This is a great time to understand what a Short position is. The types of positions I’m talking about are: Short selling stock, Selling Calls and buying Puts. Buying a Put is actually a Long position but it will increase in value as the underlying stock goes down.
I’m well aware I don’t preach much about Shorting stock and buying Puts, however, selling Calls is my number 1 strategy. And most readers know I love Naked Calls. I made a lot of money selling Naked Calls over the years, but when the market moves the way it has in the last few years, Naked Calls can be very dangerous. Now is a great time for Naked Calls.
Please google Shorting stocks (Short Selling) and buying Puts. If you want to be an options trader you must understand what this is, and now is a great time to learn the concept of Short Positions.
The bottom line is, when you Short a stock you will make money when the stock goes down. When you buy Puts, you are buying an option position. When the underlying stock goes down your option position will increase in value. I will cover these types of position in detail, one at a time, in the coming days.
Below are some Short positions I am in right now. The date is when I entered the position. The dollar amount in the 1st parentheses is the price of the stock when I entered the position.
Puts
The dollar amount in parentheses at the end of the order form is what the position cost me.
3/10/20 – ($250.50) Buy to Open 3 NVDA 9/18/20 $250.00 P @ $39.00 ($11,700)
3/10/20 – ($272.50) Buy to Open 2 AAPL 6/19/20 $270.00 P @ $25.60 ($5120)
3/12/20 – ($15.45) Buy to Open 2 TRIP 9/18/20 $15.00P @ $3.80 ($760)
3/12/20 – ($42.10) Buy to Open 2 UAL 9/18/20 $40.00 P @ $11.10 ($2220)
Calls
The dollar amount in the parentheses at the end of the order form is the total premium I received.
3/13/20 – ($38.50) Sell to Open 10 UAL 3/20/20 $44.00 C @ $2.50 (+$2500)
3/13/20 – ($18.60) Sell to Open 10 WW 3/20/20 $20.00 C @ $1.00 (+$1000)
3/13/20 – ($107.80) Sell to Open 10 WMT 3/20/20 $120.00 C @ .27 (+$270)
3/13/20 – ($17.24) Sell to Open 10 CCL 3/20/20 $21.00 C @ $1.00 (+$1000)
3/13/20 – ($13.95) Sell to Open 10 OXY 3/20/20 $16.00 C @ .65 (+$650)
3/16/20 – ($32.60) Sell to Open 5 UAL 3/20/20 $35.00 C @ $3.00 (+$1500)
3/16/20 – ($16.10) Sell to Open 10 CCL 3/20/20 $20.00 C @ .50 (+$500)
All of these Calls expire this Friday.
Short Selling
3/12/20 – Short 100 Shares DAL @ $36.32 ($3632)
I shorted 100 shares of Delta when the stock was at $36.32.
These are all short positions. As the market, or the stock, goes down these positions will increase in value. It’s the Short positions that are allowing me to make money in these crazy bad times. This is the great thing about the market and being an options trader. You can make money when the market goes down. You just have to predict direction correctly. And right now it’s pretty easy to pick direction. But maybe not for long!
As I’m writing I just sold one of the positions above. Even in these times we cannot get greedy and we must take profits. On 3/10 I bought 3 Nvidia (NVDA) Puts. The stock was at $250 and I sold a $250, At-the-Money Put. For safety I went with an Expiration Date of 9/18/20. I paid $39 per shares and I bought 3 contracts, which is 300 shares.
3/10/20 – ($250.50) Buy to Open 3 NVDA 9/18/20 $250.00 P @ $39.00 ($11,700)
3/16/20 – Sell to Close 3 NVDA 9/18/20 $250.00 P @ $54.50 ($16,350)
Profit +$4650
In these tough times I’m very happy with this result is a few days.
This is the time to learn. If you have any questions please send me an email.
Successful Trading,
Steve
The Options Coach