Interesting Artical

I read this article "From Ordering Steak and Lobster, to Serving It"and it hit me pretty close to home (not that I was ever buying $200 bottles of wine and living on steak and lobster,) however, I found a profession that I was passionate about. I was working for a company that I thought had it all together and quite frankly I loved working there. My portfolio was growing, and was ahead of the learning curve, and I was helping people learn how to invest in the stock market with out fear or greed... I was naive in thinking that I would never have to look for another job. After all I am only 33. As my Father would say, I need more life experience...We have all heard the term "it's to good to be true" well, enough said.

I like to think that in the face of the trials in our lives, we can learn, grow and teach others how to be a better human being.
The Refiners Fire is not a comfortable place, nor is it supposed to be...

After depleting most of my funds in this time of crisis and being faced with the reality of losing a comfortable lifestyle, I know that money is just a means to an end and the important thing in life is time with Family and Friends that is my "end." What is your "end?" Start setting or re-analyzing your short and long term goals. How are you progressing towards them?

Thank You to all of you that have supported me and continue to do so. I do not fear this market because I am prepared with the tools and have been taught how and when to use them. I have been blessed with passion for helping to educate others to do the same. It takes time to recover and patients to learn the most effective ways to do so.

Add another log to the fire, I can take the heat.

Stay positive, and remember if you think you have it bad there is always someone who has it worse.
Be grateful for what you have, and one more thing...
...did you want the Surf and Turf or the Chef's Special? ha ha ha
LAUGH ITS FUNNY!!!

Contact me if you ever have any questions or would like to set up a One on One.

WMT Call Calender - Follow Up

WMT Closed today at $49.74

My limit order was filled today for a net debit of $1.40 per share...

Description: JUN 52.5 Call/SEP 52.5 Call

Stock: 49.74
Quantity: -10 / 10
Cost Basis: $1.40
Price: $1.43
Value: $1,430.00
Gain/Loss $: 30.00

I am looking for a 30% ROI... This means that I need the "Price" (in bold) to = $1.82

The fill price of the long call was 1.61 and the short call was (0.21)
What this tells me is that if the stock remains stagnant (FLAT) at 50 per share, than the long call will lose a little bit due to time decay (THETA) about $0.01 a day (given the current THETA value) and with approximately 21 days till June expiration that is about .21 cents...

...that is interesting, the credit from the June short call will just cover the theoretical loss due to time decay. Result, would be a break even point if the stock stays near the current trading price 49 - 50 till the closing bell on June 19th... This is good to know because it lets me know that the potential of being in this trade for another month is high...and that is just fine with me.

This is not the only thing I need to consider...if you have any questions or comments please let me know via email coachnuge@gmail.com

WMT Call Calendar Due-Diligence

WMT Closed at $49.55 today.
My next trade: Call Calendar on WMT (Walmart.)

What I like to do is have a quick Q & A with myself before I initiate any trade...

• (Q) What is the Expectation for a Call Calendar?
  
• (A) Stagnant to Slightly Bullish
  
• (Q) Is there any recent news that will help support this type of trade?
  
• (A) Yes & No. Earnings meet expectation and the stock was flat on the news. I don't see any fixed news events to act as a catalyst to move the stock up or down. Need to pay attention to the overall market conditions. News and Sentiment.
  
• (Q) Is there any new events in the near future that can have a negative effect on this type of trade?
  
• (A) Noting that I have seen.
  
• (Q) How long do I want to be in this trade?
• (A) I want to be out of the trade in 3 to 4 weeks.
  
• (Q) How long could I be in this trade?
• (A) As far out as the long options expiration month. (anywhere from 3 to 9 months)
  
• (Q) How am I going to exit (close the trade?) Plan A (Primary Exit) & Plan B (Secondary Exit)
• (A) See Below...
  

My Exit Plan is key to making $$$, I need to keep my greed and fears in check!!! I need to think of the many things that can work against me and prepare for them...

WMT Just reported earnings last week and all was inline with market expectation:

14-May-09	Guidance	WMT guides in-line
14-May-09	Earnings	WMT in line

Therefore I expect the stock to stay in line with any technical support and resistance that is out there. I do not see any news events in the near future (the next month or two) that should dramatically move this stock up or down. Until WMT's next news event (or any unforeseen market or economic event) I would expect this stock to move sideways between support, near 45 - 48 and resistance, near 50 - 52. And the price seems to be consolidating. This could be a indication of a breakout, up or down.The Call Calendar can take advantage of this type of stagnant move. So Fundamentally and Technically, I think this trade fits. Now, I would like to be out of this trade by June expiration. I could be out of this trade in a week or a few months (possibly as far out in time as the long calls expiration month (anywhere from 60 to 100+ days, it really depends on the time frame of the long call.)


One Question you may have at this point is...

Why a Call Calendar and not a Put Calendar? Isn't the dominant trend bearish for the last year?

