But these have $1+ still of
time value hanging out in the value of the calls.
So I’m taking no action on AMZN either.
I noticed that for some reason, I don’t have calls sold on a 1,000
of the FAZ shares I my account…so I am selling October Week 1 $13
calls on FAZ.
I own an equal number of shares in each of FAS and FAZ, and each
week I like selling at the money calls on each…I also like selling
at-the-money puts on each one!
They act as a hedge on eachother – but week in and week out, the
call and put premiums are compelling to put in your pocket, and I
love it!
That’s it for right now…over and out -
–P
Master Income Update -
Friday, 24 Sept 2010
Hello there,
The bull is out, sticking it’s horns into any and everything.
I just can’t believe the lockstep up moves in the likes of ALL the
tech leaders the past few weeks. And they are tacking on more
today.
Maybe most impressive is Amazon. Amazing to see!
I continue to roll out of both FAS and FAZ. They trade opposite of
eachother (they are kind of a check on eachother, a hedge) – but they
sure pack the weekly premium!
Working with a smaller account balance, these are very, very compelling.
Are the banks back this week? FAS trades higher. Does another
payroll report drop a bomb on the market, and we may go back to a
double dip? FAZ surges.
But all this back and forth, with both of these names keeping a
hedge on the other – again, the income adds and stacks up.
Today I am selling Week One October 22 calls on FAS. I have this week’s
22 calls still on it. FAS is today and hovering right around this
strike price.
Since I’m going to be pretty much by the computer all day, I’ll watch
how this stock closes today. If it stays under $22, I’ll let this
week’s $22 calls expire, then I’ll have next week’s already sold and
in my pocket…ready to let the weekend wreak havoc on their time
value!
But if not, I’ll simply buy back this week’s if they’re slightly in
the money, and pay as little as possible for any time value part,
especially with 10 or 15 minutes left in the trading day!
I will look to roll the likes of AMZN and BIDU come next week. There’s
still a whole week of time value priced in there!
Hope this finds you well. –P
Master Income Update -
Thursday, 23 September 2010
Good morning,
Well, with new weekly options being born today – I’m making some
trades and adjustments right now.
On BIDU, the stock is up $3 and is sitting right there at the $95
area. The $90 calls I have sold – have all but a teeny-tiny bit
squeezed out them as far as time value is concerned.
The new weekly $95′s have $2.50.
I am also adjusting my AMZN position, buying back 100% of this week’s
150 calls and selling next week’s 155 calls. I am also adjusting
the puts up from the Jan 2011 130 puts to the Jan 2011 140 puts.
Also – there’s been more put buying in some of the banking names,
namely Wells Fargo. With earnings season coming around the bend -
this big money buying of puts is telling.
It gives us an edge on the likes of FAZ (the etf that’s short the big
banks and financials). FAZ is on the move today – and with new
weekly options coming out today (FAZ and it’s opposite counterpart
FAS both offer up weekly options) -
I am selling calls on FAZ today (I didn’t have any calls sold last
week…I basically forgot to, and then FAZ got hit in price, and
I figured I’d wait.
On this strength and new edge today, I am selling next week’s calls
today (cause we can!), I’m selling the $14 strike price.
Okay – that’s it for now!
–Pirate
Master Income Update -
Tuesday, 21 Sept 2010
Hello,
With the biggest tech names having a fire under their keister, it’s
decision making time.
Remember, for the weeks of time where not much happens, that’s premium
in the door, padding the account, making us prosperous.
When the underlying stock gets hot and pushes up there one week, then
more the next, then more the next…
When this happens – we still just make the “time value” part of the
options we sell. We don’t get the $1 for $1 upside. But also, if
the stock was running into the ground week after week after week,
we’re not experiencing the $1 for $1 downside either!
This is what the likes of AMZN and BIDU have done over the past few
weeks. And I’m doing some adjusting on both.
Let me tell you exactly what:
On BIDU, I am rolling out of 100% of my sold calls. I am rolling
from the 85 calls to the 90 calls – keeping them for the same week’s
expiration (the next week isn’t available until Thursday).
BIDU trades for $91.63 right now. I’d do a closer strike price, but
they don’t exist anymore -they’ve moved them all to $5 increments
(however December and January months still offer the $1 increments,
but that only helps out on the put/protection side!)
