Comments for RadioActiveTrading Blog http://blog.radioactivetrading.com This trading methodology shows you how to protect your downside and leave your upside totally open for growth. Sat, 21 Jan 2012 04:44:19 +0000 hourly 1 http://wordpress.org/?v=3.1.4 Comment on This Simple Trick Made My Stock BULLETPROOF by Saunders Jones http://blog.radioactivetrading.com/2011/12/this-simple-trick-made-my-stock-bulletproof/comment-page-1/#comment-5637 Saunders Jones Sat, 21 Jan 2012 04:44:19 +0000 http://blog.radioactivetrading.com/?p=854#comment-5637 It appears you arranged for a fifteen month CD. Assuming DIA pays 3% annual dividends, you have the equivalent of a fifteen month CD that pays interest at 3% annually. Like a CD, you get back all your principal at the end of fifteen months (plus a little). And that's the worst case scenario, i.e., assuming you do no more "income methods". Am I getting it? It appears you arranged for a fifteen month CD. Assuming DIA pays 3% annual dividends, you have the equivalent of a fifteen month CD that pays interest at 3% annually. Like a CD, you get back all your principal at the end of fifteen months (plus a little). And that’s the worst case scenario, i.e., assuming you do no more “income methods”.

Am I getting it?

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by Mike http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5633 Mike Fri, 13 Jan 2012 01:35:58 +0000 http://blog.radioactivetrading.com/?p=876#comment-5633 Thanks for pointing out the risk Right now it's just a paper trade just to see how it all behaves and find out what the risks are. I will try to follow the Blueprint but I just have a feeling that I will never have enough time to make up the risk in the time value On that trade mentioned in the blog with KFT Could you have applied IM#2 to mitigate some of the risk ? Thanks for pointing out the risk
Right now it’s just a paper trade just to see how it all behaves and find out what the risks are. I will try to follow the Blueprint but I just have a feeling that I will never have enough time to make up the risk in the time value

On that trade mentioned in the blog with KFT
Could you have applied IM#2 to mitigate some of the risk ?

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by admin http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5631 admin Thu, 12 Jan 2012 22:02:43 +0000 http://blog.radioactivetrading.com/?p=876#comment-5631 Mike: We have another blog article that illustrates the ADDED RISK associated with what you've described... <a href="http://blog.radioactivetrading.com/2009/02/how-not-to-trade-income-method-1/" rel="nofollow">http://blog.radioactivetrading.com/2009/02/how-not-to-trade-income-method-1/</a> Mike: We have another blog article that illustrates the ADDED RISK associated with what you’ve described… http://blog.radioactivetrading.com/2009/02/how-not-to-trade-income-method-1/

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by admin http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5630 admin Thu, 12 Jan 2012 14:25:14 +0000 http://blog.radioactivetrading.com/?p=876#comment-5630 Hi Mike: The questions you are asking is exactly what's covered in The Blueprint. In it we teach you how to find good married put candidates that have the "right" amount at risk. Then how and when to use up to 10 different income methods to pay off the cost of your put insurance policy. It's a risk-free purchase and the whole method is laid out for you. <a href="http://www.radioactivetrading.com/products.asp" rel="nofollow">http://www.radioactivetrading.com/products.asp</a> Hi Mike: The questions you are asking is exactly what’s covered in The Blueprint. In it we teach you how to find good married put candidates that have the “right” amount at risk. Then how and when to use up to 10 different income methods to pay off the cost of your put insurance policy. It’s a risk-free purchase and the whole method is laid out for you. http://www.radioactivetrading.com/products.asp

