So the contest is over.

Had a lot of fun, and a lot of people participated.

Thank you to everyone who took part and for spreading the word about my Protect Your Portfolio book.

I appreciate everyone’s actions.

We are going to email all the winners with instructions on your winnings.

Here are the winners:

First Place: Copy of my book Protect Your Portfolio:

Tim Davenport

Mike Gerity 

Ameen Kamadia

Fabian Ozemena 

Richard Lebel 

Armando Hernandez 

David Barrere 

Alan Switzer 

Ronald Simard 

Vinit Patil 

Second Place- 6 Month  Membership to OptionGenius.com

Henk Toering,

I was getting bored today so i decided to go looking for a fun, weekly trade to make things interesting.
This is the trade I put on in MCD.

Why this trade?

Well I own MCD stock and I have been waiting for the stock to increase along with the markets but it has been pretty much range bound. It stays above 95 and below 100. So I put on a trade that says,

In the next 8 days: MCD will stay in between 97.5 and 95. That’s a pretty small range, but it is also a small time frame.

Here is the chart:

The red lines are the breakevens.  According to the probabilities this trade has a 60% probability of profit.

Now let’s look at the math.

I got a credit of .56 which for 2 condors is $112. I am using $2.5 spreads, so the margin is $500-$112 = $388.

So $388 is the max I can [...]

Have you ever wondered where option traders live?

As part of the Option Seller Lifestyle I have repeatedly mentioned that nowadays a trader can live and trade from basically anywhere on earth.

And so we did a little research to see if option traders are actually “all over the earth”. What we found was very interesting.

This is in no way a very scientific study or anything like that, but we did a simple scan to see where OptionGenius members live. We wanted to see how many countries are represented in the OptionGenius family.

Turns out there are a lot: We have members from 45 separate countries! See the list below.

Here are the  conclusions I took from this?

1. The world is much smaller than I imagined or realized.

2. Not only are we trading against Wall Street but this is now a global game.

3. Technology will only make it easier to trade around the world in [...]

Weekly Options, or commonly called “Weeklies”, are options that trade for about one week.

New Weeklies are listed each Thursday or Friday and expire the following Thursday or Friday except the third week of the month because that is when the regular monthly options have only one week left to expiration.

Except for the shorter duration, Weeklies generally have the same contract specifications and offer the same continuous, two-sided quotes as standard options.

History of Weekly Options

October 2005 – Weekly Options, first introduced by the Chicago Board Options Exchange (CBOE), the largest U.S. options market, which are one-week options as opposed to traditional options that have a life of months or years before expiration.

These Weeklies are based on the index options: SPX, XSP, OEX, and XEO. These are cash-settled options.

As of June 04, 2010, the Chicago Board Options Exchange (CBOE) announced that it will begin trading new Weekly Options on four exchange traded [...]

Got an email today from a trader in trouble.

Here’s the situation and what I told her:

Would Allen considering giving me a advice fix for my AAPL and GOOG calls?  I have January 19, 2013

AAPL $665 bought for $42.41 now $9.90

GOOG $775 bought for $41.30 now $4.50

 I sure would appreciate some advice!!

Before you read my answer, what would you do in this situation? Take a few minutes to come up with a couple strategies.

Here is how I responded:

Ouch.

 Thats why i hardly buy options anymore.

if you dont think they are coming back, i would sell.
If you do think they will rally, you can sell current month options against them for the premium.

So on Aapl 665, Nov 630 calls are paying 2.22. Once those expire in 15 days you can sell next months, or even weeklies. But if the stock rallies above your [...]

We’ve all been hearing about how inflation is right around the corner and how it is going to ruin the economy and the country.

No one is more passionately spreading this “news” than the gold bugs or better yet, the companies that sell gold and gold advisories. But there is another group that is also promoting this- the survivalists . These are the people that hoard supplies in their basements and have bunkers in the woods. I don’t necessarily want to go to that extreme, but wouldn’t mind becoming friends with some “just in case”.

