Stock Basics 101 - Price to Earnings Ratio

Price To Earnings Ratio

As an investor that got my tilt first as a value investor, the metric Price to Earnings ratio, P/E ratio for short, was one of the first concepts I was introduced to as a way to value how attractively a company was selling at price wise compared to its earnings.  If you could identify companies selling at an attractive valuation which the market hasn't yet acknowledged, and you invested in them before the masses take notice, you stood a chance to see your initial investment appreciate in value because investors could revalue the earnings and as a result the stock price higher.  Early on this metric has driven my investment mindset more so than it does now; however, I always seem to return to the roots of this metric and keep sight of it in evaluating the value at which I am getting a stock in a company.

 

P/E Definition

I found the definition by Money Chimp as the easiest for my mind to understand as they say the P/E ratio represents the number of year's of a company's earnings it will take to add up to the original price you paid for the stock.  Contrast that by Investopedia's definition of P/E ratio, which is the dollar amount an investor can expect to invest in a company in order to get one dollar of that company's earnings.  I just understood Money Chimp's definition of that concept more intuitively and as you might can imagine, of course I wanted to invest in companies where I got paid back sooner.

P/E Ratio Comparisons for Extreme Contrast

So, say you were to contrast Apple's (AAPL) P/E  of 16.90 and its stock price at $144.02 per share, as of writing this, vs Netflix's(NFLX) P/E of 193.29 and its stock price at $149.41 per share.  Using the definition from the above, Apple clearly has the more attractive valuation as it will take approximately 17 years as opposed to 193 years to pay you back the price you paid of $144.02 if Apple's earnings stayed constant.  In this case, the earnings are about approximately $8.54($144.02/16.90) annually either by solving for E in P/E or seeing the quarterly earnings data of the last trailing twelve months

for Apple and $0.77($149.02/193.29)

for Netflix.  

P/E Ratio Comparison By Sector

However, to be fair, it is often stated when comparing P/E ratios of companies it should be to other companies in similar industry, size, and sector.  So if we compared Apple to HP Inc(HPQ), we see HP's P/E is 12.36 and its stock price is $17.48 per share, as of writing this, has a lower a slightly lower P/E than Apple.  Investors tend to pay a higher P/E multiple if they believe that earnings will be higher for a company in the future.  Perhaps that is the case for Apple as these company's are in the same industry with similar size and the same sector.  If you do similar with Netflix and Activision Blizzard(ATVI), we see Activision Blizzard's P/E is 42.24 and its stock price is $57.57 per share, as of writing this, and it has a dramatically lower P/E than Netflix.  In the above, I personally would still tilt my investment dollars in a greater amount to Apple over HP, but HP is great value here and should be considered.  Moreover, I would select Activision Blizzard in a greater portion size if choosing between it an Netflix.

Valuation Classifications

Stocks like Netflix and Activision Blizzard get classified as growth stocks as opposed to value stocks which Apple and HP are more akin to at this point in their history.  As investors, when we look at metrics like this it doesn't mean we should not invest in a Netflix or Activision Blizzard, but we should do so with great caution, as growth stocks usually help boost capital appreciation when they really take off, which we like as investors too, but these are the ones we should prune and invest in some of the slow movers that are more solid in their fundamentals like an Apple or HP.  I usually dollar cost average into growth stock positions and take some profits when they get really high like Netflix is now.  My Loyal3 10 Stock Plan(now FolioFirst) has Netflix in it along with combination of growth and value stocks.

Company Earnings Check Up

Companies report earnings each quarter, so assume you have taken a position in Apple of 5 shares at $144.02.  You know that the earnings as of taking that position is $8.54 per share on an annual basis.  If from here the price where to drop to $135 on investor sentiment sinking on Apple and it's earnings hadn't been reported for the year, should you sell?  I would say people buy and sell for different reasons, but if you sell before earnings, and Apple reports earnings that are $8.54 or higher, you lost you original position and might have to pay a higher price now to get back in to Apple stock.  Had you held your position, you would still be on track to get back the $144.02 you spent on each share.  As long term investors we have to think in terms of years in the stock market and endure price fluctuations and evaluate the numbers for ourselves to see has anything fundamentally changed.  Having a metric like P/E and others I listed in, "Stock Basics 101 - Evaluating Stocks", helps us put in perspective the long term prospects of a stock we decide to invest in.  Be careful not to be shaken out of your positions on shortsightedness of some market participants; otherwise, you miss out on run-ups in stocks like I showed in the charts on my blog, "Loyal3 10 Stock Plan Addendum".

