Stock Investment » JPM

Stock Investment :Market Goes Up – Time to Buy and Sell Options

admin — Thu, 13 Oct 2011 11:56:55 +0000

1,220 still seems to be the magic number for the S&P 500′s ($SPX) resistance. This morning’s start was good enough for me to add some more exposure though. I started with adding more UCO before lunch. I am long 300 shares already with a three covered calls at

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1,220 still seems to be the magic number for the S&P 500′s ($SPX) resistance. This morning’s start was good enough for me to add some more exposure though. I started with adding more UCO before lunch. I am long 300 shares already with a three covered calls at the January strike. I’ve been debating selling new puts for months and after I missed the low I waited some more to see if it would retest those lows. Finally I decided to take a small chance. Small based on how far it is out of the money, but not by size as much since it will double my position if assigned. While UCO was trading at .65 I sold three UCO November naked puts for .25 and received 3.73 after commissions.

UCO bottomed out early last week (10/4) at .58 and shot back up from there and didn’t close below (above my cost if assigned new shares). I’m banking on WTI oil not falling below the low s and expect this trade to expire out of the money leaving me with a full profit. I’ll make a 5.0% return if the trade works out for me. That’s 46.6% annualized. I’m bullish enough on oil to have gone with a higher strike, but with a potential return this high there’s no need to take extra risk. My other 300 shares will give me a bigger upside return if oil continues to climb. I don’t think WTI will get back above 0 until the European mess is cleared up better than a handful of rumors and plans to make a plan. If I’m wrong I’ll enjoy pocketing these premiums and the next 70 in growth from the shares I own before my covered calls come into play at .00. If the shares are assigned, my average cost per share will drop substantially and I’ll be selling six covered calls and maybe more naked puts again.

JPM reports earnings tomorrow. They’ve rocketed off their lows and I didn’t want to risk losing those gains if earnings disappoint. So I bought some insurance in the form of very short dated puts. While JPM was trading at .42 I bought two October 14 puts for .05 each and paid 0.68 with commissions. Since I bought the puts in the money by $content.58 my protection to the downside will kick in sooner than if I bought the cheaper strike puts. If JPM surprises to the upside the puts will quickly become worthless since they expire in two days. JPM gained .25 today and I think they have much more upside potential so I’ll make the .05 back quickly. I might even be able to sell these puts to get back a few cents if it doesn’t overshoot too much. I thought about selling covered calls farther out of the money at a later expiration to capitalize on the high implied volatility, but want to see if this rally has legs still after failing at 1,220 today. JPM also faltered into the close and I already have a profit on my new long puts. That’ll be moot by tomorrow when the unknown is known.

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Stocks Investments :Options Expiration – August 2011

admin — Sat, 03 Sep 2011 12:59:52 +0000

Not that it’s a surprise to anyone, but this is not a good options expiration Friday for my account. All of my naked puts finished in the money and all of my covered calls finished out of the money. These are the 11 options I was short going into the day. CSX – 1 August [...]

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Not that it’s a surprise to anyone, but this is not a good options expiration Friday for my account. All of my naked puts finished in the money and all of my covered calls finished out of the money.

These are the 11 options I was short going into the day.

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Stock Market Investment :Options Expiration – April 2011

admin — Sat, 23 Apr 2011 10:23:36 +0000

I had short options on four different stocks/ETFs that expired today. All were profitable and I plan to work with all of them again for either May or June expiration options. My only April option that wasn’t profitable was QCOM and it was assigned a couple of days ago and

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I had short options on four different stocks/ETFs that expired today. All were profitable and I plan to work with all of them again for either May or June expiration options. My only April option that wasn’t profitable was QCOM and it was assigned a couple of days ago and has gained some ground since then.

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Stock Investment :Revisting Old Friends – UCO, JPM, VXX

admin — Wed, 23 Feb 2011 13:36:38 +0000

I’ll admit I was kind of happy to see the futures down this morning when I turned on CNBC. I knew that meant I could get into some positions at better option prices than if I had sold the options last week. Then I saw oil was up pretty big on the Libya news and [...]