Also on BIDU, I’m moving a little over half of my puts around, rolling
them up from the Dec 74 puts to the Jan 2011 80 puts.
Moving over to AMZN – with it’s spike up in price, I am rolling 100%
of my this-week AMZN 145 calls, up to the 150 calls (expiring this
same week).
It’s hard to know if these names hang on to these gains – but both
BIDU and AAPL have recently broke out to new 52-week highs on
pronounced volume. GOOG also broke out of a hum-drum channel it’s
been caught in, with volume/price action to boot.
So the leaders are acting very strong here.
Anyway – that’s what I’m doing today!
–P
Karson Keith here, Preston’s right hand man. Preston got caught a
nasty bug over the weekend and is down for the count so he asked me
to fill in for him today.
After last Friday’s expiration we now sit on a fresh new expiration
month. This is a great time to sit back and take a look at what you
did last month and see what you might have improved on. Don’t get
caught up in the “woulda shoulda coulda”, rather focus on your
positions and decide what was worth while and what wasn’t. Of
course you may be in a few position in the “construction phase” but
you know your positions better then anyone. It’s very important to
have positions that are not only profitable, but you are comfortable
with and know what you are doing.
After building up all the solid trades over several months you will
end up with a portfolio that not only is a money machine, but you
will find yourself very comfortable with all of your positions.
Having positions that you are comfortable with helps keep you
focused and ready for new opportunities that may present themselves.
I personally find myself more and more involved with the weekly
options simply because the premiums are awesome, and I can change
my position week to week rather then month to month. This allows
me to stay on top of the market as it makes changes.
FAZ, FAS, AAPL and GOOG. These have been my big winners on the
weekly front and it looks like NFLX is going to be the next.
GOOG is making a huge move, it almost forces you to look at it. I
am not doing anything with it right now but anytime a stock gets
this much attention it can set up some nice premiums for a
potential trade in the near future.
No new trades today.
I hope this finds you well.
No new trades today, but I hope this finds you well.
Master Income Update -
Friday, 17 Sept 2010
Hello there!
Well as we arrive here on Friday – I am rolling out of 100% of both
my AMZN and BIDU into the next week’s options.
On AMZN I am rolling out of the 145 calls, and selling the 145 calls
for next week.
On BIDU, I’m rolling out of 84 and 85 calls (letting the 86′s expire
worthless today) – and rolling everything into next week’s 85 calls.
Toward the close, I am going to be rolling out of my FAS 22 calls and
rolling them into next week’s 22 calls. The FAZ 14 calls sold last
week will be expiring worthless today – and I will probably overwrite
toward the end of the day today the 13 calls for next week.
If you did that put credit spread on Mastercard a few days ago, all
of that premium is yours to keep. A 10 contract sized spread is
right near $2,500 in the kitty.
Okay – that’s what I’m up to in the MIT account…rolling into next
week and those strikes..
Hope this finds you well!
–P
Master Income Update -
Wednesday, 15 September 2010
Good morning,
Well this week we round the bend into Friday with every optionable
stock having expiration (instead of just the weeklies) -
And it’s got me excited about things come Friday.
It also has me excited about something I’m doing today -
When you take a look at the brand new news on Mastercard, MA – and
the way the crowd has reacted…this one’s got brand new life.
MA doesn’t have weekly options yet (this one I predict is going to be
one of the next 5 equities that get added into the weekly world) -
but with all this new news, and the way the stock is pushing up
past the $210 area (the $210 strike price).
I am doing an income related trade here…which mostly depends on the
stock staying strong and above the $210 area…basically I am selling
the Sept 210 puts and buying the Sep 200 puts.
I decided to share this one with ya – because I’m not doing any other
MIT adjustments or trades for today.
And I’m sharing it with you because I’m excited about it -especially
to see how it hangs on/reacts tomorrow, the day before Friday -
because with all the institutional volume and re-positionings, etc
for Mastercard options – this one is likely to stay stuck around the
$210 strike price. So that’s what I’ll be looking for on this one.
Okay – that’s it for now..
–P
Update #2
I’m right now rolling out of 100% of my AMZN MIT trade. I am
buying back the Sept 140 calls and selling the AMZN 145 calls.
I’m doing this because the 140 calls are almost tapped out as far
as the time value pricing is concerned – and selling the 145 calls
(with AMZN trading here around $146) – puts more money in our pockets
bottom line)..
Again, doing this now… -P
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