Possible Sell Signal

That being said, if you see earnings start to shrink, then only should you consider to take action to consider selling and it shouldn't be after one quarter, but perhaps several before throwing in the towel.  It is a companies earnings that drives this all as from it you get dividends and re-investment that lead to larger earnings and higher stock price.  If you can, track the earnings on a stock that you decide to purchase and let that help guide you in whether you still want to be in that company.

Conclusion

As with anything you buy, you make the real money when you buy and not when you sell, so let's use metrics like P/E ratio to ensure we are buying at a good price and have some margin of safety, so that we really see the upside when others begin to take notice of the value as well, but get in at higher P/E multiples; thus increasing the initial value of our investment.

Subscribe to my blog @ http://oslifemoneypoliticsnotherthings.blogspot.com or on the right side of this page in the Follow by Email box.  

Please provide feedback or questions pertaining to this blog post by leaving a comment below.  Also please be sure to share this content with your friends and family.  I thank you in advance.

Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site or surfing over to Amazon.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!

Stock Basics 101 - Price to Earnings Ratio

Price To Earnings Ratio

As an investor that got my tilt first as a value investor, the metric Price to Earnings ratio, P/E ratio for short, was one of the first concepts I was introduced to as a way to value how attractively a company was selling at price wise compared to its earnings.  If you could identify companies selling at an attractive valuation which the market hasn't yet acknowledged, and you invested in them before the masses take notice, you stood a chance to see your initial investment appreciate in value because investors could revalue the earnings and as a result the stock price higher.  Early on this metric has driven my investment mindset more so than it does now; however, I always seem to return to the roots of this metric and keep sight of it in evaluating the value at which I am getting a stock in a company.

 

P/E Definition

I found the definition by Money Chimp as the easiest for my mind to understand as they say the P/E ratio represents the number of year's of a company's earnings it will take to add up to the original price you paid for the stock.  Contrast that by Investopedia's definition of P/E ratio, which is the dollar amount an investor can expect to invest in a company in order to get one dollar of that company's earnings.  I just understood Money Chimp's definition of that concept more intuitively and as you might can imagine, of course I wanted to invest in companies where I got paid back sooner.

P/E Ratio Comparisons for Extreme Contrast

So, say you were to contrast Apple's (AAPL) P/E  of 16.90 and its stock price at $144.02 per share, as of writing this, vs Netflix's(NFLX) P/E of 193.29 and its stock price at $149.41 per share.  Using the definition from the above, Apple clearly has the more attractive valuation as it will take approximately 17 years as opposed to 193 years to pay you back the price you paid of $144.02 if Apple's earnings stayed constant.  In this case, the earnings are about approximately $8.54($144.02/16.90) annually either by solving for E in P/E or seeing the quarterly earnings data of the last trailing twelve months

for Apple and $0.77($149.02/193.29)

for Netflix.  

P/E Ratio Comparison By Sector

However, to be fair, it is often stated when comparing P/E ratios of companies it should be to other companies in similar industry, size, and sector.  So if we compared Apple to HP Inc(HPQ), we see HP's P/E is 12.36 and its stock price is $17.48 per share, as of writing this, has a lower a slightly lower P/E than Apple.  Investors tend to pay a higher P/E multiple if they believe that earnings will be higher for a company in the future.  Perhaps that is the case for Apple as these company's are in the same industry with similar size and the same sector.  If you do similar with Netflix and Activision Blizzard(ATVI), we see Activision Blizzard's P/E is 42.24 and its stock price is $57.57 per share, as of writing this, and it has a dramatically lower P/E than Netflix.  In the above, I personally would still tilt my investment dollars in a greater amount to Apple over HP, but HP is great value here and should be considered.  Moreover, I would select Activision Blizzard in a greater portion size if choosing between it an Netflix.

Valuation Classifications

Stocks like Netflix and Activision Blizzard get classified as growth stocks as opposed to value stocks which Apple and HP are more akin to at this point in their history.  As investors, when we look at metrics like this it doesn't mean we should not invest in a Netflix or Activision Blizzard, but we should do so with great caution, as growth stocks usually help boost capital appreciation when they really take off, which we like as investors too, but these are the ones we should prune and invest in some of the slow movers that are more solid in their fundamentals like an Apple or HP.  I usually dollar cost average into growth stock positions and take some profits when they get really high like Netflix is now.  My Loyal3 10 Stock Plan(now FolioFirst) has Netflix in it along with combination of growth and value stocks.