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I’ll admit I was kind of happy to see the futures down this morning when I turned on CNBC. I knew that meant I could get into some positions at better option prices than if I had sold the options last week. Then I saw oil was up pretty big on the Libya news and I knew I missed a great opportunity for lower oil prices by a day, but I didn’t have a choice due to the wash rule keeping me out of UCO until today. Of course I could’ve used USO or something else, but I like UCO better for selling options since it’s even more volatile and fairly liquid. On the spike at the open I sold covered calls for a few of my clients who took assignments at on Friday. This was golden for them, but meant I had to wait for the excitement to cool some before I could get in even close to where I wanted for my naked puts. I also had to consider the email I received from Interactive Brokers last night – UCO is set to do a reverse split (1 for 4). This will apply to shareholders of record as of the close of the markets on February 24, 2011. The funds will trade at their post-split prices on February 25, 2011. Instead of targeting 10 contracts like I did last time I figured I needed the number to be divisible by four so I’d have “whole” contracts after the reverse split. While UCO was down to .59 after hitting .16 near the open, I sold eight UCO April naked puts at $content.60 each and received 4.28 after commissions.

I don’t consider this really a half position as much as a partial position. I might sell another four contracts (or one after the split) if UCO calms down soon. I want to have enough to be able to work a strangle again if I’m assigned shares. As bullish as I am long term on oil I don’t mind taking an assignment and then adding to it on further weakness. I feel oil will be much higher this summer and even higher than that within the next few years. UCO isn’t the best long term play on oil maybe because of its contagion issues, but it tends to work great when playing it for shorter periods and consistently reducing your cost with options. I didn’t aim any higher than the strike since I know my timing might not be ideal and think a 37% annualized return is plenty without taking more risk.

Before I got around to trading on UCO I started with VXX. I wanted to strike with volatility up this morning, but didn’t want to go in right at the open in case the drop caught some wind and got worse. I waited about 40 minutes and while VXX was trading at .20 I sold one VXX April covered call at .05 and received 4.29 after commissions. I timed this almost completely wrong as my trade came in about $content.10 above the low of the day (through 2:30). Just a few hours later VXX was almost .50 higher and above my strike. I’m not actually worried about this one though. I still have 200 shares long, two June puts long and two June calls short. I don’t see the strike calls coming into play and in the extremely remote chance VXX makes it back up to I’ll close my full position while I can still sell the puts for something. I think the more likely scenario is for VXX to ride this volatility wave for a few days, maybe a few weeks at the very most, and then start its decline again. I can see that happening even if the VIX climbs a little more. By April I expect my new covered call to be out of the money again with room to spare.

After getting my VXX option in place I moved on to JPM. I was kept out of JPM like I was with UCO until today. I’m a long term bull on JPM and reopened my position with an out of the money put just in case today’s correction has legs. While JPM was trading at .99 I sold one JPM April naked put at .47 and received 6.54 after commissions. I only sold one put to start with so I could work a strangle again if assigned like I did last time around. I’m also not sure how hard JPM is going to get hit in a new correction. The chart shows possible support at a trend line of higher highs that’s around .50 today and moving higher quickly. I see another horizontal line of support just below .50. If that holds it would be around my cost per share if assigned. I expect all the action to take place well before my April contract expires. If JPM breaks .50 for more than a day it could go all the way back down to the .50 range and if that happens I’ll be ready to load up with another put, possibly even before this first one is assigned. seems like a solid floor and an area I’d even consider adding a third put if we got that low. I’m getting way ahead of myself, but trying to stay realistic about how quickly JPM can move in either direction.

I’m also still considering selling naked puts on ABT, CVS and BA, but I’ve added enough for today. I have a busy day planned for tomorrow, so it might not be until Thursday before I can get back to it.

