Message of the Day
The "Message of the day" is a page where I will post short lessons, Ideas, political comments or maybe a follow-up on a trade made the day before. The messages will stay until I feel it's time to go. There will be very important information written here. Be sure to check every day. This page was formed in an attempt to cut down on emails.
Today’s Message
Thursday, November 10, 2016
I think we can all agree that Tuesday (Election Day) was a long, drawn out, nerve racking day. I don’t think it’s a secret how I felt about our candidates, pre-election. There was no way I was going to vote to continue Obama’s policies! Especially with a candidate as corrupt as HRC. I am also no fan of Donald Trump. I agreed with the argument that he was way too insulting and “thin skinned” to be President of this great land. And his narcissism did not help my dismal opinion of him and whether I felt he had the temperament to lead this country or not. I had serious questions to whether he was a legitimate candidate or not. What I did like was the way he felt about the media, corruption in Washington, trade, immigration, the military, Obamacare, regulations, Kate’s Law, the wall, Congressional term limits, his view of where the U.S. should stand in the world, the democrats using the African American vote and doing nothing to help their cause, the list goes on. Can he solve all these issues? Probably not but it’s nice to be optimistic. He heard the voices of the silent majority and tapped into their hopes and fears. The type of President he’ll be is still to be seen. All we can do is rally around him and hope he didn’t con us. I must say I feel an excitement about our future.
As for Hillary’s demise, I do not have a “good riddance” attitude. Not that I have second thoughts about her and Bill’s policies and morals. I feel bad for the women and young girls who wanted to see a woman President in their life time. I’m talking about strong women who truly believed in the democratic policies who didn’t see her as the republicans did. They loved her the same as the Trump lovers loved him, even with his flaws. We all think differently! This was a very hard fought, passionate election, it’s time to heal.
My opinion of the anti-American protesters is not good. I call them anti-American because they are! They burn the flag, disrupt the lives of hard working people, cause problems for our law enforcement, etc. Protesting the results of an election in our very fair democracy because they don’t like the result. These whining, spoiled brats should pack up and move with the few Hollywood celebrities to a place where they all think the same. Bring Bernie and enjoy Socialism.
How did I play the election? Well from time to time I do some day trading. I don’t recommend it but I do it. I do it with stock I’m holding to try to capture some profit while I’m at my computer watching my candlestick charts and my moving average lines. At the end of the day I always end up owning the same stock. Many times I don’t even log my trades in Main Street beats Wall Street because I don’t want to complicate things for the Grasshopper readers. Plus I’m back coaching High school basketball, along with my pizza business, time is tight to explain everything.
As election day was getting closer I was getting very nervous about the outcome and my holdings. The day before the election I decided to sell all my stock until after the results. As it turned out I was able to get back into all my stock at a lower price which worked out nicely. All my stock except one, U.S. Steel. When the market was diving on Wednesday, U.S. Steel was up big because of Trump announcing his plan to immediately start work on the infrastructure. This caused a major problem for me because with the sale of all my stock it left me with a 100 contract Naked Call on U.S. Steel. The stock was up over $3. I’m not going to sugarcoat this, my account was down about $28,000. Now I have to deal with this big problem. The Call doesn’t expire until next Friday the 18th and I’ll keep you informed with the development. I’m hoping U.S. Steel falls like a rock. With the temporary sale of the stock I didn’t lose money because the price of the stock was a little above my purchase price. The problem is the Naked Call. When the stock goes up so does the value of the premium. This is a Short Call. Being short means, when the value of the premium goes up my account goes down.
If you have any questions on this please send me an email. This is very important to understand. The way it looks now I’ll probably have to do a Roll-Out next week to prevent me from having to delivery the stock at my Strike Price of $20. As I write the price of U.S. Steel is $24.50. NOT GOOD!
Steve
The Options Coach
Thursday, October 13, 2016
VOTING MADE SIMPLE
The days of voting for someone’s character are long gone.
The next President will not be able to get much of their agenda accomplished because of a do nothing congress.
Forget the 2 unworthy corrupt clowns we have running, we are screwed either way. This election is much bigger than these 2 candidates and the result of the election will affect our lives for a long time. Please understand the next President might nominate 5 Supreme Court Justices. This is one election where you can truly vote for what you believe in and the direction YOU want the country to go in. A direction that will be established for a long time: long after the circus is over. PERIOD!
Steve
The Options Coach
Friday, September 30, 2016
While doing my trading, along with my computer, I have my TV on. I’m tuned into one of the financial stations; either Bloomberg or CNBC. Both last week and yesterday, the CEO of Wells Fargo, John Stumpf has been getting grilled by the lawmakers of congress, in full view on TV, because of the recent banking scandal. The Wells Fargo scandal involves hyper-aggressive sales tactics forced on lower level workers by management. Bank employees were pressured to call account holders repeatedly and hassle them to open more accounts. In addition, millions of accounts were opened, unbeknownst to customers, by using there social security numbers that were on file. Among other crimes, Wells Fargo will be charged with identity theft. The bank has also opening credit card accounts without customers permission. Here’s the unbelievable part. Wells Fargo was charging these accounts maintenance fees and taking the fees out of other accounts these customers had. Or charging the new accounts which had no money in them. When they tried to get maintenance fees out of unknown accounts, which had no money in them, the bank’s computers sent default notices to the credit agencies. Now millions of good customers have lower credit scores. Besides getting ripped off for false account fees, millions of these hard working people received higher interest rates on mortgages in the last 5 years, or more, because of bad credit scores. You can’t make this stuff up!