That is a great question...Well thank you, I am glad I asked it.

Here is where one needs to take some initiative and based on your own judgment do you think the long term trend, over the last year will continue? OR was the correction set in place back in February? Either trade can work and be profitable, it always comes back to what are YOUR expectations and do YOU have a reasonable exit plan?

My Expectation is that the price will continue to consolidate for the next month or two. Stagnant is the trend. Between 48 and 52.
Premiums are better on the call side verses the puts. Also the sentiment is leaning more bullish...The Put/Call ratio is currently sitting around .63. What does this mean? This basically means that there are more calls being purchased then puts. The number of Puts DIVIDED by the number of calls. Those individuals that are trading Walmart are purchasing the right to buy (Long Call) this stock at a much greater volume then the right to sell (Long Put) This leans more bullish then bearish. This is reason 2 for choosing the Call Calendar over the Put Calendar.
If I am wrong I will have a Adjustment opportunity in place...

THE SET UP:
Sell To Open (STO) 10 JUN 52.50 Short Call

Buy To Open (BTO) 10 SEP 52.50 Long Call

I have set a Limit Order for a Net Debit of $1.40


Last Quote was...
SC = (0.24)
LC = 1.68
Net Debit = 1.44 Using this number is how I will map out my example.

I have decided to use the 52.50 strike for this trade. Why? you may ask... To give me a better probability of the short call expiring worthless. Note: this is will be leaning a bit more bullish than stagnant as far as profitability is concerned.

My Exit Plan WILL be Key!!!

Here is the numbers as I see them at expiration:

Stock Price	Profit/Loss
$45.00	($1,118)
$47.50	($677)
$49.75	$0
$50.00	$75
$52.50	$1,186
$55.00	$237
$55.92	$0
$57.50	($404)
$60.00	($820)

Best case scenario would be if the stock moves to $52.50 by June expiration. The short call will then expire worthless, and the long call will increase in value. (How much is determined by DELTA, THETA, VEGA, GAMMA & RHO. Some will have more influence than others.)

...For more information on the GREEKS and how they can effect a trade contact me via email: coachnuge@gmail.com so we can set up a time...

I am not looking for best case scenario here, I would like to get about a 30% Return On my Investment (ROI)

Again Using a net debit of $1.44 per share with 10 contracts this would = $1,440 invested.
1.44 x 30% = 0.43 (round up to 0.45) Just about $450 is all I am looking to make on this trade.
Technically I could set a Credit Limit order once the trade is open so the trade can close on it own with out having to watch it to close. The credit limit order would need to = 1.89 (1.44 + .45) in order to hit my 30% ROI.

My Exit Plan A is this: at anytime the long calls bid price - the short calls ask price = 1.89 I will close the trade. (Unless the limit order took me out already) This will generate about a 30% ROI.

Now we start in with the "What If's"

-What if...the stock stays right at 50, give or take a $1.00?

-What if...the stock turns more bearish below my support?

-What if...the stock takes off bullish above my resistance?


Plan A's are easy. It is the Plan B, C, and D's, Adjustment Plan, or Secondary Exit that keeps me consistent and profitable in any market condition.

With each one of these situations I need to know what I should do and if I can do it. Something I learned a while ago while still studying options is this... Just because I should make a certain adjustment or that is what my notes tell me to do, doesn't mean that I always can.

For more on my exit plans please contact me for a private tutoring session.
Email: coachnuge@gmail.com

Sorry No Posts This Week

Sorry that I haven't posted anything this week, I have been working against a deadline with getting my landscaping ready for some Hydro Seed. I must say, I really prefer teaching about the market and option trading.

I will back this next week ready for some new trades and education for you all.

If you are liking this blog so far, please let your friends know that is is 100% free to sign up. If you don't like it then tell your enemies, and more importantly let me know what, if anything, you would like to hear more about.

Thank you for all your support.

Kindest Regards, Coach Nuge

PS I have not pulled the trigger on WMT yet. However I am still interested in the strike 50 call calendar for next week. With the overall markets moving sideways and volatility settling down this could be a great long term trade.

Stay Tuned!!!

Expiration Friday

RIMM Closed today at 72.34 This means that the Iron Condor will be expiring worthless, I needed the stock to close anywhere in between 70 and 80... Done and done, max reward archived.
This Trade was opened on the 6th of May and expired worthless today (tomorrow to be exact but markets are closed) This will yield about a 42% Return on Risk in 10 days...not to shabby.
Max Reward = 1.50 per share
Max Risk = 3.50 per share
Commissions Totaled about $40 (only paid commission to enter the trade, no commissions are paid when options expire worthless)

Looking at WMT, they closed almost right at 48 (48.15) I am looking for support to hold at 48 going into next week. Therefore I will give it a day or two before initiating any new trade.

Make it a great weekend, Coach Nuge

Private Tutoring is Now Available, Contact Me For Details.
coachnuge@gmail.com