Dudes & Dudettes,

One sign you may not be a stock trader - Charles Schwab sends out an Equity Rating alert on PB and I thought, swear to all that is holly, Why did Schwab degrade Peanut Butter from a C to a D?

I had two open positions on Friday and opened a third (Economic retiree).

I had a CSP on ResMed that expired with ResMed below my strike - the rally wasn't enough for RMD to catch up with the rising tide. So I got put to on Saturday for 200 shares of fine global medical product at $40.00 per share. Just the facts:

underlying: $8,000 cash
25 Oct: STO RMD 11/17/12 40.00 CSP 2x @ 1.80 APR 55%, Net $351.05
17 Nov: Expired worthless
B 200 RMD @ $40.00 + $8.95 com = $8008.95

So... my net purchase price is $40 -1.80 = $38.20 + 0.05 com = $38.25.

My goal was to increase my stock position and to use CSP to do it with a lower cost than the open market. Goal achieved. RMD is a very thinly traded stock when it comes to options. I may take on CC but I need to train my gut more before I do.

My second open position is developing, but it is the same goal - increase a position in a stock with a CSP.

My new open position is the November Homework assignment.

I have traded the SPY in the virtual trader and decided to trade the IWM in my real account. I had cash from my FAST sell off and decided that I would attempt a Bollinger Bandit trade - get in, take some cash from the Quants, get out.

I used only the Bollinger Bands, the ETF Cool Tool and my gut to analyze the trade. It was in the morning on Friday and the IWM was hitting the bottom band pretty regularly over the last three weeks - everything pointed down. This week is short because of the Holiday. It will be thinly traded which means any good news in the market will be Mom & Pop retail investors and NOT the Suits moving the market. Any bad news could be a big drop too, but I felt like we were due for some good news.

I went through the checklist:
Market DOWN for several days (weeks)
Market DOWN for the day (was down in the morning but starting to turn up)
Close to a perceived bottom (opened below the lower BB, then moved up)
Volatility (yes, there is)

So I put on the trade:
underlying: $31,000
17 Nov: STO IWM 11/23/12 76.00 CSP 4x @ $0.43 APR 27%, Net $160.80

That was as far out of the money I could go and get > 20% APR and pick up a Benjamin.

Skip over to today. I was up last night - head cold - and saw the Europe Markets open Green. This morning, our Markets opened green.

So I checked my option around 8am PST and jumped on a trade...

19 Nov: BTC IWM 11/23/12 76.00 CSP 4x @ $0.06 APR now 49%, Net $125.60

Gosh I love getting paid to learn. Homework successfully accomplished. However, I was listening to the Cool Dude on trading ETFs and right I after I placed my opening trade, he mentioned, "IWM is based on smaller companies and has greater volatility. I wouldn't trade the IWM until the whole market has corrected and started back up." or something like that. So, I got lucky in my trading because I didn't comprehend that I picked the more risky ETF to do my first trade. I'll look into SPY for future ETF trend trading until I develop a better gut.

Then I got on-line and ordered a 12 pack of delicious Sprecher's Root Beer and Ginger Ale for Thanksgiving... poof goes the Benjamin. Easy come, easy go... but that Ginger Ale... MMMMMMmmmmm. Sprecher's is in Glendale Wisconsin for you Midwest Folk... best piece of advice in this email, IMO.

Cheers,

Malcolm
I

Thanks sooo very much Malcolm - Your willingness to share is greatly appreciated!!!

Thanks Paul.

With this unexpected bump in the ETFs, do we sit back and watch for another downward trend before writing more puts?

Trusting fundamental analysis has always been my least secure personality trait when investing - trust the numbers only goes so far and then the CEO has an affair or the plastics were replaced by sub-grade materials in China or... Not Black Swans but all too common Ugly Ducklings. It is one thing to recognize a five year growth of in sales of 14%, earnings and profits at 10% and a somewhat wide moat with zero debt versus where the price will be tomorrow, next week and five years from now. I think I hear that in the conferences and see it in the posts on line.

I checked, PB is Prosperity Bancshares, Inc. I have no clue as why I was sent the downgrade alert as it isn't a company I watch, follow or own... Peanut Butter. Go Chunky or Go Home!

Malcolm

Malcolm,

Another interesting post. I was talking with Laurie and we decided that maybe PB just does not do as well during the Thanksgiving season as there is so much else to eat. Or maybe Schwab was actually upgrading it from C for creamy to D for delicious.

Your approach for RMD is spot on and I am doing similar PUT plays on a number of stocks that are getting down to where I am interested in them, including VRA, COH, CTSH, SODA, PNRA. Panera has moved already today so I may be doing a BTC on an open PUT today and then I can look to put it on again later. As always I encourage you and everyone else to analyse fundamentals yourself and decide what buy targets are right for you. Don't just trust my or anybody else's targets.