Wells Fargo fired over 5000 lower level workers, all making between $12 and $25 an hour. No senior level or upper level management personal were fired. The Wells employees who put the quoters in place and threatened lower level workers with demotion or termination, were not fired. In fact, John Stumpt, the CEO and other big wigs received unprecedented bonuses. Now other bank industry employees are coming out of the woodwork to report that these practices are widespread in the entire banking industry.
The corporate greed in this country, and beyond, is out of control. If you read my page “Let’s get Started” you will see I mention this in the first paragraph. The public companies are hell bent on corporate profit. They must beat the last quarter’s profits in fear the stock price will go down. If the stock price goes down the corporate officers, who own millions of shares will lose millions of dollars. They will do what ever it takes to make bigger profit to achieve a higher stock price. Even rip off the hard working people of this country. Corporate greed!
My advice. Education yourself! Do not rely on any greedy bank to care for your money. Me, I keep as little money in the bank as possible. I education myself. I handle my own investments. The name of my website/blog is “Main Street beats Wall Street” for a reason. I don’t trust any of them. I want to beat the hell out of Wall Street! Legally!
Steve
TheOptions Coach
Tuesday, September 13, 2016
I am asked all the time, “why do you do this?”, with the inflection I might have an “ulterior motive” in their voice. Well I do it because I love to coach and I want to help prevent others from taking the hits I took in the market. Hopefully you can learn from my mistakes. My motive is to help Main Street beat Wall Street, PERIOD!
Below is an email I received today from a person I met at a restaurant a few days ago. Read it and you might begin to understand why I do it. Thank you Louis for your kind words. I am humbled!
Steve,
Hello. First, thank you and your son for your service. I wake up grateful every day of my life for families like yours. My father, let him rest in peace, taught his children to be grateful and humble among other valuable lessons. I pride myself on being a “people” person. Second, thank you for taking the time to speak with me and for giving my family an opportunity to earn. Although we only spoke a short time, I think you are a special person and the world is a better place for having you and your family in it. In my 47 short years, I have not been rewarded with meeting many people like you. You could have shaken my hand and gone back to your desert. However, you took an interest in me. It just so happens that I have been very curious for years about options trading (and the market in general). I will confide in you that I blew HUGE money ten years ago with the same mouse I am using to send this email. I discovered Charles Schwab. Unfortunately, I had enough knowledge to hurt myself. Age has taught me to look before I leap. This being said, I am intent on being an excellent student of yours. My motivation is my beautiful wife Julianne of almost 21 years (cancer and two heart attack survivor) and my two beautiful children Samantha 13 and Gavin 11. I am determined to give my children opportunities that I did not have. Thank you from me and my family!!! God Bless you and yours and I am looking forward to stopping by your restaurant. God Bless Mike Fiore and your other friends who made the ultimate sacrifice.
Highest regards,
Louis
Thursday, August 11, 2016
There’s nothing wrong with approaching options trading as a pastime in which you take large risks by focusing on buying cheap Out-of-the-Money calls in hopes of hitting a big payday. As long as you have money to burn! You can have your own private Las Vegas right in your home. However, being sucked in by the thought of unlimited profit potential and using options as instruments of pure speculation as a way to consistently making money is dangerous and unrealistic. This is especially true when you are buying a decaying asset, such as a short-term Out-of-the-Money option, you must understand the odds of long-term success are stacked against you.
There’s also nothing wrong with taking an occasional high-odds speculative position, but the majority of options traders who generate consistent profits and have a long history of successful options trading base their trading on businesslike rules and discipline, not personal gut feelings or tips.
If you are like most people, in these times of economic uncertainty you are looking for a way to earn extra money, that doesn’t take all of your time, preferably from home and that doesn’t require a lot of capital to get started. If you fall into this category then options trading might be just what you are looking for. Although trading is a simple business to get started in, it is far from easy to be successful at, and be wary of anyone or books that tells you differently. Also, you may have heard that trading options is risky. While nothing in life is risk free, there are ways to substantially reduce the risk.
If you want to be a successful options trader you must treat your trading like a business. Most aspiring option traders fail to profit because they don’t know how to trade options like a business. Once you implement a few steps, you’re on your way to trading like a professional. To adequately teach you to be a professional trader I would have to write a book or two. However, with a few ideas you can be well on your way.
- Education, education, education! Along with “Main Street beats Wall Street,” you must study all available material.
- You must develop rules and discipline! Try to refrain from even the occasional high-odds speculative trades. This is one of the hardest things to do. Write out a sound trading plan that details your trading approach and a sound money management method. A solid trading plan will detail the type of trades you will make, the type of trades you will not make, and risk management.
- Find and develop a relationship with a mentor. You need someone to answer questions. Maybe even a group of friends to have meetings with to critique philosophies and strategies.
