There is a lot of volatility in the markets these last couple weeks. The DOW is up 100 points then down 124 the next. Then up again, then down. But overall the short term trend has been down.

But there is a sector that is doing well.

Fast Food. Well not exactly fast food, but whatever they call the sector that is lower than the sit down meal with the waiter.

Take a look at CMG – Chipotle.  And PNRA – Panera Bread.  and MCD – McDonalds.

All doing well, all at 52 week and all time highs.

Why? Well run businesses with pricing power. But also because they are growing by building more stores, mostly overseas.

All 3 of these are in my retirement accounts and will stay there for years to come.

Here’s a question from a member about how to choose the  right option broker and my response:

There is something that has me wondering.  If you do a trade such as Iron Condor that has multiple components (4) or a vertical spread (2) can you change or adjust just one or two of those components?  You’ve talked about adjusting one side of an Iron Condor by using a butterfly I think.  Anyway, it made sense to me.  But how does the broker know, when you do the adjustment, that you are adjusting a particular trade and not putting on an additional trade.  Maybe it is different depending on your broker.  I actually did the aapl iron condor that your wife put on, just for fun and because it looked like a sure thing.  I called my broker, Etrade, to ask how I’d make an adjustment with the butterfly if it came [...]

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

It’s an iron condor on Apple. It has a 77.43% Probability of profit with 22 days left to expiration.

Sell to Open June 355 Calls, But to Open June 360 Calls

Sell to Open June 310 Puts, Buy to Open June 305 Puts

For a credit of .63

For each contract you do, you get a credit of $63 which is the max gain on the trade. The max loss is $437. So the potential ROI is 14.41%.

My plan for this trade is to keep it super simple. Let it ride until expiration. Look at exiting when up 10% or more. If I get down 15% or so I am going to exit. This is a small position and one I put on because my wife made me. I am teaching her how to trade options and she is coming up with her own [...]

Here is an interesting article by Dan Froomkin of the Huffington Post.

Orginal article here

Members of Congress Get Abnormally High Returns From Their Stocks

Members of the House of Representatives considerably outperform the stock market in their personal investments, according to a new academic study.

Four university researchers examined 16,000 common stock transactions made by approximately 300 House representatives from 1985 to 2001, and found what they call “significant positive abnormal returns,” with portfolios based on congressional trades beating the market by about 6 percent annually.

What’s their secret? The report speculates, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information or to vote their own pocketbooks — or both.

A study of senators by the same team of researchers five years ago found members of the higher chamber even better at beating the market — outperforming it by about 10 percent, [...]

Another day another dollar.

Well this month’s results were a little better than just a dollar.

For the trades put on in April, the results were +5.62%. So for YTD 2011 the OptionGenius Portfolio is +24.82%

Not getting rich overnight, but better than index and mutual funds for sure. I have read the when some hedge funds are up well above the average, like around 30% for the year, they basically take the rest of the year off. Hmm, maybe i should do that. Nah – it’s too much fun.

Could have had 11%, but one of the four trades went against us. We adjusted and cut the loss down but it still brought the overall average down. 

Including April, we have been positive for 7 months in a row.

If you are not onboard, maybe it’s time to join.

Can I make living trading options?

That’s what everyone wants to know.

Seems everyone hates their jobs and wants to sit back and trade options for a few minutes a day and make a very nice income.

And why not? Heck, that’s what I want. But it is doable? Is there anyone out there trading options for a living?

Answer: YES.

There are many people who trade for a living. But most traders don’t stick to just options or just stock. The ones I know trade everything – options, stock, bonds, commodities, even forex from time to time.

Can you make living selling options?

YES again. If you don’t get anything else out of my emails, I hope you see that making 10% on an option selling trade like an iron condor or butterfly is not that hard. We do it every month. The trick is to manage your positions and avoid loses since not every trade [...]

Why is this trade showing a loss?

That is the question a member asked me today. His question has to do with why a credit spread is showing a loss when the stock is still above the short strike.  Valid question, and one that I get asked a lot by newbies. Here is the question, the answer, a follow up question, and a basketball example. The question is in blue, and my response is in red.

_________________________________________________________________________________

Now I need to be educated a bit.  I have a question about the very last trade that you placed on April 28th, where you sold 4 May 1310 puts and bought 4 May 1305 puts.  The SPX was at 1355.77 when you placed the trade so I am assuming (perhaps wrongly) that the goal is for it to stay above 1310 and if so we keep the full credit. exactly  
 
I paper traded this along with [...]

Q:  Dear Allen,

I am pretty new to the option trading and that’s why have to ask this very basic question.
You are sometimes coming with a recommendation  “Will have to hold to expiration”. I would like to get better understanding of the processes that happen at the expiration day.  Could you please explain it briefly or refer me to the right place where I could find this information ?

Thank you

A: On expiration we look for the closing price. This is normally the close of the day for most options, or it can be close to the opening price for index options (the final settlement price for index options is complicated). If you sold an option you know if you want the price to be above or below the closing price.
 
So if you sold a 50 strike naked put, you want the price to close above 50. If it does, the option expires [...]

First Quarter 2011 Results:  OptionGenius.com: +19.2%, S&P 500: only +5.9%

Calm markets are always nice to option sellers. And so far this year, the markets have been very nice.

These results are from all the trades entered into in January, February and March of 2011. The March trades were not exited until expiration in April. The results are before commissions.

As I have said before, I think that 2011 will be a calmer year than the past three and that it will be a great time for option sellers.  So far, my prediction is coming true.

Some people think they need a lot of volatility to make money in the market as an option seller. I prefer the markets to be quiet and calm. Put on a trade, watch it, and exit at a profit or let it expire. Sounds too simplistic, but that is how it can be.

Are you a Boomer Trader? You are not alone.

Baby boomers make up the majority of OptionGenius.com members and prospects. And they seem to be the most motivated to learn how to trade quickly. This is a good thing but boomers have to be very careful. There are a lot of snake oil salesmen in the stock/investing/trading world that want nothing more than to take your money to “teach” you some magical trading system that does not work in the real world.

I am glad that you are motivated and taking action to take care of your own money, because no one care about it as much as you do.

The following article is from Forbes magazine.

The Golden Age Of Trading

Emily Lambert, 03.23.11, 06:00 PM EDT
Forbes Magazine dated April 11, 2011

The number of retirees trading actively online is growing.

 Maureen Christensen had put in 32 years as an information technology specialist when in June [...]