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