Happy weekend! Last week's longer-than-usual update meant I didn't have space to share new trades, I'll be fixing that today. One of these trades has already been closed for a profit, but the other is still open and live. This week:
$84 profit in Johnson & Johnson
New trade in Nike
$84 profit in JNJ
One of the trades put on last week was selling a put in JNJ. The stock was showing a bit of weakness, which was the perfect opportunity to establish a new position. I sold 2x $165 cash-secured puts, expiring 16 December for $168 each. Following my usual profit targets, one put was set to close at 50% profit (for the people in my couse), and the other at 75% profit. On Friday, the 50% profit was hit, resulting in $84 in realised profits.
I've received a few emails asking why set such aggresive profit targets, why not try to get 80, 90, 100% profit on the trade. While you absolutely can do that, I prefer to take gains when they present themselves, because trades can turn against you very quickly. A $100 gain today very easily becomes a $200 loss tomorrow. Trade options long enough and you'll know what I'm talking about.
New trade in NKE
During this past Thursday's live trading session we had a few appealing trade options (ahem) in Nike (NKE), 3M (MMM) and Realty Income (O). After comparing all the possibilities, the NKE trade won and we sold a $90 cash-secured put expiring 16 December (Circle 1) for $69 in premium (Circle 3)
Currently it's trading at $48 (Circle 2), so we're sitting on roughly $20 of unrealised profit. As always, the profit target is 50%, so there's an order in to buy back the position for $35, maybe it'll get hit next week. NKE has been a surprisingly consistent performer since September. 3 of our 8 trades during the course have been in NKE, with $124 in realised profit and potentially another $34 to go. Really good results in a stock that doesn't tie up a lot of capital. If you're interested to find out more about the 2 other NKE trades and how they were put on and taken off, click the button below.
That's it for this week - even though there are a couple of new positions, my overall portfolio is still looking very light.
I did enter another trade in SCHD just to lower cost basis in my own stock position, which I'll share next week if there's space.
However I don't really like this low volatility environment we're in (with the VIX just above 23), so I'm being super cautious and conservative with new trades and only picking those that make the most sense.
With just 6 weeks left to the year, this isn't the time to be reckless and throw away hard-earned profits from the previous 46 weeks!
This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.