Man… What a week.
After a rough start to 2020, I can finally say that BOND GOT HIS GROOVE BACK.
Across all of my services, I’ve made about $70,000 in realized profits this week—with a chance to make more today.
Here are just SOME of my recent trades, including the HUGE week I had in Weekly Windfalls!
I took aim and crushed a pair of Target (TGT) trades, and I’m fresh off a $5,500 win on Google parent Alphabet (GOOG).
And not only did I lock up a $5K Netflix (NFLX) winner, I also scored another $15K on fellow FAANG stock Apple (AAPL)!
Part of that is because I made a couple key pivots on my AAPL position over the past week.
So now, I’d like to walk you through what I was looking at to begin with, and why you don’t have to throw in the towel when a trade isn’t panning out as expected.
Day 1 – Jan. 30
As I mentioned in this space not long ago… if there’s one thing I’ve learned over the past couple of months, is that it’s very difficult to predict the end of a trend.
Even though stocks have been in a bull market for over a decade, and despite uncertainty about the presidential election (among other things), U.S. markets continue to thrive.
The recent coronavirus scare sent a few bulls packing over the past week or two, but the mentality of this market has remained BTFD (Buy The Friggin’ Dip).
As such, when stocks dropped last week, I viewed it as an opportunity to look for entries selling puts on AAPL’s 322.50 strike, as I expected $322.50 to hold as support in the near term.
I was wary of being a cowboy and jumping right in on the sell-off, as I figured the pullback could last a few days, but still wanted to take shots and exit the positions if they didn’t work, then try again.
So, on Thursday, Jan. 30, with AAPL trading around $323, I sent this text alert:
This means I:
- Sold the weekly 2/21 322.50-strike put
- Bought “options insurance” with the weekly 2/21 320-strike put
Since I received more money for the sold put than I paid for the bought put, the spread was established for a net credit of $1.
And since each option controls 100 shares of AAPL, and I trade 100 spreads at a time, it was opened for $10,000.
My risk on the trade was $1.50 (2.50-point difference between bought and sold strikes minus the $1 credit), or $15,000 ($1.50 x 100 shares per option x 100 spreads).
Day 2 – Jan. 31
However, on Friday, Jan. 31, the market took another massive downturn, with the Dow suffering its worst session in months amid growing coronavirus fears.
My bullish AAPL position wasn’t looking too hot.
But I know myself, and I know I’m usually pretty close to timing reversals on pullbacks… It looked like I just jumped on the iPhone maker a little too soon.
So instead of throwing in the towel on the AAPL trade, I thought I’d try again, but with a pair of lower strikes and in a different series.
With Apple stock trading around $312, I sent this text alert:
This means I:
- Sold the weekly 2/7 312.50-strike put, amid expectations for AAPL to stay above that level
- Hedged by buying the weekly 2/7 310-strike put, to protect me from a continued drop in the shares
The spread was set up for a net credit of $1.10 (or $11,000, in my case), which represents the most I could’ve made on the trade. My risk was $1.40 (or $14,000).
Even though stocks got obliterated in Friday’s session, I ultimately decided to keep the other AAPL spread (322.50/320) open into the following week, because panics like this are where I like to TAKE SHOTS and get aggressive with my bullish trading.
Monday, Feb. 3
Although Shanghai-listed stocks took a beating as traders played catch-up after the Lunar New Year week off, stocks in the U.S. were modestly higher on Monday.
My AAPL positions were looking a little better, and I ended up scoring a healthy profit on my NFLX spread!
The week prior, when Netflix stock was trading around $346.50, I notified you of the bull put spread I established on NFLX, selling 342.50-strike puts and buying 340-strike puts with options expiring Feb. 21.
Since the spread was opened for a net credit of $1.20, or $12,000, I got to keep close to half of that, with NFLX closing Monday at $358!
Not too shabby for a few days’ work!
Tuesday, Feb. 4
Once again, investors used a big ol’ sell-off as an opportunity to GRAB STOCKS ON SALE, with the Nasdaq rocketing to all-time highs, Tesla (TSLA) making headlines after a massive two-day surge, and — best of all — AAPL making a big bounce!
With Apple shares gapping back up above $315 at the open, my 312.50/310 spread was in good shape, because my sold puts were back out of the money (OTM) — where premium sellers want them to be!
And while my sold 320-strike puts had a ways to go, I knew they had nearly three weeks until expiration (Feb. 21), so I wasn’t too worried.
In fact, I got even MORE aggressive with AAPL, expecting the shares to come off Monday’s high, and on Tuesday morning opened ANOTHER bull put spread — this time in the series expiring Friday, Feb. 14.
- Sold the weekly 2/14 315-strike put
- Bought the weekly 2/14 312.50-strike put
The net credit was $1.20, so my risk was $1.30. Or, put another way, I spent $13,000 to make $12,000 — my ideal credit spread parameters.
My AAPL positions now looked like this:
Wednesday, Feb. 5
NOW, to my FAVORITE PART.
On Wednesday, the Dow Jones Industrial Average (DJI) skyrocketed 480 points, and the S&P 500 Index (SPX) tagged another record high.
And Apple stock also gained, touching an intraday high just shy of $325.
That means… all of my AAPL put spreads were OTM, and, thus, WINNERS.
I ultimately gained roughly $15,000 on this trifecta of trades!
Combined with my NFLX winnings, that’s about $20,000! And that doesn’t even include my modest gain on Target (TGT) spreads.
Guys and gals, here are some closing thoughts…
- I am feeling strong and confident, and my recent steps to improve are paying off. (I’m also getting FIRED UP in my Jackpot Trades service, notching two big back-to-back wins! And did you see the week I had in Jason Bond Picks?!)
- On Monday I went to put an order in for a spread on AAPL’s 302.50/300-strike puts, for a credit of $1.20.However, I just missed the fill with a limit, which would’ve been an easy $12,000 and illustrates how selling premium into panics is one of my favorite ways to collect with this strategy. (TL;DR — Don’t be super-picky during high-IV moments; a few cents cost me thousands of profit.)
- If you mess up on your initial trade — jumping in too soon to time a bounce, say, like my first AAPL trade — you can PIVOT instead of kicking rocks.Just adjust your strikes (and times) and try again… and again, if necessary. Sometimes, like with my AAPL trade, the profits from at least one of your winners will MORE THAN NEGATE your loss on the first spread.Or, if you get really lucky, like I did, all of your positions will close in the black! At Tuesday’s closeI was hoping for breakeven on my first AAPL trade, and ended up locking it down for the trifecta.
That said, I am just super excited right to continue to sell puts, which is the plan as long as it’s working!