Ok here is where we are currently on our 1% portfolio. There is an extra position in there for (TBT) but don’t take it one as there isn’t much premium in the options at the moment. I am long term very bearish on bonds but they may rally some more in the short term as the US dollar seems to be going from strength to strength. As you can see, if McDonalds rallies some more ( or if volatility contracts which will make options less valuable), our put will be bought back for a 50% win. We are up in all our positions except UNG. UNG has fallen back down to 21.85. Our put option’s strike is 21 so although we are down on our positions, duration is our friend when it comes to options. We merely hold our position until the following happens
1. UNG rallies and we buy back our put for a 50% win
2. The volatility contracts which again will enable us to buy back our option for a 50% win
3. We get exercised at $21. We have pocketed $77 per one lot in the process. We at that point monitor our position and pick the best time calls to bring in extra income
I repeat – we cant lose if we
1. Trust 100% our underlying
2. Stay small with our trading
3. Put our trading on automatic
The screenshot below illustrates this clearly. You can see the positions above and the GTC (Good Till Cancelled) orders below. Once our 50% profit prices get his, our broker will get us out of our trades immediately. These orders gives a trades great leverage and one day we can have 50,100,200 of these trades working simultaneously for us 24/7 where their sole job is to take money out of the market for us.
Yesterday I sold a put in USO. Oil needs to start rallying soon as it has been down now for a good while. The S@P and oil may rally together in the forthcoming months as we enter what may be a bubble phase for the stock market. Nevertheless as usual, we will stay small to make sure when this house of card comes down, we wont get burned like the masses who think this will go on forever..