Okay, so Apple, Inc., is releasing the iPhone and it's going to change the world. Some are saying that the iPhone is a complete re-invention of the cell phone. I am sure that you've heard the hype, too.
Folks, let's just back up a little, and have a reality check.
Is Apple going to sell 10 million iPhones in the next 12 months? It's possible, but it's not written in granite. The competion in this space is fierce. The iPhone is is expensive. No one knows what's going to happen in the next twelve months.
Is the hype already built into APPLE's stock price? Again, it's possible, but no one knows for sure.
One thing is for sure and it's a fact, all the hype in June up through June 26th when I am writing this has failed to push APPLE's stock any higher.
See what I mean in this new APPLE video right here.
Trade well!
Christopher Smith
TheOptionClub.com
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Friday, June 29, 2007
Sunday, June 24, 2007
Achieving Options Mastery And Transitioning To Profitable Trading
Too often, folks come to options trading with an unrealistic expectation that they can learn the business of stock options trading over a weekend and begin making money the following week. The reality is that stock options trading is a complex endeavor. That's not to say you cannot learn the ropes and achieve a level of options mastery, but it does mean that you will need to spend some time and effort.
There are two phases to the process of achieving options mastery and becoming a profitable trader. The first phase is developing the academic understanding of how options work. Phase two is the transition from academic knowledge to the practical application of that knowledge in the market.
There are many stock options trading courses out there that can help you with the first phase. Some of the courses are very good, but the cost of the programs can run several thousands of dollars. On the high end, I have seen programs where the complete curriculum can run tens of thousands of dollars.
My personal favorite stock options course is the Options Mastery Series 2007 edition, which I have reviewed in detail. (Use the link to read the review.) The Options Mastery course covers the subject of stock options extremely well, and costs much less than much of the competition. The curriculum is derived from a program that was used to train professional trader trainees so that they could walk out onto the floor and hold their own with the experienced traders, but has been adapted to be suitable for a retail trading audience.
Tackling the second phase is a bit tricky and currently there are not a lot of good tools for the retail trader. In the professional trading world, trader trainees have the benefit of learning from more experienced traders. Retail trading is a lonely business, however. Typically, its just you and your computer.
Check back here over the next several days because I have some thoughts about how you can tackle the second phase of the journey.
Good trading!
Christopher Smith
TheOptionClub.com
There are two phases to the process of achieving options mastery and becoming a profitable trader. The first phase is developing the academic understanding of how options work. Phase two is the transition from academic knowledge to the practical application of that knowledge in the market.
There are many stock options trading courses out there that can help you with the first phase. Some of the courses are very good, but the cost of the programs can run several thousands of dollars. On the high end, I have seen programs where the complete curriculum can run tens of thousands of dollars.
My personal favorite stock options course is the Options Mastery Series 2007 edition, which I have reviewed in detail. (Use the link to read the review.) The Options Mastery course covers the subject of stock options extremely well, and costs much less than much of the competition. The curriculum is derived from a program that was used to train professional trader trainees so that they could walk out onto the floor and hold their own with the experienced traders, but has been adapted to be suitable for a retail trading audience.
Tackling the second phase is a bit tricky and currently there are not a lot of good tools for the retail trader. In the professional trading world, trader trainees have the benefit of learning from more experienced traders. Retail trading is a lonely business, however. Typically, its just you and your computer.
Check back here over the next several days because I have some thoughts about how you can tackle the second phase of the journey.
Good trading!
Christopher Smith
TheOptionClub.com
Tuesday, June 19, 2007
Stock Options Expiration Report
Last Friday saw June options expire and saw a few of my options positions close.
On April 26th I had opened a Jun / Sep $85 call calendar spread on NRG Energy, Inc. (NRG). I was able to sit in that trade through a stock split and on June 4th simply closed the position for an approximate 56% profit.
On April 30th, I had sold a 1,420 - 1,430 - 1,580 - 1,590 June iron condor, bringing in a $1.25 credit. The market was very cooperative and never threatened either side of the trade. I closed the short options out for a nickel a piece. My net profit was $1.15 or about a 13% return on capital.
There were a couple "losers" along the way, to be sure. A spread on IWM did not work out and was shut down for just a $12 profit. I misjudged AAPL and shut down a position for a $8 profit. Yep, that's about it for "losing" trades this month. It is a good thing when your "losers" don't hurt you.
In a prior post I told you about by double diagonal spread on SBUX, which now has a small guaranteed profit but will probably see the remaining July out-of-the-money call option expire worthless next month. It is not consuming any capital or margin, so the contract will simply sit in the account unless there is a big upside move on this stock.