Late last week I sold SPY CSPs at the 134 and 133 level for this Friday expiration. I was able to buy them back early today at $.10. Not sure what I will spend my booty on but probably not root beer or ginger ale. I do, however, appreciate the tip and will watch for Sprecher's as it looks interesting.

I guess I spent a portion of my booty before I had even made it on ordering the game Creationary for Thanksgiving play. This is like Pictionary but rather than drawing you have to build things out of legos for your team to guess, could be interesting. I guess it has been out for a couple years but I just heard about it.

Once again, I appreciate all your great posts and sharing,

Paul Madison

TheCOOLClubDude@gmail.com

www.bivio.com/COOL_Club

On Mon, Nov 19, 2012 at 12:54 PM, Malcolm Myles <malcolm@mmyles.com> wrote:

Dudes & Dudettes,

One sign you may not be a stock trader - Charles Schwab sends out an Equity Rating alert on PB and I thought, swear to all that is holly, Why did Schwab degrade Peanut Butter from a C to a D?

I had two open positions on Friday and opened a third (Economic retiree).

I had a CSP on ResMed that expired with ResMed below my strike - the rally wasn't enough for RMD to catch up with the rising tide. So I got put to on Saturday for 200 shares of fine global medical product at $40.00 per share. Just the facts:

underlying: $8,000 cash
25 Oct: STO RMD 11/17/12 40.00 CSP 2x @ 1.80 APR 55%, Net $351.05
17 Nov: Expired worthless
B 200 RMD @ $40.00 + $8.95 com = $8008.95

So... my net purchase price is $40 -1.80 = $38.20 + 0.05 com = $38.25.

My goal was to increase my stock position and to use CSP to do it with a lower cost than the open market. Goal achieved. RMD is a very thinly traded stock when it comes to options. I may take on CC but I need to train my gut more before I do.

My second open position is developing, but it is the same goal - increase a position in a stock with a CSP.

My new open position is the November Homework assignment.

I have traded the SPY in the virtual trader and decided to trade the IWM in my real account. I had cash from my FAST sell off and decided that I would attempt a Bollinger Bandit trade - get in, take some cash from the Quants, get out.

I used only the Bollinger Bands, the ETF Cool Tool and my gut to analyze the trade. It was in the morning on Friday and the IWM was hitting the bottom band pretty regularly over the last three weeks - everything pointed down. This week is short because of the Holiday. It will be thinly traded which means any good news in the market will be Mom & Pop retail investors and NOT the Suits moving the market. Any bad news could be a big drop too, but I felt like we were due for some good news.

I went through the checklist:
Market DOWN for several days (weeks)
Market DOWN for the day (was down in the morning but starting to turn up)
Close to a perceived bottom (opened below the lower BB, then moved up)
Volatility (yes, there is)

So I put on the trade:
underlying: $31,000
17 Nov: STO IWM 11/23/12 76.00 CSP 4x @ $0.43 APR 27%, Net $160.80

That was as far out of the money I could go and get > 20% APR and pick up a Benjamin.

Skip over to today. I was up last night - head cold - and saw the Europe Markets open Green. This morning, our Markets opened green.

So I checked my option around 8am PST and jumped on a trade...

19 Nov: BTC IWM 11/23/12 76.00 CSP 4x @ $0.06 APR now 49%, Net $125.60

Gosh I love getting paid to learn. Homework successfully accomplished. However, I was listening to the Cool Dude on trading ETFs and right I after I placed my opening trade, he mentioned, "IWM is based on smaller companies and has greater volatility. I wouldn't trade the IWM until the whole market has corrected and started back up." or something like that. So, I got lucky in my trading because I didn't comprehend that I picked the more risky ETF to do my first trade. I'll look into SPY for future ETF trend trading until I develop a better gut.

Then I got on-line and ordered a 12 pack of delicious Sprecher's Root Beer and Ginger Ale for Thanksgiving... poof goes the Benjamin. Easy come, easy go... but that Ginger Ale... MMMMMMmmmmm. Sprecher's is in Glendale Wisconsin for you Midwest Folk... best piece of advice in this email, IMO.

Cheers,

Malcolm
I

Yesterday I closed out my IWM trade (STO @ 0.43 and bought back at 0.06) while the market had a really good day. Today, the market was not so good and at times really bad. The put contract closed at 0.02... I coulda, woulda, shoulda made an extra 0.04 IF I hadn't closed the trade... NOT.

I'm very satisfied to take, in a matter of hours really, 0.37 out of the market. Investing in the market is like golf - its a game that can only be played, never won.

The COOL Tool showed me that it was a good trade to get into, my understanding of the trade was good, and when I passed my exit price, it was very easy to close the trade.

Tuesday's two bit treasure - when you win, you didn't loose.

Malcolm