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by Mike http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5628 Mike Thu, 12 Jan 2012 01:40:41 +0000 http://blog.radioactivetrading.com/?p=876#comment-5628 I want to follow up on that question and modify it somewhat I am not sure what the percentage is but I am looking at a stock that is currently trading at 26.63 on jan 11 2012 and the aug 40 put is at 13.70 so that is pretty deep in the money so the total invested would be 40.33 so 0.33 of time value would be at risk if held until expiration plus the put if not sold before expiration The question is } Is this more or less risky if the put is closed before expiration ? I know if the goal is to expect the stock to go past the put to have a gain that is more risky but what if my goal is to have income ? Just sell covered calls for a few months and than sell the put and the stock or just roll the put further out if the stock is around the same price Right now the feb 2012 27 call is at 0.81 so that would more than cover the time value of 0.33 and I have another 6 months to write covered calls on it Is that considered Bulletproof or is that too deep in the money ? I understand that the gain would be limited by the call if the stock goes up but I would say it's less risky as far as the time value I want to follow up on that question and modify it somewhat
I am not sure what the percentage is but I am looking at a stock that is currently trading at 26.63 on jan 11 2012 and the aug 40 put is at 13.70 so that is pretty deep in the money so the total invested would be 40.33 so 0.33 of time value would be at risk if held until expiration plus the put if not sold before expiration

The question is } Is this more or less risky if the put is closed before expiration ?
I know if the goal is to expect the stock to go past the put to have a gain that is more risky but what if my goal is to have income ?
Just sell covered calls for a few months and than sell the put and the stock or just roll the put further out if the stock is around the same price
Right now the feb 2012 27 call is at 0.81 so that would more than cover the time value of 0.33 and I have another 6 months to write covered calls on it Is that considered Bulletproof or is that too deep in the money ?
I understand that the gain would be limited by the call if the stock goes up but I would say it’s less risky as far as the time value

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by admin http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5627 admin Wed, 11 Jan 2012 15:22:47 +0000 http://blog.radioactivetrading.com/?p=876#comment-5627 Hi Albert: I'm not totally clear on what "20% extra married put" means. I'm not sure that he meant further In-The-Money. But, if he did, here is the response... The RISK of a married put that is ITM is essentially the time value of the option. So, when you go further ITM, the time value should be lower and your insurance level is higher - so you get lower risk in the position. All investors know: When you lower risk - you also lower reward. In this case, as you go further ITM, you get a lower probability of getting profitable since the stock needs to rise further to get to break-even. When we teach this phenomenon - we call it the "Three Bears" since there you can pick your own risk level in a married put - you should be sure NOT to pick a risk level that is TOO HIGH - and don't pick on that is TOO LOW. We should pick the risk level that is JUST RIGHT. We teach our students to look for 3% to 9% as the max risk to begin with. This strikes a nice balance of risk to probability of reaching the break even. Of course, you can pick the risk level that meets your trading goals and risk aversion level. Some students do go higher. Also, to your best ability - timing the overall market condition can also give you a hint how much risk to take as well. Hi Albert: I’m not totally clear on what “20% extra married put” means. I’m not sure that he meant further In-The-Money. But, if he did, here is the response…

The RISK of a married put that is ITM is essentially the time value of the option. So, when you go further ITM, the time value should be lower and your insurance level is higher – so you get lower risk in the position.

All investors know: When you lower risk – you also lower reward. In this case, as you go further ITM, you get a lower probability of getting profitable since the stock needs to rise further to get to break-even.

When we teach this phenomenon – we call it the “Three Bears” since there you can pick your own risk level in a married put – you should be sure NOT to pick a risk level that is TOO HIGH – and don’t pick on that is TOO LOW. We should pick the risk level that is JUST RIGHT.

We teach our students to look for 3% to 9% as the max risk to begin with. This strikes a nice balance of risk to probability of reaching the break even. Of course, you can pick the risk level that meets your trading goals and risk aversion level. Some students do go higher. Also, to your best ability – timing the overall market condition can also give you a hint how much risk to take as well.

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by albert http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5624 albert Tue, 10 Jan 2012 21:12:48 +0000 http://blog.radioactivetrading.com/?p=876#comment-5624 I would like to hear your reply to the FIRST of Rimo's 2 questions. He wanted to know about buying a married put further in-the-money to increase the insurance return and maybe even make a little profit from an unexpected decline in the underlying stock price. I would like to hear your reply to the FIRST of Rimo’s 2 questions. He wanted to know about buying a married put further in-the-money to increase the insurance return and maybe even make a little profit from an unexpected decline in the underlying stock price.