- Like any business you need to cut down on expenses. DO NOT work on margin as a Grasshopper. Read my section on Margin Accounts. Margin interest can cut deeply into your profits and even eat all of them up. Brokerage fees are much less than in past years. However, commissions and fees can also eat away at your profit. Do not over trade!
- You must develop a stomach for this business! You cannot jump in and out of every position with every market move not in your favor. This will drive you batty and you will have large commissions and fees on your account. You have to find trades you are confident with. This talent is developed with education and experience.
Friday, August 5, 2016
Do you love what you do for a living? Do you love getting up in the morning? Are you happy? I hear every day of my life how unhappy people are. I’m talking about very successful people. Doctors, lawyers, accountants, business owners, entertainers, very smart successful people. Many people are not happy!
I speak to people every day about “Main Street beats Wall Street.” They can sense the passion I have for the stock market and being an options trader. Many don’t understand why I have this site and run a blog. “You put so much time in” I hear all the time. “What’s in it for you?” They cannot understand why I post all my trades, answer many emails and even sit with anyone who wants to learn. When I introduce someone to “Main Street beats Wall Street” and I say I teach option trading for free, They look at me like I’m nuts! They want to know “what’s the catch?” When some see the success of my trades, they even give me suggestions on how I can make money with my site.
Since I started working I loved every job I ever had. I think it’s very important to be happy with what you do. You do it everyday-all day, you must be happy! Some of the things I’ve done for a living are, a welder, firefighter, basketball coach, bar owner, nightclub owner, restaurant owner, pizzeria owner and options trader. I loved every single one of these jobs! Yes even being a welder. I loved showing up on a job site, flip my mask down and do my thinking while I work. No one bothers the welder on the job site. There’s a little prestige being the welder on the site.
I continue to love what I do, which is running my pizza joint and trading options. When it comes to coaching, I don’t need to get paid for teaching. I would coach basketball for free and I’ll continue to coach people with their options education for free. As long as I’m passionate about coaching, I’ll do it free. No one needs to figure out why I do it free. I do it free because I love what I do. I want to help prevent others from losing money in the market like I did. Learn from my mistakes. I did lose money, I lost plenty! I look at it as the price for my education and I want to share my education with you.
The moral of this story is, be happy! If you’re not happy with what you do, change what you do. Life is too short! I haven’t used an alarm clock in years. I wake up because I can’t wait to get up! The market opens at 9:30, I’m up before 8 to read reports getting ready to start my day trading. 8am might sound late for some but Fiore’s pizza closes at 4am lol. I have a good friend of mine who left a 15 years union job with good pay and full benefits. He wasn’t happy! He started a business and now owns multiple businesses. He is now happy and loves getting up in the morning.
Steve
The Options Coach
Wednesday, August 3, 2016
In today’s “Message of the Day” I want to talk about three big name investors who are betting against the stock market. If you are a reader of “Main Street beats Wall Street” you know I make a living selling Call Options, which is shorting a stock or the stock market. And you know I don’t like owning stock! This is why I look at the opinions of Stanley Druckenmiller, George Soros and Carl Ichan with great interest. They are betting against the Stock market.
Jeffrey Gundlach, founder and chief executive officer (CEO) of DoubleLine Capital LP, offered a bearish prognosis for the stock market. Financial commentators have been taking his opinions quite seriously, especially since Barron’s magazine crowned Gundlach the “king of bonds” in 2011. To Gundlach, the market was not as healthy as it seemed in May 2016. Corporate earnings weakness was inconsistent with widespread expectations that the Federal Reserve was sitting on secret news that the economy was better than most people realized. Gundlach’s advice: sell everything, keep only gold.
Stanley Druckenmiller served as lead portfolio manager for George Soros’ Quantum Fund from 1998 through 2000. The gloomy forecast from Gundlach came about three weeks after Druckenmiller shocked the audience at the “Ira Sohn Investment Conference” in New York.
According to financial writer John Burke, at the Sohn conference, Druckenmiller complained that the Federal Reserve was acting irresponsibly by extending its easy monetary policy past the point where the unemployment rate had dropped below 5% and the inflation rate had risen close to 2%. He emphasized that the Fed’s monetary policy facilitated unproductive use of leverage by companies involved in share buybacks and mergers, rather than capital expenditure. Worse yet, China’s credit bubble had caused a drop in the nation’s nominal gross domestic product (GDP) growth from 15 to 5%, threatening global economic growth. Druckenmiller ended his talk with the advice that investors should seriously consider gold investments.
Whether you like George Soros because of his political views or not, he is still a famed investor and billionaire and I do listen to what he has to say. Soros, chairman of Soros Fund Management LLC, holding three bearish positions, explained as signals of Soros’ belief that the stock market was headed for a storm. One of the three positions is a bet against the S&P 500. The position actually consisted of Put Options on over 2 million shares of the SPDR S&P 500 ETF (NYSEARCA: SPY). The other bearish positions were both gold investments: 19 million shares of Barrick Gold Corp. (NYSE: ABX) and Call Options on 1 million shares of SPDR Gold Shares (NYSEARCA: GLD). Most investors that are long gold feel it is a safe haven for a weak stock market. Because Druckenmiller, Soros’ protégé, had been recommending gold investments just two weeks earlier, Soros’ gold positions were looked at as an endorsement of Druckenmiller’s dismal outlook for equities. Also, in January 2016, Soros discussed his concern that an economic crisis in China would put deflationary pressure on the global economy, with a negative impact on the American stock market.
