20 Comments

Hi Kenneth,

Thanks for the followup. It looks like you are on your way to being a successful trader.

This week we'll see how NEM and the other gold stocks do. A lot depends on how money and stock markets respond to developments in the banks and other sectors.

The Fed's decision Wednesday still is up in the air. Some reports are predicting 1/4 point increase. Others are calling for 1/2 point.

Real interest rates still are negative. That suggests we will get more rate hikes and lower stock prices for awhile.

Thanks for reading and commenting.

Don

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Hello Mr. Johnson & co. I'm new to options and have been primarily just been trading calls & puts. I don't have any experience writing options. As far as trading stocks, I don't have many that are in full lot amounts to write options against. I do have 100 shares of PBR that I purchased @9.01 and 100 of GRIN @13.77. They are trading @10.02 & 12.20 respectively. Can you give me any insight on what strategies I might use to capitalize on the investments?

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Hi Kenneth. I just published an article on Newmont Mining that may give you some ideas. Also, look at some of my posts on trading covered calls and cash secured puts. They were written for new comers like you.

Do you trade on a broker's online platform? Which one? Have you read any of my other articles?

PBR has active puts and calls options. You have a small profit in a bear market.

The key is to start by trading small, one options contract at a time.

Do the monthlies until you're comfortable with doing the trades.

This is not trading advice. It is for education purposes only.

I don't worry about paying capital gains taxes on options and stock trading. I work to make money.

For example, a speculator might sell 1 PBR 4.21.23 expiration $10 strike (delta .55) for about $0.58 a share. If PBR was called at $10, you'd gain $0.99 a share plus 58 cents for the covered calls. There is no dividend, but you would achieve about at 55.2% annualized return on the 36-day trade if you did the same kind of trade on any stock or ETF even 36 days for 12 months.

As the price of the stock and its options fluctuate, you would sell different strikes covered calls options at different options prices. Usually, after beginning covered calls trading on a stock with a great ARoR, you'll find that ARoR will be all over the map on a low-priced stock like PBR. Just shoot for the returns you want and the risks you can live with.

After PBR is called, you buy it back after it dips a bit. Or you can sell puts fairly close to the money until the stock is assigned to you. Then you can sell covered calls again.

What is important is to get to the point where you are trading at least one options contract on up to about 12 stocks per month or per week. A diversified portfolio on a small portfolio gives you a better chance of making money without taking too many risks every month.

You have a small loss on GRINN. Learn to take small losses quickly. In this case GRINN options are not very liquid. You could raise some money by selling GRINN and finding another stock that fits your time line and budget and that has active and liquid options.

Try to pick stocks that are going up, not down. Your goal is to generate a nice weekly or monthly options premium income by selling covered calls and cash secured puts.

Keep it simple. Just do boring covered calls and cash secured puts trades instead of trying make a killing on a stock. Trading weekly and monthly covered calls lets you right the game in your favor instead of letting the house take your money.

Look for lower priced big stable companies that have active options like Ford (F) or Kinder Morgan (KMI), which I've owned and traded options on for years. It also pays a good dividend.

If you have small holding in other stocks, you might consider selling them to raise money to use on your covered calls and puts trading.

I like trading KMI because I trade it so often, I always make money on it and I always take assignment on KMI puts because it is a good income stock with some potential to give me some capital gains when the stock is called. When that happens, I trade the wheel and sell puts until the stock is assigned. Then I sell covered calls again.

Read some of the articles I have published in the last year. Feel free to post questions. I hope this helps.

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Thanks for the great feedback! I have a better understanding of these concepts now. I will absolutely continue to educate myself and refer to your informative articles to help understand how the options market works.

I'm selling the GRIN shares asap and I'm on the fence about keeping the PBR shares in this market market. I suspect PBR will re-visit $9/share an I'm not particularly bullish Brazilian energy. Did PBR stop paying dividends? I don't see any since Nov. but they have paid out the last couple of years.

Anyway, I can keep you posted. Since the central banks announced pumping liquidity maybe the market and oil will get a bounce here leading up to the rate decision

I read the Newmont article and I love the approach. Your work is very helpful to understand these concepts. I also prefer high dividend stocks and typically screen for >2% yields. I picked up some NEM shares @$42.51 earlier this month. I also have some GDX and GLD calls that are skyrocketing. I've traded in and out of KMI and F. Both are approaching support and will be looking at them close.

I'm an oil bull. I outpaced the market substantially in 2022 hedging with energy stocks. I've unloaded quite a bit and am an optimistic buyer here.

I've done really well with options so far but have had to painfully let a few expire. I've been neglecting to look at open interest and shouldn't be an issue going forward. I mainly use online version of tda for trading and tos for s&p bookmap and charting. I may use tos more for options, maybe the OI stands out better. Although I may shop around for better options pricing. Any thoughts on tradier w/ $.35 options trading?

Thanks again! I appreciate you taking the time to chat with me. I think your substack articles are high quality and will continue to follow your work. Are you on Twitter? Let me know and I'll give you a follow.

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What I'm doing with GOLD (Barrick mining) I have a couple covered calls remaining after I lightened up a few weeks ago. In the last 4-5 days, these GOLD shares have risen. I also sold a March 31 170 put on GLD to collect some premium as gold rises, and USD declines.

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Hi Jim. I had NEM put to me at $49. It's at $46.11 with a good dividend and gettin up to where I'll probably sell 14-day calls on it. And I might sell some more puts on it. To me, the gold stocks are good options trading, income properties. I see GLD options are very actively traded and very deep so you can trade any strike you want. For me, that make it a good options trading, income ETF. You can sell as high as the $186 strike 3.24.23 covered calls and get more than an 11% ARoR. Nice.

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My rules are simple. Keep it clean and civil. Don't flame other posters. Flame politicians and regulators as much as you want. Just don't libel or slander anyone.

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I think I have set this up so subscribers can start chats on their trades or trades that you are considering. We have over 300 subscribers. If five or more start using this service, I'll be happy to chime in.

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I'll write an article about this soon. I'm using puts to get discounts on high dividend stocks with pretty good options liquidity and volume. I'm building what I hope will be a longer term portfolio of high dividend covered cals and puts stocks.

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I'll use chats to post my trades without writing long articles every time. It feels more like twitter and Facebook but it will be only for subscribers.

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Anybody else care to post your trades with any details you want to disclose?

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Most of what I’m doing is 30 days or less ITM calls....B/W INTC MAR24 28 calls net debit $27.15 today.

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I haven't done buy/write covered calls on anything but on DFS and other things that have being put to me.

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Now it looks like I'm in chats.

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Ok, I'm in comments, not chats. Still trying to figure this out.

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Yes, most of my puts look to expire worthless. But I've got a few more cliff hangers than usual.

I'm hoping for snap backs in the next 2 and 10 days.

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Hello Donald! Crazy markets these days!

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Are you selling puts, calls or just hanging out? I sold a bunch of puts last Friday and covered calls on some stock I own Tuesday.

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March 24 puts: CAT $210 strike. Calls: DFS, which was put to me at $105, $105 strike calls. MRK bought at $110, sold $100 calls.

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March 17 expires: CG cost $35, calls strike $35 KMI $18.50 cost, $19 calls, $17 puts. IBM $125 puts. XOM $110 puts. DVN $55 and $50 puts, and $59 calls. MSFT $220 puts. RSG $125 cost, $135 calls. VRTX $228.15 cost, $280 puts, $300 calls.

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