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by admin http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5618 admin Fri, 06 Jan 2012 15:20:05 +0000 http://blog.radioactivetrading.com/?p=876#comment-5618 Hi Rimo: Yes, you can reverse the RPM setup by doing a married call... a short stock position with a long call for protection. But... keep in mind that we are trying to REDUCE the risk in the trade over time - with a married call your risk is increasing over time due to margin interest on the short stock position. Alternatives that allow playing the bearish market would be - buying a put option or better yet, play a regular RPM (married put) on an INVERSE ETF. Hi Rimo: Yes, you can reverse the RPM setup by doing a married call… a short stock position with a long call for protection. But… keep in mind that we are trying to REDUCE the risk in the trade over time – with a married call your risk is increasing over time due to margin interest on the short stock position. Alternatives that allow playing the bearish market would be – buying a put option or better yet, play a regular RPM (married put) on an INVERSE ETF.

]]> Comment on “HOW MUCH?” …Asset Allocation Made Simple for RadioActive Traders by modern@tpg.com.au http://blog.radioactivetrading.com/2012/01/how-much-asset-allocation-for-radioactive-traders/comment-page-1/#comment-5616 modern@tpg.com.au Fri, 06 Jan 2012 11:12:47 +0000 http://blog.radioactivetrading.com/?p=876#comment-5616 Hi Kurt, Have you tried working with 20% or 30% Extra married put option and make adjustment for slight increase in the cost? It should give us opportunity to come out of the trade with no loss or small profit should the trade starts going against the preferred direction. Can this trade also work in reverse direction by going short and using call option instead put option? Many thanks. Rimo. Hi Kurt, Have you tried working with 20% or 30% Extra married put option and make adjustment for slight increase in the cost? It should give us opportunity to come out of the trade with no loss or small profit should the trade starts going against the preferred direction.
Can this trade also work in reverse direction by going short and using call option instead put option?
Many thanks.
Rimo.

]]> Comment on My Stock is Up… NOW WHAT? by Kurt Frankenberg http://blog.radioactivetrading.com/2011/09/my-stock-is-up-now-what/comment-page-1/#comment-5573 Kurt Frankenberg Tue, 13 Dec 2011 16:48:18 +0000 http://blog.radioactivetrading.com/?p=759#comment-5573 Thanks for the Q, Eddie. The answer is NORMALLY, yes. That is, if you are simply selling a call against your stock, you want to make sure that that call is at or above the strike price of the put. However..! With Income Method #6, that requirement is somewhat relaxed. Normally if I'm going to sell a call, I wait for the stock to perhaps approach the put's strike price first. That way I get enough bang for my buck (or buck for the... you know what I mean). Because I don't have to wait for the stock's price to move before applying IM#6, I nicknamed this Income Method "Gimme My Money NOW". If you check the graph, this play makes money and doesn't lose it. I can't say that about ALL Bear Call Spreads, but this one is set up so that if the stock goes up, 100% of the risk inherent in the Bear Call Spread is neutralized. Check it out and get back to me. Happy Trading! Kurt Thanks for the Q, Eddie. The answer is NORMALLY, yes. That is, if you are simply selling a call against your stock, you want to make sure that that call is at or above the strike price of the put.

However..! With Income Method #6, that requirement is somewhat relaxed. Normally if I’m going to sell a call, I wait for the stock to perhaps approach the put’s strike price first. That way I get enough bang for my buck (or buck for the… you know what I mean).

Because I don’t have to wait for the stock’s price to move before applying IM#6, I nicknamed this Income Method “Gimme My Money NOW”.

If you check the graph, this play makes money and doesn’t lose it. I can’t say that about ALL Bear Call Spreads, but this one is set up so that if the stock goes up, 100% of the risk inherent in the Bear Call Spread is neutralized. Check it out and get back to me.

Happy Trading!

Kurt

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