Carl Ichan, another famed investor and financier has a portfolio with many large long position. However, On June 9, 2016, Icahn offered a bearish take on the portfolio holdings of Soros Fund Management, ignoring the significant long positions in Soros’ and his own portfolio. The inconvenient truths of Ichan’s portfolio did not stop “sensationalist” bloggers from writing repeatedly that Icahn was betting on an imminent financial Armageddon.
Steve
The Options Coach
Monday, July 25, 2016
You arrived here because you’re a reader of my site “Main Street beats Wall Street” or you followed a link from a Facebook post.
Clinton or Trump?
This is one wild political season! And it’s been wild for a year now. To tell you the truth I’m getting a little sick of it. Have we ever had two such untrusting candidates? I don’t trust either one! If you scroll on Facebook or Twitter you will read some unbelievable crap. I really think everyone should do a little homework here. I do my homework and I feel we have two bad candidates still standing. I don’t write my thoughts on Facebook because I’m from NYC and I have so many friends on both sides. I don’t want to cause problems with close friends and family members with comments that aren’t going to change anyone’s mind anyway. I wish my friends and family members felt the same because they’re really insulting my intelligence. I might be taking a wimpy approach but I could really insult either one of these candidates and cause a computer argument. Something I’m not interested in. Since this is my personal forum, I’ll say what I want. Don’t like it, don’t come here!
What has Hillary ever done? If you listen to Jeb Bush, Hillary only sponsored 3 bills that became law. 3 bills in eight years in the senate. This is true, but not the whole truth. She did co-sponsor 74 bills . A sponsor is a person who presents (writes) a bill or resolution for consideration; Those who support it are known as co-sponsors, meaning you voted for it. I don’t look at being a co-sponsor as a big deal. She did support 74 bills but only wrote 3. She had a lot of time on her hands to run the Clinton Foundation! Other than that, I can’t think of another damn thing she did with any meaning.
Donald Trump, what did he do? Well, he’s not a politician. I guess he’s a talented business man. He is a billionaire! He came on the seen like a blabbering buffoon fright train trying to impress the fading middle-class and anyone else who feels the country is going down the tubes. When it comes to where this country’s going, it’s not good! Why else would we have so many people, so unhappy, to vote for a guy like him, an old disheveled socialist or “Crooked Hillary.” People are not happy!
After reading miles of half truth and exaggerated stories on both sides, I decided to give my opinion, but only on my own forum. I will refrain from Facebook post. According to the FB post I read, it looks like most people made up their mind on who they’re going to vote for. After all I’ve seen and read in the posts, if you believe everything Trump says unequivocally, I must question your intelligence. If you believe anything Hillary says unequivocally, I must question your intelligence.
I know you have to vote for someone so my last comment is half joking and with sarcasm. The bottom line is I don’t like either one. I’m not going to vote for Hillary JUST because she’d be the first woman. I’m not going to vote for Trump JUST because of his crazy promises. implementing policy is still a democratic process. I feel if he can’t work with congress he’ll go to the Executive Orders. We’re used to them! Either way this election goes I’ll be upset on the evening of Election Day. Thinking of where we’re going and how we’re getting there with our new jackass. I believe many will be voting for the “lesser of two evils,” which ever one that is. I also feel the winner will be determined by Bernie’s people. So many of them are say they will not vote for Hillary. That doesn’t mean they’ll vote for Trump, but if they have a lot of “no shows” this could hurt Hillary. Not too many will come across for Trump.
Who will I vote for you ask? The truth is I’m from NY, it will not matter, Hillary got it! But you should still vote. The bottom line is, I will NEVER vote for Hillary. I’ve seen enough of her over the years, I truly feel in my heart that she is not a good person. I think she lies about everything. She is funded by Wall Street and her foundation is funded by many countries in the middle East. Countries with no rights for women, no rights for gays. I really don’t see how any woman or gay person would vote for her. She loves money more that Trump. She owes these countries and Wall Street many favors and they affect her decisions. I also can’t see how any “far left” person would vote for her. So far she raised over 60 million dollars from Wall Street alone. Bernie’s people are very upset and many will not be voting. I don’t see how any Jewish person could vote for Her. Obama’s administration, both with Hillary and without Hillary, ruined the relationship with our closest ally, Israel. I would like to hear from some of my Jewish friends. I would like to hear how you could vote for someone who will probably continue with the same policies. Even if she doesn’t support his policies, how could you like Obama after he did what he did to the relationship with the homeland?
Trump! Wow he’s a handfull! He’s not a politician and change would be nice. BUT, his arrogance, his narcissism, his insults. He has no political-life record to go by but he did good in business, I guess. I will never listen to the media and believe he hates women, or he’s a racist. When it comes to America’s social issues he makes everything sound much worse than they really are so he can push his agenda, but I think the black/white issues would get worse because of his arrogance. That scares me! With the way the world is going I think we need a revamping of our immigration policy and our foreign policy. I’m a believer of nationalism. I want a strong country. I’m not a believer of a world economy first. The Euro-zone and the Euro didn’t work so well. Worry about america first!
