The market has had some serious mood swings lately. The key to making money in this volatile market is patience. As the market swings from low to high we are picking our spots.  We look for good companies that can provide us at least a 2% swing for the month.  Here is the strategy, pickup stocks on the downswing and as soon as you get an upside profit you sell a short term call at the money.  Here’s how it works. If you bought PFE at $30.20 and took it to $30.50 that is close to 1% and sell a call at $30.50 for another 1%.  By selling the call at the money it will deteriorate if the stock moves down, thus protecting your downside, and if it moves up and is called away “SUCCESS”.

Before investing of any kind consult your financial advisor. Options are not suitable for all investors and people can and do lose money.  By the way PFE was purchase last week by our Sensei.


If you are like me, you like the coffer you drink.  Yes, the price has gone up but we still seem to drift towards that favorite cup of joe.  This is why our Sensei is selling the October 65 SBUX and collecting the premium of $2.80.  We don’t expect that you’ll have to wait that long for the put to go worthless.  Let’s say we are wrong and SBUX continues to drift lower.  We would be in the stock at $62.20, that is 11.50% lower then it’s trading now.  We believe as an innovator and one of the leading coffee brewers in the U.S SBUX will be a winner.

AS always. consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.

The puts are already making money. Stay tuned for our next idea. 2-27-14

Mach 10, 2014, the puts are down to 2.20.  Winner Winner!

TWEET TWEET, Why Use Options!

Now many of the prognosticators advised that TWTR would not go higher after the IPO.  As a general rule many IPO’s do not workout well for the short term investors looking to make a big hit.  However we encourage our students to use options to limit their exposure. TWTR is up almost 100% from it’s original IPO price.  If you bought some call options as soon as they became available you would be up 300 to 400%.  If the stock fell you would not own the stock and had a limited loss.

Now the question is will TWTR continue to fly or break a wing?  If you own the stock we encourage you to protect your profits, using collars.  Our Sensei expects that 2014 will be a volatile one!

AS always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.

Excuse Me I’m Staggering

OK, no one like to see someone stagger but when it comes to options plays it’s a good idea.  We stagger our call selling in a rising market as to take advantage of any upside that continues further then anticipated.  A recent poll shows that many believe the market is due for a pullback. However we look at call premiums to determine the real sentiment.

We recently sold the current weeks calls against our AAPL and bought the longer dated call. The market is expected to rally after the 15th of december, this weeks calls should expire at a profit and we are buffered for our longer dated call. Now staggering is selling or buying with mixed expiration dates.  So for our call sellers we would sell the weekly and month calls with the same or slightly higher strikes.

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.

Another winner from our Sensei.  If you have been watching AAPL you saw a slight pull back last week and now the deal with China is on.  Winner Winner

Choke ME!

Ok, for my experienced options students this is known as a collar, you sell one and buy one. As LNKD was about to report earnings I heard a lot of chatter about earnings, revenues, and future forecasts. The average move on earnings for LNKD is about 9%. This simply means if they beat we see a 9% increase and a loss creates a 9% decrease. Of course this is past history and as a rule of thumb we must consider the other possibilities.  This situation was crying for a collar, selling an upside call and buying a put to protect your downside. Now, let’s look at what can happen. It sky rockets and we limited our profits and decreased our profit by purchasing the put, it crumbles and we earn the call money, and protect our downside with the put.  Remember we constantly advise you to limit your losses, so in this case the COLLAR fits this particular situation.  For those of you who owned the stock this was a great way to play it. For more on COLLARS stay tuned to optionsdojo.

As always consult your advisor before investing of any kind. Investing involves risk and people can and do lose money. Options are NOT suitable for all investors.

Have You Ever Run Out Of Time?

One of the key mistakes young option buyers and sellers make is not allowing enough time for the option trade to maximize your potential for success.  An example would be that your call expires on the same day that earnings are reported. The fact is that earnings DO NOT always send a clear message. You may want to have an extra day or so, this allows the earnings report to reviewed and analyzed. In addition as most stocks follow the momentum for the day you may find that the impact may not be as severe as you expected. These are just a few reasons our Sensei suggests looking at the forward month to determine if you should extend the life of your option.

As always consult your financial advisor before investing of any kind.  Investing involved risks and options are not suitable for all investors.


At this point you may want to ask yourself, will the U.S bomb Syria? If you believe the answer is yes, we suggest protecting your portfolio by selling calls and buying puts to protect your downside.  The selling of calls gives you the money to protect yourself.  It is not like that the market rally ( if at all) will surpass the previous 15,500 range.

If you believe we won’t bomb you want to look at the taper suggested by the Fed. You of course have until mid September for that can actually happen but the market is already deciding. The rise in oil is an inflationary act. As americans have to pay more at the pump it will lead to less spending over the holidays. So regardless of a change in rates the bottom line is that life is getting more expensive. It is for this reason that our sensei suggests looking at BONDS. The bonds have decreased in price and so that means the yields are going up! In cases where the price is below par you can pickup a decent income and price appreciation upon maturity or call.  If no taper occurs you’ll pickup some quick appreciation and can decide to capture it or hold on.

We have found several situations where the yields are int he 6 to 6.5% area, with an additional 4% appreciation available. This means a 10% return with strong financials.  We will be sending those out to our members.

As always, consult your financial professional before investing of any kind. People can and do lose money.


Puts: A put contract gives the buyer the right but not the obligation to sell stock at a stated price. The seller of a Put has the obligation to buy the stock if the option is exercised.  The PUT buyer is usually protecting his downside, and the PUT seller is assuming the risk of buying the stock at a stated price.

An example would be APPLE is selling at $580 per share, the PUT buyer wants to protect his position against a downturn in the stock. For this reason he purchases a PUT that gives him the right to sell his APPLE  stock at $580.  You would be hedging your position against a downturn, however like homeowners insurance, no claim no return of any of your money. If APPLE does not retreat the money spent is 100% at risk.  LIke insurance you have a stated period of protection.

The PUT seller is assuming the risk that they will have to buy the stock at the stated price. IN this case the seller of the PUT hopes that APPLE will increase in price or stay above the $580 price. In this way the seller won’t have to buy the stock and they keep your funds. Look at this like the homeowners policy, no claims the insurance company does not return any of the money.

Stock Options

Stock Options: An option gives the buyer the right but not the obligation to buy/sell stock at a stated price within a certain period.

The U.S. uses American Options, these options can be exercised immediately after purchase and until expiration.