Company Earnings Check Up

Companies report earnings each quarter, so assume you have taken a position in Apple of 5 shares at $144.02.  You know that the earnings as of taking that position is $8.54 per share on an annual basis.  If from here the price where to drop to $135 on investor sentiment sinking on Apple and it's earnings hadn't been reported for the year, should you sell?  I would say people buy and sell for different reasons, but if you sell before earnings, and Apple reports earnings that are $8.54 or higher, you lost you original position and might have to pay a higher price now to get back in to Apple stock.  Had you held your position, you would still be on track to get back the $144.02 you spent on each share.  As long term investors we have to think in terms of years in the stock market and endure price fluctuations and evaluate the numbers for ourselves to see has anything fundamentally changed.  Having a metric like P/E and others I listed in, "Stock Basics 101 - Evaluating Stocks", helps us put in perspective the long term prospects of a stock we decide to invest in.  Be careful not to be shaken out of your positions on shortsightedness of some market participants; otherwise, you miss out on run-ups in stocks like I showed in the charts on my blog, "Loyal3 10 Stock Plan Addendum".

Possible Sell Signal

That being said, if you see earnings start to shrink, then only should you consider to take action to consider selling and it shouldn't be after one quarter, but perhaps several before throwing in the towel.  It is a companies earnings that drives this all as from it you get dividends and re-investment that lead to larger earnings and higher stock price.  If you can, track the earnings on a stock that you decide to purchase and let that help guide you in whether you still want to be in that company.

Conclusion

As with anything you buy, you make the real money when you buy and not when you sell, so let's use metrics like P/E ratio to ensure we are buying at a good price and have some margin of safety, so that we really see the upside when others begin to take notice of the value as well, but get in at higher P/E multiples; thus increasing the initial value of our investment.

Subscribe to my blog @ http://oslifemoneypoliticsnotherthings.blogspot.com or on the right side of this page in the Follow by Email box.  

Please provide feedback or questions pertaining to this blog post by leaving a comment below.  Also please be sure to share this content with your friends and family.  I thank you in advance.

Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site or surfing over to Amazon.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!

Stock Basics 101 - Evaluating Stocks

Investing Over Gambling

Anyone can buy stock, it's not hard if you open and fund a brokerage account.  You can then go out and select from tons of stocks, and you can say I'm going to put this money all in Apple, or in Google and Facebook without any analysis.  You may or may not do well with this strategy as it will somewhat largely hinge on your psychology in dealing with a constant in the stock market and that is stock price fluctuations.  The thing of concern to most investors is that the price goes up from when they got in.  However, we really have no control of what is going to happen once we are in it, but if we have done some research, and have a sufficient and realistic time horizon, and have a basis for why we are buying particular stock(s), we can have more confidence that we are investing instead of just gambling.

Owning Companies That Share Profits

One of the main reasons for investing in stocks, I have established in my blog post, "Blacks Don't Invest In Stocks and Bonds" is about having an ownership in companies that are producing products and/or providing services and are, we hope if we own them, generating increased revenues and bottom line growth and profit, which can often lead to an appreciation in value of our investment/money over time.   So, how can we evaluate stocks?

The Novice Perspective

Let's take the perspective of a novice investor ready to invest their money, but not wanting to lose his/her money, and trying to navigate how to go about this.  Before thinking about gain or loss, think whether you want to be an owner of the company in question.  For example, personally, I don't want to be an owner in oil company stocks when I'm actively investing; though through passive S&P 500 index fund I'm still exposed only because they are part of the index's basket of stocks, but I'm OK with that as well.  So, with individual stocks, you can chose those you want to be involved in and exclude those you don't want.

Evaluate Companies Who's Products/Services You Use

The medium by which you will search out stocks to chose from is all on you as there is online, via financial newspaper, brokerage platform, etc., but it's not a bad idea to evaluate the stocks of companies who's products and services you are a consumer of already as you and other customers are contributing to that companies revenues.  I have done such a thing on Motif Investing with Os Own What You Love where I created and then bought the motif of stocks who's products and services I largely utilize with some, but not a lot of, analysis because I will dollar cost average (consistently buying into positions when the price may be higher or lower than original prices I initially bought at) into these positions over time and these companies are largely ubiquitous and have long term prospects.  Once you are comfortable, then expand horizon to other stocks outside your initial realm.