I also had other positions in my account, which have been adjusted heading into the June expiration. Those remaining positions are all showing a profit.
So, am I just bragging over some good fortune? The message behind me sharing these results is that June was a good month for me, but now because I guessed right on every trade. There were a few trades that did not work out. What allowed me to maintain profitability is that when a trade was not performing in line with my expectations, the trade was shut down. It happened that I was able to shut each trade down for a small profit, but that does not always happen. Losses will occur.
The key is to recognize that you will be wrong about a fair number of your trades. Don't let you ego, or your wishfulness, get in the way of your trading. Shut them down, reallocate the capital, and let your winners mature.
Good trading!
Christopher Smith
TheOptionClub.com
On April 26th I had opened a Jun / Sep $85 call calendar spread on NRG Energy, Inc. (NRG). I was able to sit in that trade through a stock split and on June 4th simply closed the position for an approximate 56% profit.
On April 30th, I had sold a 1,420 - 1,430 - 1,580 - 1,590 June iron condor, bringing in a $1.25 credit. The market was very cooperative and never threatened either side of the trade. I closed the short options out for a nickel a piece. My net profit was $1.15 or about a 13% return on capital.
There were a couple "losers" along the way, to be sure. A spread on IWM did not work out and was shut down for just a $12 profit. I misjudged AAPL and shut down a position for a $8 profit. Yep, that's about it for "losing" trades this month. It is a good thing when your "losers" don't hurt you.
In a prior post I told you about by double diagonal spread on SBUX, which now has a small guaranteed profit but will probably see the remaining July out-of-the-money call option expire worthless next month. It is not consuming any capital or margin, so the contract will simply sit in the account unless there is a big upside move on this stock.
I also had other positions in my account, which have been adjusted heading into the June expiration. Those remaining positions are all showing a profit.
So, am I just bragging over some good fortune? The message behind me sharing these results is that June was a good month for me, but now because I guessed right on every trade. There were a few trades that did not work out. What allowed me to maintain profitability is that when a trade was not performing in line with my expectations, the trade was shut down. It happened that I was able to shut each trade down for a small profit, but that does not always happen. Losses will occur.
The key is to recognize that you will be wrong about a fair number of your trades. Don't let you ego, or your wishfulness, get in the way of your trading. Shut them down, reallocate the capital, and let your winners mature.
Good trading!
Christopher Smith
TheOptionClub.com
Sunday, June 17, 2007
Options University and the Options Mastery Program
It is Father's Day weekend and I am looking forward to a special dinner with my family. I've been told I can even take a nap, if I choose!
With the luxury of free time, I've been reading through a lot of e-mails from Brett Fogel and a few other folks over at Options University, updating me on some recent developments, and I thought you might appreciate some of the information as well.
The Latest News On Options University
Options University is one the fastest growing options education companies in the United States and it is the publisher of my favorite options education programs currently available for the retail trading audience. The company has always been quite small and because of their small size the folks at OU have traditionally relied upon third party vendors and "virtual assistants" for much of their back office and customer support.
Outsourcing to these third parties was cost effective, but it resulted in some problems. In my conversations with Brett Fogel and Ron Ianieri, I realized that they knew that if they were to grow company and better serve their customers that this would eventually have to be dealt with because the inherent limitations of outsourcing were causing frustrations for them as well as their growing customer base.
All things considered, and all frustrations aside, the frequency of problems was a "positive problem." It was an indication that Options University had grown beyond the capacity of the current system and was ready to take the next step forward.
As a result of their growing success, Options University also took on a very ambitious project. They hosted the Investors Super Conference and attracted some very big names in the business as speakers. The conference was a huge success for them, but it also diverted their attention away from the day-to-day affairs of running the core business. Of course, with a "virtual staff" there just were not others that could pick up the slack while the Super Conference was in full swing and some things "fell through the cracks."
Well, here is the really good news. With the Super Conference now behind them Brett Fogel turned his attention to preparing the company for even better things to come. Options University now has new, larger offices which were necessary to house the new employees that have been hired. Those employees have been trained, they are "learning the ropes," and helping get Options University settled into their new offices. I spoke with Brett Fogel who pretty much runs the show over there, and they have some great plans for the future.
How Options University Compares
At TheOptionClub.com, the focus is upon helping stock options traders transition from an academic understanding of options to becoming full fledged, profitable traders. Students from many, many programs find their way to our websites, discussion forums, and this blog.
Before we can really help anyone become a successful options trader, they must lay a foundation of understanding. They must learn how options work and how they can be used in the market place. There are many ways to do this, but for those who are truly serious about mastering the subject they typically enroll in one of the many courses and seminars offered on the subject.