Anyway, here is a video that shows a parallel between our debt/money supply and that of Argentina before they had massive inflation. It’s at the beginning of the video. I don’t want to scare you and don’t think things will get that bad, but it is good to keep your mind open to new ways [...]

So the FED is meeting today and tomorrow.

The economists and every pundit on Wall Street have an opinion on whether they will inject more money into the system through a third round of Quantitative Easing.

There are plenty of reasons for and against and you can read all the economic and fiscal reasons on other sites.

My take is that there will be more QE tomorrow and it is for a reason I have not seen anyone else mention.

Because Ben Bernanke is a human being. Some of you conservatives might argue that point, but stick with me.

Everyone knows there is an election coming and a strong stock market will help the incumbent. The election is also turning out to be a close race so far.

Bernanke has the ability to give the stock market one more push higher before the election. But he is supposed to remain impartial. So why I do I say [...]

In this month’s (September 2012) SmartMoney magazine, they ran an article about normal people who are trying to make their fortunes by trading. It kinda reminded me of the Tech Bubble when every article was about normal Joes making a killing day trading, and the housing bubble when everyone and their mother was out there flipping houses.

One of the profiles caught my eye. The guy’s name is Patrick, 43, and he used to work at Washington Mutual until he got laid off. So he moved back in with his parents to save money and spent a year learning how to sell options. After numerous courses and seminars, he decided to focus on iron Condors and spent 6 months trading condors in a small account.

All of this is great. He seems serious and really wants to learn to trade. More power to him.

What pissed me off was the fact that he just got licensed as a Registered Investment Advisor (RIA) and wants people to give him money so he can trade condors for them.

Say What?

This guy, who at 43, lives with his parents, has less than $100k to his name, hasn’t been trading for more than a couple years, wants others to let him trade for them?

Could this be the problem with the financial management industry? That people with no experience, no track record, and who frankly do not even know what they claim to know get to gamble with other peoples’ money.

Sheesh. This guy’s trading makes him so stressed out that he had to take up boxing to relief the stress. He can’t even discuss what he does with his parents because it freaks them out. He gets up at 2 am to watch what the European markets are doing. Oh, and he meets potential investors at Starbucks because of course the only alternative is to have them come to his childhood bedroom.

Hey Patrick, how about you:

1. Make enough from your own trading to pay your own bills.
2. Trade well enough to beat the markets for at least 5 years
3. Stop mooching off your parents

And after all that, then you try to do the same with someone else’s money. Because in the beginning who is going to give you money to manage besides your friends and family? And once you lose their money, you are going to need a lot more than boxing lessons to relive the stress. Or maybe the boxing lessons are for self defense incase angry investors hunt you down after you lose their money.

Peter Lynch is given credit for telling investors to invest in things they know.

It can be good advice, but not always. Just because you fly United Airlines every week and the planes are usually full does not mean that you should buy the stock.

But this idea of buy what you know can reap huge rewards if you find a new, small company that is a local favorite and just getting set for explosive growth.

Take Starbucks for instance. If you lived in Seattle and saw how well it was doing before it went nationwide, you could have made a fortune if you bought shares when it went public.

Today I have a stock that just went public this week. Most of you haven’t heard of this company, but if you have it’s because you have eaten here or someone was raving about the place.

The stock is CHUY and the company is Chuyey’s.

It’s [...]

Emotions are said to be a trader’s worst enemy. Our Achilles Heel.

They take control of us and cloud our judgment. They force us to make mistakes and decisions that end up hurting us in the end.

That’s why people introduced trading systems, computer programs, and crazy complicated algorithms. – To take the emotions out of trading.

But I am still human, and so are you. So we are still liable to make mistakes based on our emotions.

In one instance I am knowingly letting my emotions get the better of me. They are making me violate one of the cardinal rules of trading.

The rule says that you should not hold a grudge against a stock. You do not need to make your money back from the same stock you have lost money on. It is better to move onto another trade.

I can’t do that. I have documented every stock, etfs, and index I have traded over the past [...]