This is Lesson 3 in our 5 Part video series on Iron Condor Trading

Where do you start when you want to start trading stocks and covered calls?

That is the topic is this video. In it I go over how to get started, how to calculate how much money you need to get started, what you can make, and some simple guidelines I wish I knew when I got started.

When you are just getting started in trading options the way the prices and credits are calculated can be a bit confusing. Order entry is another confusing topic that costs a lot of new traders a lot of money.

In this video I go over the math of the iron condor. How to calculate the credit, the max loss, the margin, and the potential return on investment

This week I got an email from a couple of members asking some basic questions on option selling. I was happy that they had the nerve to ask the questions and not just try to figure it out on their own. They had gone through some of the material on the site but it was still over their head.

I answered their questions via email, but decided to go a little bit more in detail in a video. So here it is..

I want to thank the members who sent the email and I hope they got their answers.

Keep the questions coming. If you have a question, I bet dozens of others have the same question. So ask away. The worst I can do is not answer.

Ever want to know what it feels like to fly over the earth?

Check this out:

 Here’s the description from the original choppy version of the video:

A time-lapse taken from the front of the International Space Station as it orbits our planet at night. This movie begins over the Pacific Ocean and continues over North and South America before entering daylight near Antarctica. Visible cities, countries and landmarks include (in order) Vancouver Island, Victoria, Vancouver, Seattle, Portland, San Francisco, Los Angeles. Phoenix. Multiple cities in Texas, New Mexico and Mexico. Mexico City, the Gulf of Mexico, the Yucatan Peninsula, El Salvador, Lightning in the Pacific Ocean, Guatemala, Panama, Columbia, Ecuador, Peru, Chile, Lake Titicaca, and the Amazon. Also visible is the earths ionosphere (thin yellow line), a satellite (55sec) and the stars of our galaxy.

Here is a pretty good video of a segment done by Jim Cramer in which he talks about what to invest in inside your retirement accounts.

Now it is possible to sell options inside your IRA and many people do. I do not recommend it for the most part. Why?

Because it is still more riskly than just owning a bunch of boring dividend paying stocks. If you are an OptionGenius member you can see how I invest my own funds and the allocation. But in my retirement accounts, I am mainly invested in stocks. I do sell covered calls and sometimes some puts, and the occasional credit spread/condor/ or butterfly. But those are the exception.

I use my normal trading accounts for the bulk of my option selling trades.  Several reasons.

1. I like to take the gains out to live on and enjoy. Can’t take your profits out of an IRA and [...]

With the VIX above 40 I do not have too many trades on right now, and so I got bored and went looking for a speculative trade. I think I found one. With the SPX having trouble getting back above 1100, it makes it a good time to sell some weekly Calls. Actually I was thinking of selling Weekly Puts this morning, but the market came back all the way to 1100 but couldn’t break it.

So here is what I did:

Sell Oct1 11 1145 Calls and Buy Oct1 11 1150 Calls for a credit of .55 each

85% Probability of Profit. 12% Potential Return.

I don’t want to hold these all the way to expiration (Friday). I am expecting SPX to drop after failing to raise above 1100 and will exit the trade with a respectable profit. If SPX breaks above 1100 to about 1110, I will probably exit the trade as well [...]

This is Charley Reese’s final column for the Orlando Sentinel… (I have never heeard of him but a member forwarded this  to me and it makes sense to me so I am positng it here)
He has been a journalist for 49 years.
He is retiring and this is HIS LAST COLUMN.

Be sure to read the Tax List at the end.

This is about as clear and easy to understand as it can be. The article below is completely neutral, neither anti-republican or democrat. Charlie Reese, a retired reporter for the Orlando Sentinel, has hit the nail directly on the head, defining clearly who it is that in the final analysis must assume responsibility for the judgments made that impact each one of us every day. It’s a short but good read. Worth the time. Worth remembering!

545 vs. 300,000,000 People
-By Charlie Reese

Politicians are the only people in the world who create problems and then [...]

Here is a trade I just put on in my personal account.

The stock is NLY. The trade is a simple Put credit spread

Sell to Open Oct 16 Puts (.40)

Buy To Open Oct 15 Puts (.26) for a credit of .14 cents per spread.

Trade has a 74% probability of success. And can make 16.2% if left to expiration.

NLY is a financial company but a very boring stock. I love owning this one as well because it pays a little over 10% dividend right now.

So here is how the trade works: If NLY is above 16 on expiration day (right now it is trading at 17.68) I make the whole 16.2% minus whatever commissions I paid to get into the trade. If NLY is below 16 and above 15 I will be assigned the stock if I don’t exit the trade. Again, I don’t mind owning this stock. if NLy is below [...]

Here’s a trade if you are brave enough:

S&P500 is down about 2.5% today. Sitting at 1145.

I am taking a stab at some weekly Puts.

Sell to Open SEP2 11 1070 Puts, Buy to Open SEP2 11 1065 Puts for a credit of .35 each

That equals roughly a 7.5% profit potential. These will stop trading Thursday at the close. The settlement price will be released Friday morning. Same as with regular SPX options.

As long as the SPX stays above 1070, this trade makes money. It has a 90% chance of doing so.

Will SPX drop 80 points in a couple days? Seems unlikely but who knows. Still, I like my chances.