Will I vote for Trump? Still to be seen! I’ll have to see how the next few months go. If I vote, it will not be for Hillary. I’m not in favor of opening the flood gates for Syrian refugees. I think all immigration should stop until we get a policy together, which should take long. All the gun haters don’t want the possibility of some bad guys getting guns. Well, I don’t want the possibility of some terrorist coming in with the open door policy.
Do your homework!
Steve
The Options Coach
Friday, June 24,2016
Brexit! Is this a word? What does this word mean? It’s a word made up of two other words, British and Exit. Something like J-Lo, which stands for Jennifer Lopez. Brexit is a word made up which is short for the British exit or withdrawal from the European Union (EU). Brexit is a political goal that has been pursued by various advocacy groups, and political parties since the United Kingdom joined the precursor of the European Union in 1973.
The European Union (EU) is a political-economic union of 28 member countries that are located primarily in Europe. The EU has developed an internal single market through a standardised system of laws that apply in all member states. Within the EU, passport controls have been abolished. EU policies aim to ensure the free movement of people, goods, services, and capital, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development.
The United Kingdom voted in a referendum on 23 June 2016 to leave the EU. Well, is this world changing or what? Passport control? Is Trump influencing change? Are people sick of the direction the world is moving? Why is Trump so popular? Why is Bernie so popular? If Trump gets in, big changes may continue. The British leaving the EU is huge news and the world might never be the same!
The result from a historic referendum in the U.K. is rocking markets around the world and slamming U.S. stock futures, which indicate how shares will open at 9:30 a.m. The Dow futures are -510, Nasdaq -160 and the S&P -75. Get ready for a crazy day!
The result led British Prime Minister David Cameron to issue his resignation this morning. He had been campaigning for the U.K. to remain in the EU. I guess Cameron and his seemingly left (center) ways said, I’m taking by ball and going home. The left does the same in this country. If it doesn’t go the liberal way, there will be unrest. I can’t even imagine what happens in this country if Trump gets in.
Yesterday I was watching CNBC as I was trading. Every trader on the different segments of the show was saying the U.K. will leave the EU and tomorrow will be a huge day in the market. They said “you must be fully invested.” They had me thinking, should I load up on stock? Should I get out of all my short positions? I decided to not make a move and stay my course. I am holding 1000 shares of Facebook but I’m not worried about that. Facebook will come back! The rest of my positions are short and I should have a nice day; only time will tell! The bottom line here is, you must have a plan and the “professionals” know no more than us who live on Main Street.
This looks like it’s going to be a brutal day for the ones who are long but I think the bigger news is the direction the world in moving. People of the world are fed up!
I cannot cover this entire huge story in my forum. Make sure you Google Brexit and get the full story and the ramifications of the British historic referendum vote.
Steve
The Options Coach
Tuesday, May 24, 2016
As a basketball coach I believe in repetitive teaching. I would do a drill everyday for 5 or 10 minutes, not once a season for an hour. I do the same with teaching options. You will read many similar short lessons on a subject, not one long lesson and forget about it. Having said that, my “Message of the Day” will be about Naked Calls, as apposed to Covered Calls. If you read “Main Street beats Wall Street” on a regular basis you know I write about this often. The books say Covered Calls are the safest strategy. I disagree! I will agree with this if you are an investor and not a trader. Meaning, if you buy and hold your stock, Covered Calls is a good, safe way to bring in some extra money while you’re holding your stock long term. I’m not saying this is a bad strategy! It’s just not what I do, or what I teach on my site. The way the market moves these days I would rather not own stock. If you are into buying and holding, Covered Calls is a great strategy. If the stock goes down, you own it anyway. You ride out the highs and lows. I like in and out. I don’t want to own stock. With the buy and hold/Covered Call strategy, you would not want to get assigned. When I’m involved in a Covered Call I normally want to get assigned and move on to the next deal. Completely different strategies. I would much rather do Naked Calls and never have to cover my Call. I work on margin. If I never have to buy the stock, I don’t pay margin interest. This happens when I write a Naked Call and the stock never hits my Strike Price and expires worthless.
If I do a Covered Call and the stock goes down, yes I keep the premium; but I also keep the stock at a lower price. As I write this I’m in 3 stocks that are lower than where I bought. All 3 were Covered Calls. I either started as a Covered Call or I had to cover a Naked Call because the stock approached my Strike Price. If I cover a Naked Call I like the stock to stay above the Strike Price and I get assigned. It doesn’t always happen that way. Sometimes you buy the stock and it drops as you are waiting for the Call to expire and continues going down. I’m holding U.S. Steel and GoPro at a lower price as a result of Covered Calls and the stock going down. I also own 2000 shares of Facebook. 1000 shares are above where I bought and 1000 is below where I bought. The 1000 shares that are above where I bought, I bought at $113. Today the stock is up and it’s at $117.45. As I’m writing this I was just executed on selling 10 contracts of FB $118 Calls to expire this Friday, May 27th. I received a $.55 ($550) premium and if I get assigned I’ll make $5000 on the stock. My other 1000 shares of FB I bought at $119.90. I cannot get a decent premium until the stock get a little higher because I want to sell the $120 Strike Price Calls.
