I didn’t make as many trades this week, but I still had nice results. There are a number of reasons why my trading volume was down.<\/p>\n
Some of you might remember I had shoulder surgery a couple of years ago. Well, it’s time for the other one. This is very common for someone who played a lot of overhead sports. My main one being basketball. This week I put a few days in doctor’s offices getting the process started with evaluation, x-rays, MRI’s etc. Next week I’ll see my doctor again to go over MRI results and plan surgery. Hopefully I’ll get this done early in December.<\/p>\n
I’m also lying low because of the election. I’m still holding Apple, Peloton and Nvidia, and selling Calls, but haven’t gotten into anything new. Although, I have plenty in my margin account.<\/p>\n
It looks like Wall Street is betting on a Biden win, so if that happens, maybe the bottom won’t fall out. Only time will tell, but either way, I’m hoping to continue to lie low and only make money with my current positions.<\/p>\n
On a different note I’d like to talk a little about “mistakes” and “trades not working out.” As traders we make plenty of mistakes, many times resulting in the loss of money. But sometimes you do the right thing and trades just don’t work out, causing an undesirable result. Let me explain with 2 recent trades.<\/p>\n
Trade #1<\/u><\/span><\/p>\n Trade 1 was a mistake! Last week with Peloton in the low $130’s I sold 10 contracts of the $140 Naked Call. With a day remaining to the contract the stock went up to $139. Peloton being a very hot stock, I decided to buy the 1000 shares at $139 to cover my Naked Call. The stock went up a little higher then pulled back. The stock never hit my $140 Strike Price and the Call expired. I still own the stock. The stock dropped all the way down to $120. I was able to get another $140 Call sold that expired yesterday, and brought in a nice premium of $2750, but the stock is now in the low $120’s and I might not be able to get a Call sold for next week.<\/p>\n So, where was the mistake? My mistake was, I should have never bought the 1000 shares to cover the $140 Call. After I bought the shares I noticed that Peloton’s Relative Strength Index (RSI) was well above 80. Any RSI above 70 means the stock is overbought and due for a pullback. When I buy a stock I always look at the RSI! For some reason I forgot to look at it before I bought the 1000 shares of Peloton. If I saw the RSI above 80 I would have never bought the shares. Me not doing my normal diligence, and reneging to look at the RSI, was a mistake. I love peloton, and I think it will work out, but I should not be in the position of owning this stock at $139 and it being at $122. This will happen enough in my trading career, I don’t need it done with a mistake when it could have been avoided.<\/p>\n Trade #2<\/strong><\/span><\/p>\n Trade #2 is a trade that just didn’t work out. This Monday I sold a Nvidia Covered Call. I own 1000 shares at $553 and sold the $560 Call. I brought in a premium of $10 for $10,000. 1 hour after that trade the stock dropped down a few dollars to the point that the premium was $5. I decided to do a “Buy to Close” at $5 locking in a $5000 profit in 1 hour.<\/p>\n It was only Monday. I was hoping the stock would go back up and I would sell the Call again for $10. For the rest of the week the stock never came back up and I never got another Call sold. If I never did the “Buy to Close” I would have kept the entire $10,000 premium, and not only the $5000.<\/p>\n I do not look at this move as a mistake. In fact, it’s part of my rules to get out of a position if I can keep half the premium with the entire week remaining. And I would do it again! I had a missed opportunity of another $5000 but I don’t think it was a mistake. I just think it’s a situation where a trade didn’t work out.<\/p>\n You can beat yourself up over mistakes, and hopefully you can prevent yourself from making them again, but you cannot control the market. Sometimes it just moves in a direction that is not best for your position.<\/p>\n Let’s take a look at this week’s trades.<\/p>\n Nvidia<\/strong><\/p>\n This is the trade I just spoke about. I kept $5000 and not the $10,000 I signed up for. Sometimes it happens!<\/p>\n 10\/19\/20 \u2013 Sell to Open 10 NVDA 10\/23\/20 $560.00 C @ $10.00 (+$10,000)<\/strong><\/p>\n 10\/19\/20 \u2013 Buy to Close 10 NVDA 10\/23\/20 $560.00 C @ $5.00 (-$5000)<\/strong><\/p>\n Peloton<\/strong><\/p>\n This was a Covered Call where I was not assigned.<\/p>\n 10\/16\/20 \u2013 Sell to Open 10 PTON 10\/23\/20 $135.00 C @ $4.10 (+$4100)<\/strong><\/p>\n 10\/23\/20 \u2013 Expired 10 PTON 10\/23\/20 $135.00 C <\/strong><\/p>\n Another Covered Call that was not assigned.<\/p>\n 10\/16\/20 \u2013 Sell to Open 10 PTON 10\/23\/20 $140.00 C @ $2.75 (+$2750)<\/strong><\/p>\n 10\/23\/20 \u2013 Expired 10 PTON 10\/23\/20 $140.00 C <\/strong><\/p>\n Square<\/strong><\/p>\n A Naked Call that expired. I love Naked Calls that expire worthless. I keep the premium without making an investment.<\/p>\n 10\/19\/20 \u2013 Sell to Open 10 SQ 10\/23\/20 $200.00 C @ $1.50 (+$1500)<\/strong><\/p>\n 10\/23\/20 \u2013 Expired 10 SQ 10\/23\/20 $200.00 C<\/strong><\/p>\n PayPal<\/strong><\/p>\n Another Naked Call expiring.<\/p>\n 10\/21\/20 \u2013 Sell to Open 10 PYPL 10\/23\/20 $222.50 C @ $50\u00a2 (+$500)<\/strong><\/p>\n 10\/23\/20 \u2013 Expired 10 PYPL 10\/23\/20 $222.50 C <\/strong><\/p>\n It was a good week, but I would have liked assignments with Nvidia and the Peloton Covered Calls in preparation for the election. Let’s see what happens this week.<\/p>\n Have a great weekend!<\/p>\n Make sure you vote, this is a big one!<\/p>\n Successful trading,<\/p>\n Steve<\/p>\n The Options Coach<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" I didn’t make as many trades this week, but I still had nice results. There are a number of reasons why my trading volume was down. Some of you might remember I had shoulder surgery a couple of years ago. Well, it’s time for the other one. This is very common for someone who played […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-9130","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/P75MP0-2ng","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/9130","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9130"}],"version-history":[{"count":2,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/9130\/revisions"}],"predecessor-version":[{"id":9133,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/9130\/revisions\/9133"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9130"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nProfit +$5000<\/strong><\/span><\/h4>\n
\nProfit +$4100<\/strong><\/span><\/h4>\n
\nProfit +$2750<\/strong><\/span><\/h4>\n
\nProfit +$1500<\/strong><\/span><\/h4>\n
\nProfit +$500<\/strong><\/span><\/h4>\n
\nTotal Weekly Gain $13,850 <\/strong><\/h2>\n
\n