While I cannot audit all of the programs out there, I do try to keep on top of what is available. The live training seminars typically cost $3,000 to $30,000 and fall into one of two general categories. The first category is what I call a comprehensive options education, which focuses upon multiple options strategies and how to apply them to take advantage of differing market conditions. The second category of seminars focus upon a single strategy or adaptation of a single strategy. For example, I have seen seminars focusing exclusively upon covered calls and am aware of at least one that focuses upon married puts.
I, personally, do not like the niche focused seminars. They emphasize one trading strategy to the exclusion of others. The problem with that narrow focus is that you tend to see every trade in the context of that one strategy and may find yourself missing much more effective means of trading a position. Now, if you already have a strong understanding of options and want to expand upon your understanding of how to trade covered calls I don't have any problem with that. I simply believe that you will be a better trader if you have a more complete understanding of options.
As for the programs offering a more comprehensive view of the subject, most do not provide that education in one sitting. Typically, you will need to enroll in multiple seminars or courses for that education. With each course costing thousands of dollars, you quickly find that you're spending 10's of thousands of dollars. Is it worth the price? Perhaps, but only you can say whether it is worth it for you.
Options University offers a home study courses that deliver all of the information and insight that the other seminars offer, but deliver it at a much more affordable price. The most comprehensive of their offerings is their Options Mastery course. The whole course was born out of the curriculum trading specialist Ron Ianieri taught to new floor traders. He adapted that original curriculum for the retail audience and put it together in one program.
The Options Mastery program comes in both a home study version, which is excellent, and from time-to-time is offered as a live class. I had the privilege of sitting in on the first live classes that Ron Ianieri conducted and can tell you that he invests a tremendous amount of time and effort working with his students until he is sure they have mastered the key concepts.
Good Things To Come From Options University
Now that they are in their new office space and have expanded their staff to respond more efficiently to our needs, you can expect some really terrific things to come from Options University. I'll keep you posted as I learn more.
So, happy Father's Day to all my fellow dads out there!
Christopher Smith
TheOptionClub.com
With the luxury of free time, I've been reading through a lot of e-mails from Brett Fogel and a few other folks over at Options University, updating me on some recent developments, and I thought you might appreciate some of the information as well.
The Latest News On Options University
Options University is one the fastest growing options education companies in the United States and it is the publisher of my favorite options education programs currently available for the retail trading audience. The company has always been quite small and because of their small size the folks at OU have traditionally relied upon third party vendors and "virtual assistants" for much of their back office and customer support.
Outsourcing to these third parties was cost effective, but it resulted in some problems. In my conversations with Brett Fogel and Ron Ianieri, I realized that they knew that if they were to grow company and better serve their customers that this would eventually have to be dealt with because the inherent limitations of outsourcing were causing frustrations for them as well as their growing customer base.
All things considered, and all frustrations aside, the frequency of problems was a "positive problem." It was an indication that Options University had grown beyond the capacity of the current system and was ready to take the next step forward.
As a result of their growing success, Options University also took on a very ambitious project. They hosted the Investors Super Conference and attracted some very big names in the business as speakers. The conference was a huge success for them, but it also diverted their attention away from the day-to-day affairs of running the core business. Of course, with a "virtual staff" there just were not others that could pick up the slack while the Super Conference was in full swing and some things "fell through the cracks."
Well, here is the really good news. With the Super Conference now behind them Brett Fogel turned his attention to preparing the company for even better things to come. Options University now has new, larger offices which were necessary to house the new employees that have been hired. Those employees have been trained, they are "learning the ropes," and helping get Options University settled into their new offices. I spoke with Brett Fogel who pretty much runs the show over there, and they have some great plans for the future.
How Options University Compares
At TheOptionClub.com, the focus is upon helping stock options traders transition from an academic understanding of options to becoming full fledged, profitable traders. Students from many, many programs find their way to our websites, discussion forums, and this blog.
Before we can really help anyone become a successful options trader, they must lay a foundation of understanding. They must learn how options work and how they can be used in the market place. There are many ways to do this, but for those who are truly serious about mastering the subject they typically enroll in one of the many courses and seminars offered on the subject.
While I cannot audit all of the programs out there, I do try to keep on top of what is available. The live training seminars typically cost $3,000 to $30,000 and fall into one of two general categories. The first category is what I call a comprehensive options education, which focuses upon multiple options strategies and how to apply them to take advantage of differing market conditions. The second category of seminars focus upon a single strategy or adaptation of a single strategy. For example, I have seen seminars focusing exclusively upon covered calls and am aware of at least one that focuses upon married puts.