In summation, I am a Naked Call trader but get caught in Covered Calls may times. Picking the direction of a stock is the most difficult thing to do. If it was easy we would all be millionaires. When I have a Covered Call on a stock, it seems more often than not the stock goes down and I have to hold longer than I want. I’m a trader! I want my money freed up to make some more.
Steve
The Options Coach
Monday, May 9, 2016
To enter a Stop Loss is a very common practice and taught by many books. Today’s question is, do Stop Losses work? They will work, sometimes! Some books will make it sound like it’s a fool proof way to sell your stock at a desired price to lock in profit or sell before your stock goes down further. Sometimes they will work and sometimes they won’t. Let’s take a look at the definition by Investopedia:
Stop Loss – An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a position in a security. However, execution is not guaranteed, particularly in situations where trading in the stock is halted or gaps down (or up in the case of a short position) in price. Also known as a “stop order” or “stop-market order.”
Example – I buy a stock at $20 per share. After holding for a while the stock went up to $25 per share then started to pull back. When it was down to $24, I decided to enter a Stop Loss Order at $23.50. I wanted to watch a little longer to see if it would reverse and continue back up or if it continued down. If it continued down, I wanted to sell at $23.50 to stop the loss and lock in the profit I still had.
This example is a very common situation. Most Stop Loss Orders will be entered as Good till Cancel (GTC). The problem is sometimes it takes a few days, if ever, to reach the price of the Stop Loss sell order. If you hold the stock with a Stop Loss order over night you never know where the stock might go while the market is closed. If the market closes with the stock at $24 with the Stop Loss order at $23.50, over night the stock could go to $22 and your order will never get executed. The Stop Loss order only works while the market is open.
Case in point – Right now I’m holding 5000 shares of U.S. Steel. The stock closed on Friday at $18.84. I had a Covered Call on the stock expiring Friday with the Strike Price of $19. My Call expired and I keep the premium but I wanted the stock to get above $19 so I would get assigned. I really didn’t want to hold U.S. Steel. The stock closed at $18.84, I didn’t get assigned and I had to hold the stock over the weekend. This morning the stock opened at $17.98. Down $.86! I could not do anything about it. Even if I had a Stop Loss at $18.50 I would not have been executed. Bad luck for me! To make things worse the stock is still falling.
Bottom Line – I’m not a big believer in Stop Losses. I’m a trader, I watch the market! If I have to be away from my computer, I can use a Stop Loss, but over night? All bets are off! Anything can happen. Do not rely on Stop Losses over night! If you think something bad can happen, sell your stock before the market closes. If I did that with U.S. Steel I’d be looking a lot better today.
Steve
The Options Coach
Friday, May 6, 2016
Cramer: Today’s payroll numbers could ‘unleash a parade of Horribles”
With oil and the dollar given blame for pulling down stocks again yesterday, Jim Cramer fears the market could be in for a tough end to the week today.
This morning, the Labor Department is expected to release nonfarm payroll numbers. Cramer thinks it could be big enough to take focus away from oil and the dollar.
“If we get a weak payroll report, if this economy doesn’t grow as robustly as we might have expected just a few weeks ago, then it will unleash a parade of horribles onto the stock market,” the “Mad Money” host said.
Cramer also anticipates presumptive Republican nominee Donald Trump to step up discussions on slow job growth. At the same time, he thinks Trump could ‘resurrect’ his attack on Apple for not bringing jobs to the U.S.
“When he bashed corporations before, he didn’t have the gravitas that you gain when you win the nomination. Now that has all changed, and his statements could actually have an impact,” Cramer said.
Cramer feels bank stocks will likely also break down to levels seen last when the market worried about bad oil loans and rate hikes would be scarce.
“We had come to expect that, with things improving in this country, we would probably get a rate hike in June. A weak employment number takes that off the table, and the bank stocks will get clocked,” he said.
Cramer feels retailers could also take a hit again. He was shocked with the preliminary guidance indicating a decline in revenues for big names like L Brands and Victoria Secret. This could impact other retailers, too.
He also said a bad employment number would adversely affect the cyclicals, which have been a strong bull market lately.
Finally, Cramer wouldn’t be surprised to see technology get beat up again, including Apple.
“The bulls need a number tomorrow that is just strong enough to think there could be some growth, but weak enough that the Fed heads won’t feel the need to scream for instant hikes that this market can’t handle. The amazing thing? That may just be the number we get,” Cramer said.
I’m not a big Cramer guy! But we should take in what he says with a few grains of salt.
Steve
The Options Coach
Monday, May 2, 2016
I woke up this morning, as any morning, the first thing I did is look at the futures. To my pleasant surprise all indexes were in green. The Dow +50 , Nasdaq +12 ,and the S&P +7.
At 8:00 I had to bring my car to my local gas station/auto repair shop. My inspection expired April 30th. The shop is 1 mile from my home. I dropped the car off and took a brisk walk back home on this nice cool morning. Who walks without thinking? My thoughts were dominated by the fact that today is the first trading day of May. I am not a seasonal trader but I am well aware of normal market movement starting in May.
As the calendar flips to May, the U.S. stock market enters what is historically its worst six months of the year, in which it typically underperforms the November-April time frame.
