Friday Update

Friday Update Hello Smart Option Sellers! Been quiet here this week for us. Sometimes that's the best thing as we keep our hands in our pockets and let the market work for us. What does that mean? It means an up-trending market (and stocks) will cause our put-option positions to decay which will allow us to buy them back and lock in gains. No need to meddle and make our lives more stressful than they may already be! I like hands-off investing methods and put-selling is one of the best. The Dow Industrials (INDU) finally joined its partners (S&P500 & Nasdaq) in hitting all-time new highs this week. That's a great thing. And I don't really see it slowing down too much. I'll continue to look for new put-sell plays but for now let's continue to hold current positions as-is. All are in the green except for Big Lots (BIG), which is trading a tad above our initial sell price. Survey Results It's time to reveal the results of the option credit spread survey that I had asked everyone to weigh in on. Many of our current Smart Option Sellers members have asked if we can start a new trading service that advises on option credit spreads. I have written a few times on this topic over the last month or so and will entertain the idea of launching this new service, but only if we have enough support for it. The service would be selling put option credit spreads only (not call option credit spreads) because of the never-ending bull market. Just like selling naked put options (like we do now), selling put option credit spreads works extremely well in bullish stock market environments. So it only makes more sense to engage in a strategy that takes advantage of the bullish scene. I offered the survey in two different alerts over the past six weeks, so if you haven't weighed in yet, you missed your opportunity to be included in these results. But you can still email me your decision at this point (only for those who didn't vote). Here's what the results showed: Out of our whole membership file, 62.5% voted on the subject. 57.6% were very interested 15.3% were not interested 9.4% were not sure 17.6% wanted to know more I was hoping to get more than just 62.5% of the whole group to vote. But I understand that some of you are new to Smart Option Seller and are just not ready to take on a new service, or even consider one just yet. Not a problem there. More than half who voted are very interested, which is a good start, and I believe after I finish answering your questions and writing up the option credit spread primer, the undecided folks will convert over. I'll try to get all of that published over the next few weeks, and if I feel the interest is still there, I believe we can move forward with the service. Thank you to all that participated. Q&A Only one question this week. Q: Lee, just an observation and maybe this would be worthy of a Friday Q&A. I've wondered about this before and implemented it to increase my ROA. When you issue a buy back alert as in CVS, the Stock price is so far above the strike price it can happen of course, but unlikely that I will get put the stock. Why not hold the put option until expiration to save the buy back price if you don't need to free up margin? At that time it expires worthless, thus ending your obligation and pocketing the extra cash. Maybe I'm missing something and I know it's a little more risky than buying out of the position, but it seems with so much room why does it not make sense to just let it ride and expire? I love the service and don't chime in much, but this was on my mind. I have the same situation in your unofficial trade in CAT which in hindsight was an awesome observation on your part. Can you expand on this thought. A: Hi, thanks for the question. Make no mistake, you are more than welcome to employ any trading tactic you'd like. But one of the best things about a winning trading system is that you follow the rules and never (almost) deviate from them. For us, the "80% Rule" is one of those things we try not to deviate from. First off, in my opinion, everyone could use the extra cash and margin funds to put towards new trades. If taking gains on a trade early (before expiration) can not only lock in profits, but can also free up margin money - we're going to do it. I'd rather leave the extra $.05 of profit on the table than take the chance of the stock having a very unfortunate incident that could cause it to drop dramatically. It's not worth holding, in my opinion. In the case like CVS, which was well over $30 above the strike price - seemed like a no-brainer to just leave it alone. And you'd probably be right. But we stick to our rules and that's why we locked in the gains. Like I said, you are more than welcome to tweak my system to fit your style - I have no problem with that. Thanks again! Well, that all for today. Continue to hold all other positions as-is. Have a great weekend everyone! Contact me here Regards,