What a turnaround!
We knew Yellen's speech yesterday would boost the markets but – WOW! We didn't have to hear what she actually had to say, of course, the Futures popped the S&P up to 1,855 and we finished the day at 1,862, well over our strong bounce target for the week (see Monday's post for details).
Since the week is ending today, all they have to do is hold 1,850, along with Dow 16,240, Nas 4,150 (not there yet), NYSE 10,430 and Russell 1,145 (oops) and we're back in bullish business.
So, we have a couple of laggers – is that the end of the World? Maybe – and, since it's a holiday weekend, I think we're going to hold off on our BUYBUYBUYing until we get the all clear next week. Meanwhile, it's not like we're sitting on our hands. In our Live Member Chat Room we like to do earnings plays and yesterday we picked SNDK and went with the May $80 calls at $1.55 with SNDK at $76.19. Earnings were great and, pre-market, SNDK is heading for $81, which should give us at least a double for our day's work.
Even more recently, at 5:46am, I sent out a note to buy Silver Futures (/SI) at $19.51 and I just (7:46) put out another note to close it out at $19.70. Why take a 19-cent gain off the table? Because Silver Futures pay us $50 per penny, per contract so 19 cents is $950 per contract in two hours – that's good money!
I Tweeted out that trade as well so make sure you follow me HERE if you want to know about more trades like that or JOIN OUR LIVE MEMBER CHAT ROOM and never miss another opportunity, like the one I also posted this morning for Gasoline Futures (/RB)!
In yesterday's morning post, I called for shorting oil at the $104.75 line into inventories (10:30). Of course, I made that call at 8:11 am, so forgive me for missing by a dime but we hit our shorting target (with a spike almost to $105) and then got a big WHEEEEE! down to $103.25 – that's good for $1,500 per contract in just a couple of hours. This is why, in our Live Webcasts and in our Live Conferences, we like to take a little bit of time to educate our Members about Futures Trading.
Of course, it's not ALL futures and options at Philstockworld – just yesterday morning, in our 9:17 Alert to Members, I noted:
Euro/StJ – Also, don't forget Draghi flat out said they will take drastic action to keep a lid on the Euro here. Probably makes FXE a good short ($136.50) – certainly they don't want to see $140 and you can sell Jan $140 calls for $1.65 to help fund a $140/134 bear put spread at $3.10 for net $1.45 on the $4 spread.
FXE is already down $1 at $135.50 this morning – up 0.7% in a day is pretty good for straight stock picks. LOL – stock traders are so cute, aren't they? Of course if we like an call option, we also like the underlying stock and, if we like a put, then we like shorting the underlying – so all our option calls are stock calls as well – it's just that the stocks are SO DULL!
Also, with stocks, we don't have the opportunity to BE THE HOUSE, which is what we always strive for in our investments (and we are now #1 in Google when you type "be the house"!). This is our theme for 2014 so, as we start the 2nd quarter, let's review our strategy:
In the video, we discuss a RIG position in which we bought the stock on May 5th for $44.13 and sold $1.60 per month of call options. As you can see from the chart, we were able to successfully sell the May, June and July calls, before being called away in July at $48.70 but, just a week later, we had another opportunity to enter at $45 and had successful August, September, October and November sales before getting called away in November as the stock rocketed over $50 on earnings.
Our 9 sales netted $1,440 in gross sales and $967 in profit or $9.67 per share, which is as much as we would have made if we had played the stock perfectly from the low to the high – BUT WE DIDN'T EVEN NEED IT TO GO UP! That's the point, we're not limiting our upside – WE'RE GUARANTEEING IT!!!
Had the stock gone lower (it did eventually), we would have still had that $9.67 in our pocket and our $44.50(ish) basis would have been reduced to $34.83 – these are the trees we pant that grow strong roots and are able to then stay in our portfolio for years to come.
We are back to buying RIG, now that it's gotten cheap again, it's in our Income Portfolio as well as our Long-Term Portfolio and we're going to review our Long-Term and Short-Term Portfolios for our Members today – we already did our other 3 Virtual Portfolio Reviews yesterday.
I won't go over them again here but the $25,000 Portfolio is up 15.8% for the year, the $100,000 Butterfly Portfolio is up 15.8% and the $500,000 Income Portfolio, which is more conservatively invested, of course, is up 7% – all handily beating the S&P so far. We are not swinging for the fences in these portfolios, we are just using the above strategy to grind out profits. If the market goes up or the market goes down – we don't really care – as long as we get to sell our premiums!
Enjoy your Holiday Weekend,
– Phil
