Good story but are you saying you had 6 months of success and now you think it is appropriate to teach people?
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Free registration at the forum removes this block.I will give a little information about the way that I trade. I trade a married put strategy. Basically it means that for every 100 shares of stock that I own I also by a put to hedge my position. This limits my risk and keeps the profit potential open.
For example
Currently I own CMCSA at 37.71 (lets say 100 shares for example purposes)
I also own the CMCSA 37.50 Put option which I paid 1.25 for
The cost basis for this trade is for the trade is 38.96 ($3,896)
The risk on the trade is 1.46 or 3.7%. ($146)
I can not lose more than 1.46 ($146) on the trade plus commissions. The upside is open.
I will adjust this position during the life of the trade in order to reduce the risk or lock in an profits. I don't have to worry about my stop loss getting hit or any gap downs in the stock. It could go to zero tomorrow and it wouldn't matter I am protected with the put option, so the overnight risk is just the 1.46.
Some of the nuances involve knowing when to buy the stock, which stock stocks to buy, how to adjust, which strike price, how far out in time, Risk management, Portfolio Risk management, etc
This is the basic strategy.
Regards,
Z
I think in an over-bought market like we have now, this is not a bad strategy.
It probably appeals to a lot of people who's risk tolerance is slim and none. IMO, the strategy he teaches is a good strategy to have in your tool-belt.
Nice thing is with this strategy you can follow the rules of cutting losers quick
By cutting losers you mean unwind the entire trade? Sell the put and the position?
I will give a little information about the way that I trade. I trade a married put strategy. Basically it means that for every 100 shares of stock that I own I also by a put to hedge my position. This limits my risk and keeps the profit potential open.
For example
Currently I own CMCSA at 37.71 (lets say 100 shares for example purposes)
I also own the CMCSA 37.50 Put option which I paid 1.25 for
The cost basis for this trade is for the trade is 38.96 ($3,896)
The risk on the trade is 1.46 or 3.7%. ($146)
I can not lose more than 1.46 ($146) on the trade plus commissions. The upside is open.
I will adjust this position during the life of the trade in order to reduce the risk or lock in an profits. I don't have to worry about my stop loss getting hit or any gap downs in the stock. It could go to zero tomorrow and it wouldn't matter I am protected with the put option, so the overnight risk is just the 1.46.
Some of the nuances involve knowing when to buy the stock, which stock stocks to buy, how to adjust, which strike price, how far out in time, Risk management, Portfolio Risk management, etc
This is the basic strategy.
Regards,
Z
Thank you @MidwestLandlord , @MJ DeMarco , and @GoodluckChuck , for all of your feedback. I really appreciate it.
I've decided to share more of what I am doing taking your advice and maybe this thread will turn into a learning thread instead.
Here are some points about the strategy that may address some of the comments.
1. The market is overbought, but it can stay over bought for some time and a lot of people were saying overbought months ago and this thing still goes up. Having said that if you are standing on the sidelines not wanting to get involved, you could be wasting an opportunity to participate in the upside move. This is one way to do it while protecting yourself.
2. This strategy allows you to take advantage of the markets "rubber band" effect in a way. If the stock were to go down, you will have the opportunity to lower your cost basis in the stock and then when the stock rubber bands back up or bounces , you may have the ability to make a profit.
3. If the stock were to go up from here, this could turn out to be a no risk free trade, by purchasing or rolling the put up and out.
4. Since it is cutting your upside by requiring your stock to advance a bit more before you make money, it may not return large % return per year, but maybe you can make more than having your money sitting in a CD at less than 1%.
5. The timing of the stock purchase is important also, and the type of stock chosen. It would be best to choose strong companies that have strong financials. I believe through chart reading skills the timing can be improved to better than 50/50 and by doing so you get a slight edge. You wouldn't want to buy a stock in a downtrend. A stock that is up trending would be best or one that has been bottoming out with a potential to bounce. I have criteria that I like to use for defining an up trend and other patterns.
6. Within the context of the married put, one can also sell calls against the position and receive some premium further reducing the cost basis or adding profit to the position. Yes this may cap the upside, but then again you could roll up and out on the call before getting called out and give the upside more potential. In other words you can be active within the position to squeeze some more $$ out of it.
Bonus:
7. This can be done in a bear market. You can short a stock and buy a call and do the reverse and now you can play in a bear market or in a down trending stock.
It does take some time to learn chart patterns and understand reading some financial statements of companies and also paying attention to things like earnings. Sometimes also you may be in a position for months at a time but all the while you can be active selling premium or making adjustments tot he position.
I don't think you understand what I am trying to do.
But I never said that the market was overbought.
Following the advice of some of the veterans here, I am sharing most of what I do so that people can see how it works. If it's not your cup of tea, I respect that.
I trade with IB and the commissions are very low.
I don't short stocks just because they went down. There is more criteria to it then that. For example right now in this environment I am not shorting anything, the market is clearly in an uptrend.
If you owned the banks in 2006 and had some puts to protect your positions you would not have lost as much.
Thanks for your feedback.
Z
I have studied stocks and options and the market for over 10 years. I have had good years and bad years.
If you need proof or statements then I am not the person for you.
if he can move this thread out of the marketplace (since I am no longer trying to sell anything) I think it would be better.
Yes this thread started out as me trying to sell some education about the way that I trade, and that is why it is here in the market place. It has since taken a slightly different direction, wherein I am now posting more about what I do so that people can see what it is about. My intent now is to share information which hopefully will be helpful to people and not so much to solicit sales. I had contacted MJ about possibly moving this thread somewhere else, but I am not sure that it can be done.
Either way make the money first through a business. A true money-making machine. Then dabble in these types of things. Even a 1000% return on $250 investment is only $2,500. But a 1000% return on $25,000 investment is $250,000. Or a $250,000 investment could be 2.5 million dollars. Compound interest maintains your wealth, explosive growth explodes your wealth.
Thanks for the suggestions.May I suggest you start publishing your trades live via youtube. So you can explain as you trade, remember to insert the right tags on each video (hint: use tubebuddy) and then as you gain more subscribers, you can link to your course. This way you'll have a much larger audience to cater to. Plus people will build their trust in you over time.
I say this from experience, and I use it still.
I don't know why I'm answering this on Christmas day, so have a great one guys. Merry Christmas and Happy hols!
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