This is a well-documented seasonal trend with solid historical numbers behind it. It begs the question: Should investors follow the old Wall Street adage to “sell in May and go away?” Well, last summer I went away (to Greece) but I did’t sell. I stayed in a hot (safe haven) stock, GoPro. While I was away for 2 weeks GoPro went from $60 down to $30.
Not only my numbers but historic numbers back up this summer market slow down. Looking at stock market history back to 1950, most of the market’s gains have been made from November to April and the market has generally gone sideways, at best, from May to October.
There are strategies to capitalize on this seasonal trend and certain sectors that tend to outperform. Consumer staples and health care are two sectors that stand up well in face of seasonal sluggishness, outpacing the markets.
If you read “Main Street beats Wall Street” you know I do not often buy stock without selling options. Trying to capitalize on seasonal trends is not a strategy I’ll be doing. I’ll be concentrating on selling more Naked Calls and try not to own stock at all, or as little as possible. At least until I see if this well-documented historical trend will continue in 2016.
My recommendation is be careful, do your homework, follow the market, stay disciplined and do not get greedy at this time of year. If you don’t follow this advice, during the summer you will get burned!
Steve
The Options Coach
Thursday, April 14, 2016
This morning the bureau of Labor Statistics reported on the consumer price index which they do monthly. The consumer price index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living. This month the CPI was up 1%. The labor Dept also reported the jobless report. The number of Americans filing for unemployment benefits unexpectedly fell last week, revisiting a level last seen in 1973 as the labor market continues to strengthen despite a sluggish economy.
Initial claims for state unemployment benefits “decreased 13,000 to a seasonally adjusted 253,000 for the week ended April 9”, the Labor Department said on Thursday. That matched the level for early March, which was the lowest since November 1973. I believe you can take this report with a grain of salt. The Obama administration has been accused of making these numbers look better for political reasons by not counting the amount of people who just gave up looking for work.
Before the reports the futures were flat. After the release of the reports the futures went up slightly.
Steve
The Options Coach
Wednesday, April 13, 2016
This morning the U.S. Bureau of labor Statistics reported the Retail Sales. The Retail Sales Index is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence.
Retail sales in the U.S. last month fell 0.3%, according to the Commerce Department, a weak end to the first quarter. Economists had expected the headline reading to increase 0.1%. Core retail sales, excluding automobiles and fuel prices, rose 0.2%. Consumer spending accounts for more than two-thirds of the U.S. economy.
Despite the unexpected decline in the March retail sales, stock futures remained higher for the opening.
Steve
The Options Coach
Monday, April 11, 2016
Earnings season kicks off Monday and there’s bad news and potential good news when it comes to corporate profits.
First the bad news: Everyone on Wall Street knows first-quarter 2016 corporate profits are going to come in weak. Analysts polled by Thomson Reuters expect earnings to contract 7.6%, marking a third straight quarter of negative growth.
The good news? There are strategists on Wall Street who say the worst of the “profits recession” is in the rearview mirror. The first three months of the new year, they predict, could mark the bottom for profit weakness.
“Earnings recession continues, but first quarter should mark the trough” was the main bullet point in an earnings preview published by Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch.
Analysts forecast profits for Standard & Poor’s 500 companies to fall 2% in the second quarter of the year, but earnings normally beat by 3 or 4 percentage points each quarter. If that trend continues, profits will again turn positive in the current April through June quarter.
Aluminum maker Alcoa unofficially kicks off earnings season after today’s closing bell and big banks, such as J.P. Morgan, Bank of America and Wells Fargo report later in the week. For some of the stocks I’ve been playing like a piano, Netflix will report next Monday, April 18th after the close, U.S. Steel will report Tuesday April 26th after the close and Facebook on Wednesday, April 27th after the close.
Steve
The Options Coach
Friday, April 1, 2016
I get many questions on why I do so many trades involving Facebook (FB) and Netflix (NFLX). Well, the answer is I’m a big believer in following a few stocks, watch their charts and try to learn and predict how a stock might move in a certain market condition. Many times I look at the pre-market reports and the index futures and I know what FB or NFLX will do for the day. Not exactly but I can give an educated guess. This strategy is written in this blog in a few places and it’s something I’ve been doing for many years now. This week I sold options on U.S. Steel (X) and Time Warner. I’ve been watching both of these companies for many years. My first trades with U.S. Steel was over 15 years ago. Time Warner I’ve been watching since they got bought by AOL. Back in the late 1990’s AOL was one of the biggest internet companies. Over the years AOL lost value and separated from Time Warner. Time Warner is now worth about 15 times the value of AOL. I feel it’s very important to have a relationship with a company. In doing so you watch how a company’s moving. You watch their earnings reports and other news. You learn how a company might move. This is what I’ve been doing with FB and NFLX. Do not try to follow 20 companies! I look for big name companies. Companies with nice premiums, not too big and not too small. I like when a company has 1 week options. If I like a company and it only has the old school 1 month options, I wait until there’s 1 or 2 week left to Expiration Date then see what the options look like. I love short term options. Especially because I only sell options. Time Decay is always on my side.
Steve
The Options Coach
Monday, March 28, 2016
The “Road to the Final Four” is over! After the 2 thrilling games played on Easter Sunday the final four is established. The final four is Villanova, UNC, Oklahoma and Syracuse. Now we’re on to the road to the National Championship.
