Good week. Good decisions.

Options trading is a risky business in that one can take highly leveraged positions in hopes those positions will move in your favor and produce higher than normal payoffs due to the leverage.  Of course if one takes positions where the market moves against you the opposite is true in that you can lose bigger than normal.  The point is that good decisions make for good weeks or good months. 

We took some serious positions about a month ago in Apple and Facebook.  We had Apple shares at $380 and $400.  Facebook at $20 per share.  Apple reported good earnings this week relieving investors and moved up nicely to end the week at $441 per share.  Facebook put good earnings on the board as well and ended the week at  $34 per share.  In the instance of Facebook we got paid 35 cents per share for our insurance position and sold out our position at 1 cent per share.  As you can see a highly leveraged position can produce good income over a short period.   35 to 1 in about a month is serious jack in our universe.    Apple produced similar results.   

Our portfolio has 13 position of that size monthly and so the goal is produce likewise profits each month without committing huge amounts of real capital, but by using other people's money to leverage our positions.  The key as noted is do one's homework and not be forced to use other people's REAL money unless needed.  One gets to take million dollar positions without having the actual million dollars in the bank so to speak. 

Since the early spring this year we changed our approach to a more simplified trading policy since the current political environment in Washington DC makes it much harder to take positions that administration policy could make mute with executive orders.  So far it seems to have worked since we are firmly in the black for the year and have no underwater positions currently.   We patiently wait for blood in street on good securities and ponce when opportunity arises.  It makes for less trades, more homework, less risk, and now more profits.  Once we make our money we exit and find other opportunities. 

This week we will add positions in BCE an old favorite and likely KO a new name for us.