My Two Favorite ETF Trades Right Now
My Two Favorite ETF Trades Right Now
Welcome to the free video for simple options. We're going to do a quick review of the positions we've been doing...mostly we've called out the room. I mean here's the thing. What I have found is that ideally you set up positions in such a way that you have some that are very low stressed, you don't even need to watch and some that are higher stressed meaning that you've got potential bigger impact.
Longer Term and Lower Stressed
OK. So if we look at AZO, very low stressed, longer term put spread. You know, just has every day making $162.00 in Theta decay essentially. You know, not accounting for the intrinsic value that we get if it rallies. That's great. And you can look here in the video at my total Theta decay is negative 1592. I actually try to keep that positive but at this moment in time I actually have a lot of directional plays, OK which we'll take a look at.
Blackberry, you've got to love this stock to the down side. On principle, I had to buy puts on that. It's up 110 bucks.
CME, we sold all of our directionals on this and now we just have a naked put. So that's been a fantastic play. Triple D, the Theta on this, $312.00. Now let's take a look real quick and see how that's structured. My main goal in setting up these portfolios is I don't want my Theta to get high...I don't want my Theta to get very high. So here I bought a thousand shares, no Theta decay there. But I also bought 200 calls that expire in 19 days, lots of Theta decay there. To offset that Theta decay what I did is I sold the 75 dollar puts. OK. So in a perfect world we rally a couple of bucks, I make money on all these positions and we're good to go. If we -- in a worst-case scenario we just trade sideways, and the money -- the Theta decay that I lose on the calls I gain on the puts. And of course, if it goes down I've got to react very quickly according to my trading plan.
Now directionally I don't see a need to do anything with the Yen. I think the Yen is going to get destroyed. There's no put selling here...or sorry, call selling, because I think it's going lower. I did do a spread earlier but ultimately when it broke its wedge. So the 99 dollar puts that's a 100 percent gain. And I'm looking actually for a pretty decent gain here. These are 110 days out. I'm planning to hold these. This thing is going to continue to get hammered right now at 2400. I'm expecting more from that. But if you look at this in terms of Theta I am going to lose $307.29 a day, if it trades sideways like that, you know, I'm going to lose money. But as long as the Yen is heading lower the intrinsic value that I gain will outweigh that. But that's something that I want to look at. You can see up until this point most of my Theta has been positive.
So now if we come down...and oh, dang. You know, I've gotta a major negative Theta here in Visa and that's what's contributing to most of this. So let's look at that. So if you look at this, what I've done here -- I'm actually surprised in looking at this -- is I...what did I do here. All right. So I bought 200 calls but what I did not do here -- I'm actually surprised in looking at this -- is I did not sell some puts. And I should have sold, I mean if Visa's at $203.00. So what I'm going to do Monday Is I'm going to sell some $200.00 puts to offset this. This is a mistake on my part. And that's one way that you can kind of look at that and say, wow, that must have been a mistake. I would never have wanted that much Theta decay on my positions. And it was a mistake, I need to sell some puts. So that's what I'm going to do on Monday.
ETF Plays for 2014
And then if we go through some of my ETF plays, so my favorite ETF play, one of my -- I've got two favorite ETF plays for 2014 -- well for early 2014. And that's long UNG, i.e., buying calls and buying puts on FXY. I think UNG -- this is called a pilot position. So I bought some $18.00 calls that expire in 19 days and $22.00 calls that expire in 138 days. I'm expecting a 10 bagger out of this meaning that it goes to $5.50.
Join me on Tuesday
I'm going to do a webinar on Tuesday. I'm going to talk about these ETF trades. But really the idea is that a lot of these trades like CME and stuff like that, that's great. On CME I'm looking to buy options -- a lot of times at $7.00 and sell them for $12.00 and that's great. But on ETFs you have the opportunity to buy things at like 55 cents and sell them for $5.00. Now I don't know about you guys, I mean I'm not going to shirk a gain like this. That's great. But when you buy something at 55 cents and can sell it at $5.50 that's a whole different ballgame. All right. So that's what I'm going to be talking about on Tuesday. There will be some links on the email to join that. So you just click on the link on the email or at the end of this video and I'll see you at the webinar on Tuesday.