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Trade Alert 4/14/2020


Hello Investors,
Today we discussed a few key points regarding a favorite trading strategy, the butterfly. Specifically that the higher the volatility in the stock, the lower the risk and higher reward in the butterfly. We are entering into a high volatility butterfly in United Airlines (UAL) with a nice risk/reward accordingly.
In addition, we continue to generate income on existing positions and use the income to buy more shares.
We sold a “short strangle” in INDA. An obligation to buy more shares at 21/share or sell the current shares at 30/share. This paid us a credit +0.45 income. We used the income to buy 2 more shares of stock at current levels.
We have a pending order to sell a covered call in TMUS. We are attempting to sell the  May 15th – 100 strike calls for +0.74 credit. This is a “good ’til canceled” order.
We have a pending order to buy 2 contracts of the UAL May 15th 33/39/45 call butterfly referenced previously. We raise our price to 0.90 debit and will leave it as a “day order” only. If we don’t get filled today then the order will cancel away and we will reassess and send an update if we want to try again.
We will have a short meeting on this Friday (April monthly options expiration). To review and adjust positions into expiration as needed.
Have a great week!

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Trade Alert 4/13/2020


Hello Investors,

We have had a change of heart on markets. We entered into a protective position in SPY last week. We have a very small profit (roughly breakeven) and we will take it off today. We realize this is a quick exit but think there will be better prices/opportunities to hedge in other ways.

Sell to close: SPY June 19th (monthly) 260 strike puts (ratio of 1)
Buy to close: SPY June 19th (monthly) 230 strike puts (ratio of 2)
Sell to close: SPY June 19th (monthly) 200 strike puts (ratio of 1)

Limit credit: 3.18

The result is a small profit of +0.08 but we certainly aren’t taking it off for the profit. We think this market might shock and surprise for a while.

Reminder we will have our usual meeting at 10:00 a.m. ET tomorrow (Tuesday).
See you then!

Trading Mentors
investingmentorships@gmail.com

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Trade Alert 3/17/2020


Hello Investors,
We had previously sold our precious metal position (IAU). We are looking to replace it by selling some naked puts in Silver (SLV). We went into a deep discussion on historical ratios of Gold vs Silver and why we think SLV could be a great play here! In addition, we discussed markets, VIX and many other topics in our meeting today.
Sold to open: SLV April 17th (monthly) 11.00 strike puts for +0.76 credit (naked puts that require us to buy the stock if it is below 11/share at expiration.
We bought 8 shares of ABBV at 70.91 per share (we will acquire ABBV shares and cash when the deal with AGN closes).
We bought 10 shares of EFA at 47.81 per share.
We will have a short meeting on Friday morning for options expiration.
Happy Trading!

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Trade Alert 3/18/2020


Hello Investors,
It is hard to know which companies won’t make it through this crisis. We have decided to reduce the risk in our portfolios slightly. While we believe that much of our capital are in very top quality businesses. There are still some that have bankruptcy risk. So, we have sold 100 shares of GM stock that we own (we are leaving our put in place). We are using the proceeds of $1600 to buy the XLY consumer discretionary ETF. In this way, we won’t need to find out if GM can make it through. We know that some of the companies will survive and thrive over time. So, we are taking 1/2 of our risk in GM and making it less risky. We will discuss this further on Friday.
We sold 100 shares of GM and used the $1,600 and bought 20 shares of XLY ETF in its place.
Happy Investing!

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Trade Alert 3/20/2020


Hello Investors,
Today we discussed our positions through options expiration and there isn’t much that needs to be done. The Disney 1×2 call spread will expire for a loss of -0.50 per spread. The SPY Bear Call spread will expire for a gain of +0.50 per spread. In addition, we will take ownership of some shares.
We have a new trade calendar spread (sideways expectation) in the Nasdaq 100 ETF (QQQ).
Buy to open: QQQ June 19th (monthly) 181 strike calls
Sell to open: QQQ April 17th (monthly) 181 strike calls
Debit: 6.50
Have a great weekend!

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Trade Alert 3/24/2020


Hello Investors,
A very active day in the markets so lets get right to it:
We bought more shares of the following:
3 more shares of TMUS at $77.40
7 more shares of ABBV at $69.10
4 more shares of EFA at $49.54
5 shares of CVX at $63.19
3 shares of NVDA at $241.67
7 shares of MRK at $68.06
We sold a short strangle in DELL. The obligation to sell our stock at 45/share (covered call) or buy more stock at 25/share (naked put).
We collected a credit of +0.81
We then used the income to buy 2 more shares of DELL at 35.09
We sold a covered call in BAC. The obligation to sell our stock at 25/share (covered call).
We collected a credit of +0.20
We then used the income to buy 1 more share of BAC at 19.99
Have a great week!

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Trade Alert 3/25/2020


Hello Investors,
Today we sold an April 17th (monthly) 125.00 strike covered call against our Disney (DIS) shares. We used the income to buy 1 more share of stock.
In addition, we are “delta hedging” our covered call in DELL shares. Although it is a “covered call” we don’t want to give up our stock. So, this will allow us to generate income and make upside as we think the shares may in fact finish above $45/share at expiration. We will detail this idea further next week.
We bought 38 more shares of DELL at 40.97 per share.
Cheers!

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Trade Alert 3/27/2020


Hello Investors,
We made a few changes to the portfolio today.
First, we bought another 60 shares of DELL. That gives us complete coverage for our existing 45.00 strike covered call. If you are “delta hedging” then continuing with a smaller position size makes perfect sense. In addition, we are attempting to sell a 50.00 strike covered call for 0.30 credit (that call is unfilled and will be a GTC good til canceled order).
We made a swap and sold some shares of GM and bought XLY in its place. That was a form of taking on less risk with the uncertainty. We believe that GM can weather this storm and that the stimulus packages are big in bridging the gap. So, we are swapping back. However, we are doing it in a very conservative manner.
We took profit on our 20 shares of XLY.
We entered into a 1×2 put spread in GM for a credit of +1.03.
Bought 1 contract GM April 17th put at 19.00 strike
Sold 2 contracts GM April 17th put at 18.00 strike
Limit Credit: 1.03
Potential cost basis for reentry at April 17th expiration = 15.97
If the stock remains higher then we will make the +1.03 credit and reevaluate.
Have a great weekend!

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Trade Alert 3/30/2020


Hello Traders,
This trade didn’t go as expected. The “skew” in volatility was such that we took a big hit on volatility as the VIX declined. We feel that taking a smaller loss is the right approach and we will find a better structure for our future outlook. This will be discussed tomorrow.
Sold to close: QQQ June 19th (monthly) 181.00 strike calls
Bought to close: QQQ April 17th (monthly) 181.00 strike calls
Limit credit: 5.80
The result is a loss of -0.70 or $70.00 per spread traded.
See you tomorrow at 10:00 a.m. ET for our Trading Mentors program!

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Trade Alert 3/31/2020


Hello Investors,

Not much in the way of additions today. We entered a new trade that will require the market to move higher to reach our credit price. We would put this in the “very high risk” category because it involves a “naked call” aspect to the trade. This trade along with the risk/rewards is fully detailed in the class video.

Buy to open: SPY April 6th (weekly) 274.00 strike calls (ratio of 1)
Sell to open: SPY April 6th (weekly) 277.00 strike calls (ratio of 2)
Limit credit: 0.85

Have a great week!