I, personally, do not like the niche focused seminars. They emphasize one trading strategy to the exclusion of others. The problem with that narrow focus is that you tend to see every trade in the context of that one strategy and may find yourself missing much more effective means of trading a position. Now, if you already have a strong understanding of options and want to expand upon your understanding of how to trade covered calls I don't have any problem with that. I simply believe that you will be a better trader if you have a more complete understanding of options.
As for the programs offering a more comprehensive view of the subject, most do not provide that education in one sitting. Typically, you will need to enroll in multiple seminars or courses for that education. With each course costing thousands of dollars, you quickly find that you're spending 10's of thousands of dollars. Is it worth the price? Perhaps, but only you can say whether it is worth it for you.
Options University offers a home study courses that deliver all of the information and insight that the other seminars offer, but deliver it at a much more affordable price. The most comprehensive of their offerings is their Options Mastery course. The whole course was born out of the curriculum trading specialist Ron Ianieri taught to new floor traders. He adapted that original curriculum for the retail audience and put it together in one program.
The Options Mastery program comes in both a home study version, which is excellent, and from time-to-time is offered as a live class. I had the privilege of sitting in on the first live classes that Ron Ianieri conducted and can tell you that he invests a tremendous amount of time and effort working with his students until he is sure they have mastered the key concepts.
Good Things To Come From Options University
Now that they are in their new office space and have expanded their staff to respond more efficiently to our needs, you can expect some really terrific things to come from Options University. I'll keep you posted as I learn more.
So, happy Father's Day to all my fellow dads out there!
Christopher Smith
TheOptionClub.com
Saturday, June 16, 2007
Stock Options Trading and the SP500
Friday's gains saw us return to the prevailing bullish market trend. The S&P 500 retraced to 1,487, which was consistent with my expectation.
In yesterday's surge, my bullish portfolio bias allowed for appreciation while short option premium keeps my account theta positive. It's a tough time to be an investor right now because we are seeing a "wall of worry" being built between rising interest rates, inflationary concerns, falling real estate prices, growing mid-east tensions, etc.
As options traders, there is a lot we can do to 1.) preserve our investing and trading capital, and 2.) position ourselves for gains. The typical mutual fund investor can only sit back and hope that the world turns in their favor.
With this correction apparently over, I will probably readjust my hedge positions. The SPYder put diagonal I mentioned in my last post will likely be rolled into a vertical credit spread consistent with the bullish outlook.
My expectation is that the S&P500 will make a new all-time high and work its way to 1,600. That is not a certainty, so we all need to stay sharp and remain observant.
Good trading!
Christopher Smith
TheOptionClub.com
In yesterday's surge, my bullish portfolio bias allowed for appreciation while short option premium keeps my account theta positive. It's a tough time to be an investor right now because we are seeing a "wall of worry" being built between rising interest rates, inflationary concerns, falling real estate prices, growing mid-east tensions, etc.
As options traders, there is a lot we can do to 1.) preserve our investing and trading capital, and 2.) position ourselves for gains. The typical mutual fund investor can only sit back and hope that the world turns in their favor.
With this correction apparently over, I will probably readjust my hedge positions. The SPYder put diagonal I mentioned in my last post will likely be rolled into a vertical credit spread consistent with the bullish outlook.
My expectation is that the S&P500 will make a new all-time high and work its way to 1,600. That is not a certainty, so we all need to stay sharp and remain observant.
Good trading!
Christopher Smith
TheOptionClub.com
Friday, June 8, 2007
Stock Market Update
The the bears seem to be taking a break today.
My portfolio continues to have an overall bullish bias, but I am looking at a break of the trend channel by the S&P 500. The market had been losing momentum through May, so a correction is not unexpected.
I am looking at a probable retracement on the S&P 500 to about 1,473, which is the .382 Fibonacci level. Right now the index is holding its 50-day moving average and is trying to get back above 1,500, but it will need some push to get there. I'm not seeing it, so my expectation is for a bit more selling.
Yesterday, I opened a put diagonal on the big cap index which provide me with some profit potential for the expected downside. I am keeping the overall bullish bias to the portofolio because I expect that we will see renewed bullish trend after things sort out. I'll keep selling premium in the front month in the meantime.
Stay awake out there!
Good trading,
Christopher Smith
TheOptionClub.com
My portfolio continues to have an overall bullish bias, but I am looking at a break of the trend channel by the S&P 500. The market had been losing momentum through May, so a correction is not unexpected.
