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OP Income Newsletter Jul +4.6%, Aug +10% (Open)

Published on July 28, 2012

OP Income Newsletter Jul +4.6%, Aug +10% (Open)

July 28, 2012

OP Income Newsletter July portfolios delivered +4.6%; and August 2012 Income portfolios are up +10% and we still have a few more weeks to go. These results exclude gains from OPNExtra which is a FREE feature for OPN members that includes directional as well as earning trades.

OptionPundit Income Newsletter

The key difference between “OP Income Trades” and “OPN Extra!” is the capital allocation. OPN Income newsletter uses majority of the portfolio capital and is employed for non-directional income trading strategies for example Iron Condor Spread, Calendar Spread, Diagonal spread, Credit and debit spreads, etc. OPN Extra uses a small fraction of capital of trade set-ups based on earnings, momentum, swing trades, unusual M&A, support and resistance etc.

Unless your trade is structured based on prudent capital allocation even a few losses can wipe out whole portfolio. So at OptionPundit, overall focus is to preserve and grow capital via Income Trading Strategies and use OPNExtra! as accelerator opportunistically. And since primary focus is on Income, the OPN performance excludes gains from OPNExtra even though these are nicely accretive to overall portfolio performance.

Here are the results from OPNExtra! (Trade details– For Member’s only)

Earnings-
While Bidu and LVS are still open, here are the results from other symbols-> INFY +175%, WYNN +18% and +24%, GOOG +19% and +54%, CMG +225%, PNRA -50%, CHRW +12%, TXN +10%, AAPL +63.6%, IDCC -26%, CROX +6% and WFM +178%. We still have many more weeks left for earnings to come.

Directional Winners (Stocks):
TXI +$4.0 points, TSCO +$3.2 points, EQT+$1.74, MPC +$1.09, RAX booked for approximately +$1.00 point, MCK +$0.68, FB +$0.70 points, UTHR +$0.6, COST +$0.47, BUD +$0.28, RTN +$0.31;

Directional Losers (Stocks):
FMX -$0.32, MKC -$0.1, SHOO -$0.14 points, and stopped out at PAY for -$0.98 loss. 

Stocks gainls/loss are based on the price action from the trade trigger proint and are in terms of stock’s gains or loss; were options traded on these positions, the gains and losses would have been magnified. For instance – TSCO ATM/OTM option would have doubled during the day from the trigger point.

July 2012 was an unusual month requiring hedging income portfolios almost every week. We paid cost to hedge our capital last month (we needed to do so during massive European risk). Greece, especially, made the world go nuts. There was extreme fear everywhere. Then there are summit after summit. Had we not hedged, our Jul returns would have been in excess of +10%. However, Not placing hedge and then winning is confusing luck with smartness. This “smartness” may cause a permanent loss of entire capital (and I have testimonials from members who suffered that during 08/09 declines as people were already used to madness of 07 bullmarket). Had this doom’s day worked-out, I would have probably received similar testimonials. In trading, there is no coulda, woulda, shoulda. Hindsight always makes a perfect trade. But trading needs to be done with a FORESIGHT based on learning from the hindsight(s) and past.

We have great time ahead, Volatilities are low, earning season is in full swing and OPN Extra is warming up with other trade systems/set-ups. So if you are still on sidelines and have missed past several weeks’ action, sign-up for OPNewsletter now. There is no waiting list currently and OPIncome Newsletter subscription is open to all.

Profitable Trading, OP

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