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,

Joel Locke

Third Place- 2 Month Membership to OptionGenius.com

Gloria Briones

Dennis Nelson

Fourth Place -Iron Condor Trading Report

Don Plemons

Jim Thelen

Amitabh Mishra

 James Black

Robert Cowen

Fifth Place – Free Share of Stock of a Real Person

Sue Caldwell

Tony Pierre

Richard Lefebvre

Tom Di Martino

Ronny Young

Hedging Strategies Contest Winners is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 lose, while the most I can make is $112 or 28.8% ROI in 8 days.

Is this the best trade out there today? Probably not. Is is a good trade? Depends on your reasoning.  Will it provide me a bit of excitement? Yup.

Free Trade: 03/7/2013 is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 all markets and we need to be able to adapt and maybe trade other markets as well.

4. More and more people will be trading options. That is going to do wonders for liquidity.

Leave your comments below on what you think this globalization means for option trading.

Here is the list. If your country is not listed, leave a comment to let us know where you are trading from, then join OptionGenius .

• United Arab Emirates
• Netherlands Antilles
• Argentina
• American Samoa
• Australia
• Belgium
• Bahrain
• Bermuda
• Brazil
• Cananda
• Switzerland
• Chile
• China
• Czech Republic
• Denmark
• Ecuador
• France
• United Kingdom
• Grenada
• Hong Kong
• Indonesia
• Ireland
• Israel
• India
• Italy
• Japan
• Kuwait
• Lebanon
• Luxemborg
• Mexico
• Malaysia
• Netherlands
• New Zeland
• Panama
• Phillipines
• Portugal
• Qatar
• Russia
• Sweden
• Singapore
• Slovakia
• Thailand
• Ukraine
• United States Minor Outlying Islands
• USA

Where Do Option Traders Live? is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 funds (ETF’s): Standard and Poor’s Depositary Receipts (SPY), Nasdaq-100 Index Tracking Stock (QQQQ), DIAMONDS Trust, Series 1 (DIA), and iShares Russell 2000 Index Fund (IWM), are now traded.

June 25, 2010 – The Chicago Board Options Exchange (CBOE), introduced one-week options, or weeklies, on four individual equities — Bank of America (BAC), Apple (AAPL) and Citigroup (C) and U.S-listed shares of BP (BP).

Beginning on Thursday, July 1, 2010 – all new Weeklies series at CBOE will begin trading on Thursdays and expire the following Friday. Previously, new series were listed each Friday and expired the following Friday.

July 5, 2010 – the Weekly Options on the following became available: GLD, XLF, EEM, C, BAC, AAPL, BP, F, and GOOG.

More and more stocks, indexes, and ETFs have been added to the CBOE weekly list as they have become more and more popular. For a complete up to date list: click here: http://www.cboe.com/micro/weeklys/availableweeklys.aspx

Why Were Weeklies Introduced?

Very simple. To make money.

The CBOE, the brokers, and the Stock markets that options trade on all make money when more options are traded. The more trades, the more commissions and trading fees they can collect. The CBOE had already introduced monthly, quarterly, and LEAP options. Their analysis showed that many people were trading options in the last two weeks before expiration.

So they introduced one week options, and they have a hit on their hands. As of today, one-fourth of all option volume in a popular stock like Apple is in the weekly options. Weeklies volume for the OEX is over 30% of the total option trading volume.

As they introduce more and more underlyings to trade weeklies on, the trading volume continues to increase. Cha-ching! At least for the CBOE. For traders it is a different story, but more on that in another article.

Using Weekly Options

Weeklies can be used in various strategies just like standard options: Covered Calls, Collars, Married Puts, Debit and Credit Spreads, Iron Condors, Calendars and Butterfly positions. The premiums will be slightly lower compared to the standard expiration options naturally due to the lower time value.

Weeklies are a good way to gamble. If Vegas or online gambling are not options, weeklies might be what you are looking for. Why do I say that? Because of the lack of time. They do not allow you the luxury of being wrong on your assessment.

Let’s say the earnings are coming up in your favorite stock, XYZ. And you think earnings will be great and the stock will shoot higher. Your trading options are to buy stock, buy monthly call options, buy a monthly debit spread, or sell a monthly put spread.