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Stock Investment :Options Expiration – November 2010

admin — Fri, 26 Nov 2010 02:58:03 +0000

I had a good options expiration this November as most of my positions went my way. Here’s the breakdown of how everything finished for me.

SPY – 112 Straddle (sold 1 put and 1 call at 112) – My put finished well out of the money and which means my covered call

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I had a good options expiration this November as most of my positions went my way. Here’s the breakdown of how everything finished for me.

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Stock Investments :Options Expiration – August 2010

admin — Mon, 23 Aug 2010 03:43:30 +0000

Today’s option expiration finished somewhat differently than I thought it was going to as of a week ago. Here’s the breakdown of how it went down:

VXX, two August 24 Puts – I’ll be assigned 200 shares of VXX on Monday morning. Instead of trying to roll

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Today’s option expiration finished somewhat differently than I thought it was going to as of a week ago. Here’s the breakdown of how it went down:

I have a lot of options expiring in September, so any other new options I write in the coming weeks will probably be for October so I can continue to spread out my risk into different expiries.

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Stock Market Investment :JPM Option Strangle

admin — Thu, 15 Jul 2010 09:44:27 +0000

Last week I mentioned that I took an option assignment on my JP Morgan (JPM) naked put. I sat on the shares for a little while trying to decide how to make my next move. I thought JPM might have some more upside, which it has since I was forced into buying the shares, but was [...]

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Last week I mentioned that I took an option assignment on my JP Morgan (JPM) naked put. I sat on the shares for a little while trying to decide how to make my next move. I thought JPM might have some more upside, which it has since I was forced into buying the shares, but was also still nervous about adding any more shares. I decided the best option was to sell both a new naked put and a covered call (an option strangle plus long 100 shares). While JPM was trading at .43 my order hit and I sold one JPM August 37 naked put at .18 and sold one JPM August 42 covered call at $content.90 and received 5.67 after commissions.

After buying my first 100 shares at .00 I left the emotional aspect of wanting to finish the series of trades with a profit out of my decision making process. I think JPM is close to fairly priced where it is now (unless some new regulation hits that hurts it worse than I expect). Based on that assumption I figured selling my 100 shares for than .50 higher than they are now would be a good thing. The same goes for buying almost .50 lower than the current price. I gave myself a wide range to have both of these options expire worthless at the same time.

I took in .85/share from the original naked puts and .05/share from this strangle if the naked put isn’t assigned. That gives me a current cost per share of .10 if JPM stays above .00. If the new naked put is assigned I’ll have 200 shares including the 100 shares I’ll have to buy at .00. That’ll bring my cost per share down to .55 if JPM doesn’t stay above .00. I’ll still be in a hole, but closer to the trading price by then. I doubt I’d sell any more naked puts to add more shares, but will certainly plan to sell new covered calls in that situation.

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Stock Market Investment :Options Expiration – April 2010

admin — Wed, 21 Apr 2010 12:14:20 +0000

After operating in a daze the past couple of weeks I happened to notice the date today and saw April options expire tomorrow. That got me to jump. I started looking at each of my expiring options (NDAQ, INTC, T, JPM and UCO) and making decisions on what to do. Here’s

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After operating in a daze the past couple of weeks I happened to notice the date today and saw April options expire tomorrow. That got me to jump. I started looking at each of my expiring options (NDAQ, INTC, T, JPM and UCO) and making decisions on what to do. Here’s how I’ve started and plan to proceed.

With all of these positions expiring worthless (assuming nothing insane happens on Friday), I’ll be less than 65% invested again and back on the trading path. The quandary I’m in is that although I’m feeling bullish I recognize that the markets have been on a long, barely broken run for the past couple of weeks and at some point we should get a small pull back. Most likely that’s going to point me to making moves like I’ve done with UCO where I enter my limit order and try to have some patience. I don’t think any pull back in the next month is going to be too great, so if my May options continue to work for me I’ll be able to keep rolling every other month without much risk.

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