Although the “Road to the Final Four” always has unpredictable excitement, this year the opening round had some huge upsets to give the tournament a look like no other. Hawaii(13) beat California(4), Wichita St.(11) beat Arizona(6), Yale(12) beat Baylor(5), University of Northern Iowa(11) beat Texas(6), Stephen F. Austin(14) beat West Virginia(3), University of Alabama Little Rock(12) beat Purdue(5), Ganzaga(11) beat Seton Hall(6) and the upset of the tournament, Middle Tennessee St(15) beat Michigan St(2) in the opening round. All number 1 seeds did make it to the Sweet 16 but then the all hell broke loose! Not only did Syracuse(10) mow over everyone in it’s way but they beat a powerful Virginia(1) to get into the final four along with Villanova(2), UNC(1) and Oklahoma(2). This looks like it shaped up to be a great final four. All teams are playing great but I feel Oklahoma looks the strongest and they are my pick to win the National Championship.
Steve
The Options Coach
Tuesday, March 22, 2016
According to the Employee Benefit Research Institute’s (EBRI) in a just released 2016 Retirement Confidence Survey, most Americans are not very confident they’ll have enough money to live comfortably throughout their retirement. The report says, just one in five (21%) workers are “very confident.”
Worse yet, the percentage of workers very confident, despite the millions spent on investor education, hasn’t changed all that much in the 26 years the EBRI has been tracking retirement confidence.
In its research over the years, EBRI has identified ways for workers to boost their retirement confidence. 26 years only brings us back to 1990. The amount of greed and corruption in the banks and on Wall Street during this period, coming to a head in 2008, I believe is the cause of the confidence problems. All of the ways the EBRI identifies for workers to boost retirement confidence involves investing money with banks and Wall Street firms.
Let me tell you how I boosted my confidence in having enough for my retirement years. I tried to educated myself so I don’t have to rely on some kid to manage my money. Or give my hard earned money to a “financial planner” who has nothing to lose. If he makes you a little money he takes part of it, but if he loses your money, you absorb all the losses.
I believe in education and diversifying my money. I don’t want to put my future in someone else’s hands. When you educate yourself you pick and choose what to do with your money with confidence. When I say diversify I don’t mean invest in different stock sectors. Don’t get me wrong, I do have some money in IRA’s which involves some of the institutions I mentioned above, but not all my money. Maybe 5% of my worth. I have my worth divided into my business, my trading account, real estate, physical precious metals, a Roth Ira, traditional Ira, life insurance, my bank account, CASH and a few more vehicles controlled by me. My bank account is very minimal because of crazy low interest rates and possibly negative soon. When it comes to precious metals and cash, you better know how and where to store them. We will be talking about this soon.
Education, education, education, will give you freedom and the confidence to retire with comfort. Continue reading “Main Street beats Wall Street” and the many other forms of material and you will retire with tons of assets. I do not believe you can only work for a living. I believe you must diversify and have your hard earned money work for you.
Steve
The Options Coach
Thursday, March 17, 2016
Happy St. Patricks Day! I will not be around the market too much today. I will be celebrating March 17th with my son and many other New York City firefighters. Steve Jr will be marching then we will get together and let the games begin. St Patty’s Day has long been my favorite day of the year. New York City is the place to be. Enjoy your day! I’ll be back at my desk tomorrow morning.
Tomorrow is expiration day. I have 2 options sold and they are going nicely. I have a FB $112 Call sold and a NFLX $101 Call sold. NFLX is coming out with some financial news tomorrow afternoon, there could be a pop in the stock late in the day. Right now NFLX is up $2 in anticipation of a good report. It’s above my Strike Price of $101. It’s at $101.10.
Steve
The Options Coach
Tuesday, March 15, 2016
We have the Fed in meetings for 2 days, Japan announcing on their economic policy, Russia leaving Syria, Iran ready to launch test rockets, even March Madness is starting but dominating the news is the U.S. political circus. You know Americans are unhappy when the 2 people getting most of the votes are Donald Trump and an old disheveled socialist. I guess we can thank the last seven and a half years of failed policies and a disloyal & collapsing Republican Party for the unprecedented dissatisfaction
On the Republican side a candidate needs 1,237 delegates to clinch the nomination. If no one gets that there will be a contested convention. I think this would be complete mayhem. Trump currently has 460, ahead of Senator Ted Cruz’s 369, Senator Marco Rubio’s 163, and Ohio Governor John Kasich’s 63. Today voters are hitting the polls in five states in contests that could determine whether Donald Trump is on track to win the nomination outright, or whether the GOP faces a bitter convention fight in Cleveland this July. The two biggest prizes are winner-take-all states Ohio and Florida, which combine for 165 delegates. Candidates will also be battling for delegates in North Carolina (72 delegates), Illinois (69 delegates), and Missouri (52 delegates).
Hillary Clinton maintains a sizable lead over Bernie Sanders in the race for the Democratic nomination but don’t count the socialist out. He’s coming on strong while Hillary’s numbers are falling.
This can get interesting! What is this country coming too! Donald Trump? Hillary? A liar? A choker? A socialist? And Kasich, the most Presidential and probably the most knowledgeable, in last place! This will be a race for the ages!
Steve
The Options Coach