I have also broke down some of the stocks in this portfolio in the below blog post:

 Loyal3 10 Stock Plan (Loyal3 is Now FolioFirst)

Loyal3 10 Stock Plan Addendum

My Basic Evaluation Approach

My approach to evaluating a stock is more of an introduction and is by no means definitive.  This is not an exact science and you may grow to have your own way to evaluate if and how to select stock(s) you want to buy.  Based upon my knowledge and experience, I just lay out a few things that stand out in my mind that I look for when I am evaluating an individual stock.  If just starting out too, it may be wise also to have more of a tilt towards being a value oriented investor, as their philosophy is towards buying stocks selling at a discount to others and have a margin of safety inherit in that you are buying dollars for less than $1.

I personally look at few metrics I learned as value investor which are:

• P/E ratio (less than 19)
• Dividend Yield (greater 2%)
• 52 week high/low (towards low end)
• The chart (10 year chart sloping generally upwards)
• Return on equity (15% or greater)
• Revenue growth (growing or even)
• Net margin (15% or better)
• Debt to equity (less than 1 or dependent on others in same sector)
• Current ratio (above 1)
• Quick ratio (above 1)
• Moat like qualities (best in brand)

Note:  Metrics have links to Investopedia which often are accompanied by video to explain these concepts.  

The Research Gets You Through The Downturns

These are the metrics I generally use to evaluate if I'm getting a solid company without just guessing, because we can guess for sure, but that is too much like gambling!  We are investors and don't gamble, right?!  The evaluation is mainly for you to be able to stick with a company when there are price downturns.  If you know nothing about the company how do you know if this is just short term or not.  This evaluation by no means that a stock's price will not go down less than what you bought it at and if it does go down that you picked a bad stock.  Sometimes it just a wait and see and the wait is better when a company pays a dividend while you do so.  

Using Apple as an example, it's 52 week low was $92.14 and now it's $145.82.  There were plenty of naysayers to this stock of why it wasn't great, but it sported a P/E of 11 at one point with a 2% dividend selling at tremendously cheap price compared to other stocks, yet it stands as the largest market cap in the world, with $200 billion in cash overseas and tremendous balance sheet.  This for me was a no brainer as I got in at $92 price range and even a little at $100 plus.  I have done well.  This was a time to get in and select an individual stock(s) to outperform and it has. 

Pick Your Spots

This blog post discusses evaluating single stock, but in future blog post I'll discuss index and ETF investments which are more of a basket of stocks weighted to some benchmark like the S&P 500.  In investing in individual stocks, your aim should still be performance that beats a benchmark like the S&P 500.  There are certainly times that arise, like the example above with Apple stock, when selecting individual stocks are appropriate when you feel you can outperform the benchmark because of the price you buy stock(s) at or you may just want to be overweight in particular stock names.  There are always times to be investing in an index fund as this, in my opinion, should be the core of your holdings, but at lower prices is always optimal. 

In Closing

As when you are buying anything, you are I hope trying to get it at the cheapest price though your value of it may be greater.  Investing in stocks doesn't have to be hard at all if you are comfortable evaluating stocks.  This often seems to be a daunting task that those on Wall Street seem to think Main Street cannot master; however, in my opinion, that is not the case.  If you look at it, professional money managers are losing money all the time in the stock market and they are supposed to be the experts.  They often don't beat their benchmarks after fees and costs, so how much better are they?  Is this something you could do yourself?  I would say you can if you educate yourself in the what, why, where, and how's of investing.

Look Out For and Vote On Poll

I'll post a poll where I would like you to submit stocks you have evaluated and think can be winners.  I will then post the results. 

Subscribe to my blog @ http://oslifemoneypoliticsnotherthings.blogspot.com or on the right side of this page in the Follow by Email box.  

Please provide feedback or questions pertaining to this blog post by leaving a comment below.  Also please be sure to share this content with your friends and family.  I thank you in advance.

Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!

