RadioActiveTrading Blog

Greetings, Traders!

I’ve decided that rather than bragging about MY plays, I’m going to start almost exclusively bragging about the plays of my Students.

This latest comes from Tom, who has been sitting on shares of XEC at a low cost basis for YEARS. Tom has shared the numbers with me and made them available for instructional purposes. I’m posting it here because I suspect there may be many more Traders in the same shoes as Tom: Having shares of stock that are UP… but no guarantees about the future.

This answers the problem that faces anyone that’s holding onto a stock that’s up from where they bought in. What’s a trader to do? We could sell right now because today’s price might be as high as it ever gets… or maybe we should NOT sell because after all, it’s gained so much, might it not just keep going up? (more…)

Well, it’s happened again: I’ve gone and overlooked one of the first lessons in The Blueprint and have now returned to its truth. This happens to us all, doesn’t it; you know something that works and yet you go away from what works, looking for something better to replace it.

Often, you hear the saying “Practice what you preach”. In my case, the thing that I have preached and caught myself NOT practicing recently is the use of affirmations to instruct and program my mind for better trades.

I know, I KNOW! Some of you guys out there might be rolling your eyes… like I have… at the “positive thinking”, “new agey”, somewhat psycho-babbly idea of repeating sentences to one’s self in an effort to somehow get centered in the universe.

Sigh.

Well, I think it’s silly too. So silly that I often overlook its power and effectiveness. Now, don’t get me wrong… I know better than to think that by repeating phrases over and over to myself, that I can actually make a stock’s price go up or down. (more…)

I want to share with you an experience I had yesterday. Actually, I have one version or another of this same experience ALL the time: I bump into someone that owns stock, or can get stock, at a lower price than it’s trading today. We strike conversation, I ask if they would like to see a way that they could have “stock insurance” so that the value of their stock would never go down… AND get PAID to have it.

They always say, “Wow! I never knew you could do that.” I know. A lot of people don’t know that you can absolutely protect your stock from loss and get paid to do it. But it’s true. And I run into people all the time that are in a position to do exactly that: buy an insurance policy so that their stock never, EVER loses ground… and have the cost of that insurance handled, even get paid to do it. I love telling people I meet about this fact.

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Well… I hate to say I told you so…

(that’s a d@mn lie… everybody that says “I told you so” says it with at least SOME relish…)

…but I have after all been saying for eight years now how important it is to use put options, specifically married puts with stock, to make a stop that REALLY works. An exit plan that actually behaves properly.

See, “stop” orders fail miserably at doing what they are intended to do: “STOP” the hemorrhaging when your stock goes against you, and keep you safe.

Feel safe? Did yesterday help? Of course I’m talking about the PLUNGE of Wall Street, in which it fell nearly 1000 points… 650 of those points in just a ten minute period. If you were trading with stops, the term “Black Swan” means something real to you now. That swan swooped in and TOOK you out of a position with a certain amount of pain, pain that you need never feel again.
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In this post, comments and wisdom I got from an experienced options trader about married puts, risk management, and trading in general.

Hi gang! I recently got off the phone with a local (MY state) options trading enthusiast. All over the Denver and Colorado Springs areas there are groups that offer support to users of VectorVest, OptionVue, and other firms dedicated to teaching the public about trading options, then selling them the tools to do it. (I personally prefer a cheaper and better alternative at http://www.poweropt.com/RAT/ )

Anyway, some of these local groups look for guest speakers at their events. When a friend of a friend suggested that I talk with a local, veteran options trader… Dennis… I left a message on his phone a couple of weeks ago, then forgot about it. (more…)

Trader Question: I am intrigued with your approach and am considering buying the Blueprint. However, I am only permitted to trade protective puts and covered calls, and am doing so with dividend paying stocks. I also cannot use margin. Thus, I am concerned that the additional methods (other than covered calls and dividend paying stocks) in your Blueprint will not be available to me. (more…)

IN the last installment of this blog, I mentioned that it was important to have more than one “arrow in your quiver” when it comes to playing the current market conditions.

I then went on to lambaste the strategy of selling covered calls… NOT that it’s necessarily a bad practice overall. It’s just that covered call selling is a trading strategy that’s only appropriate for one specific kind of market: sideways and choppy. In a market that’s trending up or down, covered calls are a losing proposition.

Unfortunately, there are so many gurus and groups out there that are “one-trick ponies”… claiming that covered call selling is the best strategy for ANY market. This way of thinking is not only incorrect, it’s DANGEROUS… as anyone that held unprotected stocks through the crash last year can testify.

So what’s the answer? (more…)

WHY should a trader learn to do more than one options trading strategy? In today’s trading environment, it’s important to have more than just one arrow in your quiver.

The most familiar option play (other than speculatively buying a call or a put) is selling a covered call. There are a number of online trading workshops, sit-down seminars, books, videos and trading newsletters ALL geared to teaching this foundational trading strategy.

But when you really get right down to it, selling a covered call against stock that you own is a losing game except in a very specific market environment: sideways and somewhat volatile. (more…)

Question: I have watched with interest all of your you tube stuff, read the sketch, done some independent research. I have been searching for a way to generate reasonable income for the day comes when I have to live on my retirement account. I have seen it all, read all the decent books (McMillan etc.) and tried various techniques using stocks and options with what I call my “learning account”. (more…)

There are several default Collar searches that are set up in PowerOptions for different market conditions. There is no default Collar search for the RadioActive Strategy, as we never sell the call right away after we open the Initial Married Put / RPM trade. With this method, selling the call right away can result in significant losses, not on the downside but on the UPSIDE. If I sell a call below the put strike price because of the premium, I run the risk of getting assigned if the stock spikes resulting in a significant loss below my cost basis.

Before I go into further details, let me break down the default Collar searches on PowerOptions. To access these searches, simply click the Collar tab and select ‘Search’: (more…)