I am looking at a probable retracement on the S&P 500 to about 1,473, which is the .382 Fibonacci level. Right now the index is holding its 50-day moving average and is trying to get back above 1,500, but it will need some push to get there. I'm not seeing it, so my expectation is for a bit more selling.
Yesterday, I opened a put diagonal on the big cap index which provide me with some profit potential for the expected downside. I am keeping the overall bullish bias to the portofolio because I expect that we will see renewed bullish trend after things sort out. I'll keep selling premium in the front month in the meantime.
Stay awake out there!
Good trading,
Christopher Smith
TheOptionClub.com
Thursday, June 7, 2007
Option Trading Update
It has been awhile since my last post, but that's not due to a lack of anything going on. To the contrary, I've been overwhelmed and not finding the time for several things. With a few moments to spare this morning, I wanted to update you on a couple things.
On June 4th, I closed that NRG calendar spread that was covered in my last post. The stock had performed very well, ahead of a 2:1 stock split. Following the split, I owned the $42.50 call calendar with twice the number of contracts. The split had no real impact upon my position, but a subsequent move in the stock could effect it.
I opted to simply close the spread for a credit of $2.15. That equated to total revenue of $430 per original spread. The capital used to open the trade was $275 per spread, so gross profit on the NRG trade was $155 for each spread that was originally opened. My commissions totaled $9 per spread for the round trip, leaving me with $146 or a net profit or 53% over 39 days. I am very pleased with that return.
So, the market has been selling off the last couple days. A couple "Chicken Littles" have started talking about market downturn and a gloomy summer. Who knows, they may be right. I'm not convinced, however.
The trend in the broad market remains decidedly bullish. It is natural for the markets to sell of for a couple days, before pushing to new highs. My overall portfolio bias remains bullish, but all of my positions are hedged and risk is limited. With June expiration about eight days away, I'll be looking to adjust a few positions and open some new ones.
The recent rise in the VIX may make it a bit easier to get a solid credit, just be careful about selling calls to close to the market lest you get caught if the market pushes higher.
I have been receiving a number of inquiries about my private membership site. Here's the scoop. I am announcing this on my blog first, so if you're reading this you're among the first to know.
The membership site has been tested and is working well. I have a small group of initial subscribers who helped me test the software and who have provided me with feedback. I will be opening the doors to the public this month. The initial launch is going to be small, though.
Why a small launch?
I am in no hurry. My goal is to slowly build a valuable resource for you and I do not want to overextend myself and risk disappointing you. The starting membership price is going to be cheap, but I'll raise it as service is expanded. But get this... Once you subscribe, your membership rate will not be increased so long as you remain subscribed.
So, stay tuned.
Christopher Smith
TheOptionClub.com
On June 4th, I closed that NRG calendar spread that was covered in my last post. The stock had performed very well, ahead of a 2:1 stock split. Following the split, I owned the $42.50 call calendar with twice the number of contracts. The split had no real impact upon my position, but a subsequent move in the stock could effect it.
I opted to simply close the spread for a credit of $2.15. That equated to total revenue of $430 per original spread. The capital used to open the trade was $275 per spread, so gross profit on the NRG trade was $155 for each spread that was originally opened. My commissions totaled $9 per spread for the round trip, leaving me with $146 or a net profit or 53% over 39 days. I am very pleased with that return.
So, the market has been selling off the last couple days. A couple "Chicken Littles" have started talking about market downturn and a gloomy summer. Who knows, they may be right. I'm not convinced, however.
The trend in the broad market remains decidedly bullish. It is natural for the markets to sell of for a couple days, before pushing to new highs. My overall portfolio bias remains bullish, but all of my positions are hedged and risk is limited. With June expiration about eight days away, I'll be looking to adjust a few positions and open some new ones.
The recent rise in the VIX may make it a bit easier to get a solid credit, just be careful about selling calls to close to the market lest you get caught if the market pushes higher.
I have been receiving a number of inquiries about my private membership site. Here's the scoop. I am announcing this on my blog first, so if you're reading this you're among the first to know.
The membership site has been tested and is working well. I have a small group of initial subscribers who helped me test the software and who have provided me with feedback. I will be opening the doors to the public this month. The initial launch is going to be small, though.
Why a small launch?
I am in no hurry. My goal is to slowly build a valuable resource for you and I do not want to overextend myself and risk disappointing you. The starting membership price is going to be cheap, but I'll raise it as service is expanded. But get this... Once you subscribe, your membership rate will not be increased so long as you remain subscribed.
So, stay tuned.
Christopher Smith
TheOptionClub.com
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