Buying stock is the most expensive way to trade it. Buying monthly call options is much cheaper and you could double/triple your investment. Buying monthly debit spreads is an even cheaper way to play it. But the gain is capped. If you sell a monthly put spread, you have a higher percentage probability of making money, but it would only be a percentage of the amount you put at risk.

Stock                                      Expensive                             5-10% returns if correct

Buy Calls                              Less Expensive                    Potential for 100% return

Buy Debit Spread             Cheapest                               Return is capped. Potential around 50% return

Sell Put Spread                  Given a credit                       5-10% return but highest probability of making a profit.

But what about weeklies?

What if you bought weekly call options? They would cost a fraction of what the monthly call options would cost and you could earn several hundred % if you are right about the direction of the stock. Wow! A potential 1000% gain. That sounds amazing.

And it does happen. How often will it happen to you? Probably not too often.

Because you also have the chance of being wrong. What happens if the stock drops in price on earnings or it does not move much at all?

Stock                                      No problem. Just sell the stock and lose a little

Buy Calls                              Problem, but if there is enough time premium you will lose about 50% of the investment

Buy Debit Spread             Lose less than 50% of the investment because of the hedged position.

Sell Put spread                  Could still profit, especially since volatility will drop after earnings

Buy Weekly Calls              Lose it all! With only a couple days to expiration your trade is toast. 100% loss.

Moral of the story: Buying weekly options is a sucker’s game.

What about selling weekly options? Since they only have a few days to expiration and some hefty values, can’t we sell these and make a killing with very little risk?

Not unless you do it right. I explain in the next post

History and Use of Weekly Options is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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.

Trading Quiz: What Would You Do? is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 of thinking. Keep in mind that the video is from 2009 and nothing has happened so far.

Enjoy.

Inflation is coming! Buy Beans! is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 he will do it?

Because Romney made it perfectly clear that he would fire Ben if he wins the election.

The FED has made it clear that it is not a matter of “if” they will do QE3 but “when”. And if “when” is the question, then the next opportunity after tomorrow is in December, after the election.

To me, Ben seems like a very smart man and one that is very sure of himself. So I don’t think he will care much if he gets replaced because of politics. But I have a feeling that he wants to stick around and see this thing through. If he stays, and the economy recovers he will be hailed as the best FED chief ever, and people will forget all about Ben’s predecessor Alan Greenspan or at least continue to blaim him for the whole mess. On top of that, Ben would get to stick it to Romney.

So what’s the downside? Not much if they are going to do it anyway. The upside? For Ben, a lot.

QE3 Tomorrow? One Reason No One Talks About is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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.

The Options Whiz? How About Investor Beware is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 a Mexican restaurant with a unique flavor. It’s not pure Mexican, and although it is a chain with 36 stores at this point, each restaurant is different.

The chain started in Austin and has a distinct Austin feel. But they are now in 8 different states.

DISCLOSURE: I bought some shares today and plan on buying more as time goes on. I really enjoy the food there and try to go when I get a chance. (The closest store to me is 30 minutes away.) Every store I have ever been to is busy, almost all the time. In fact, I asked them if they were a franchise because I definately would have bought some. But they don’t sell franchises. Every store is corporate owned.

The stock just started trading this week and I stumbled upon it today by looking at charts of stock that are hitting their all time highs.

If you are looking for a small company that has the potential for explosive growth, take a look at this one. They are in a part of the country that wasn’t hit as hard by the recession and they continue to add new stores. They could easily quadruple the number of stores in the markets they current serve without being saturated.

This is one I am very excited about.

New IPO You Should Look At is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com

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 few years along with if I made money on them, or lost money.

Then, in my personal account, I look at the ones I have lost on and try to “get my money back”. I want to have all positive trades. Meaning that if I lost $87 on SRZ back in 2009, I will look to do a trade on it now, that will make me at least $88 so I can wipe off that loss.

Sounds silly if you think about it rationally. But since I am not a Vulcan I continue to do it.

Since these records also incorporate my day trading days, you can believe I have a whole bunch of stocks to get my money back from.

But you know what? It adds a little more excitement to the game. I know you are not supposed to treat a stock like an adversary, that my real adversaries are the other traders, but it is fun.

What about you? What ways, if any, do you let yor emotions get the better of you?

What trading rules do you break on purpose?

Do You Break The Same Trading Rule I Do? is a post from Option Selling.
To learn how you too can earn 8-12% Monthly Returns Safely and Conservatively check out OptionGenius.com