Stock Basics 101 - Evaluating Stocks

Investing Over Gambling

Anyone can buy stock, it's not hard if you open and fund a brokerage account.  You can then go out and select from tons of stocks, and you can say I'm going to put this money all in Apple, or in Google and Facebook without any analysis.  You may or may not do well with this strategy as it will somewhat largely hinge on your psychology in dealing with a constant in the stock market and that is stock price fluctuations.  The thing of concern to most investors is that the price goes up from when they got in.  However, we really have no control of what is going to happen once we are in it, but if we have done some research, and have a sufficient and realistic time horizon, and have a basis for why we are buying particular stock(s), we can have more confidence that we are investing instead of just gambling.

Owning Companies That Share Profits

One of the main reasons for investing in stocks, I have established in my blog post, "Blacks Don't Invest In Stocks and Bonds" is about having an ownership in companies that are producing products and/or providing services and are, we hope if we own them, generating increased revenues and bottom line growth and profit, which can often lead to an appreciation in value of our investment/money over time.   So, how can we evaluate stocks?

The Novice Perspective

Let's take the perspective of a novice investor ready to invest their money, but not wanting to lose his/her money, and trying to navigate how to go about this.  Before thinking about gain or loss, think whether you want to be an owner of the company in question.  For example, personally, I don't want to be an owner in oil company stocks when I'm actively investing; though through passive S&P 500 index fund I'm still exposed only because they are part of the index's basket of stocks, but I'm OK with that as well.  So, with individual stocks, you can chose those you want to be involved in and exclude those you don't want.

Evaluate Companies Who's Products/Services You Use

The medium by which you will search out stocks to chose from is all on you as there is online, via financial newspaper, brokerage platform, etc., but it's not a bad idea to evaluate the stocks of companies who's products and services you are a consumer of already as you and other customers are contributing to that companies revenues.  I have done such a thing on Motif Investing with Os Own What You Love where I created and then bought the motif of stocks who's products and services I largely utilize with some, but not a lot of, analysis because I will dollar cost average (consistently buying into positions when the price may be higher or lower than original prices I initially bought at) into these positions over time and these companies are largely ubiquitous and have long term prospects.  Once you are comfortable, then expand horizon to other stocks outside your initial realm.

I have also broke down some of the stocks in this portfolio in the below blog post:

 Loyal3 10 Stock Plan (Loyal3 is Now FolioFirst)

Loyal3 10 Stock Plan Addendum

My Basic Evaluation Approach

My approach to evaluating a stock is more of an introduction and is by no means definitive.  This is not an exact science and you may grow to have your own way to evaluate if and how to select stock(s) you want to buy.  Based upon my knowledge and experience, I just lay out a few things that stand out in my mind that I look for when I am evaluating an individual stock.  If just starting out too, it may be wise also to have more of a tilt towards being a value oriented investor, as their philosophy is towards buying stocks selling at a discount to others and have a margin of safety inherit in that you are buying dollars for less than $1.

I personally look at few metrics I learned as value investor which are:

• P/E ratio (less than 19)
• Dividend Yield (greater 2%)
• 52 week high/low (towards low end)
• The chart (10 year chart sloping generally upwards)
• Return on equity (15% or greater)
• Revenue growth (growing or even)
• Net margin (15% or better)
• Debt to equity (less than 1 or dependent on others in same sector)
• Current ratio (above 1)
• Quick ratio (above 1)
• Moat like qualities (best in brand)

Note:  Metrics have links to Investopedia which often are accompanied by video to explain these concepts.  

The Research Gets You Through The Downturns

These are the metrics I generally use to evaluate if I'm getting a solid company without just guessing, because we can guess for sure, but that is too much like gambling!  We are investors and don't gamble, right?!  The evaluation is mainly for you to be able to stick with a company when there are price downturns.  If you know nothing about the company how do you know if this is just short term or not.  This evaluation by no means that a stock's price will not go down less than what you bought it at and if it does go down that you picked a bad stock.  Sometimes it just a wait and see and the wait is better when a company pays a dividend while you do so.  

Using Apple as an example, it's 52 week low was $92.14 and now it's $145.82.  There were plenty of naysayers to this stock of why it wasn't great, but it sported a P/E of 11 at one point with a 2% dividend selling at tremendously cheap price compared to other stocks, yet it stands as the largest market cap in the world, with $200 billion in cash overseas and tremendous balance sheet.  This for me was a no brainer as I got in at $92 price range and even a little at $100 plus.  I have done well.  This was a time to get in and select an individual stock(s) to outperform and it has. 

Pick Your Spots

This blog post discusses evaluating single stock, but in future blog post I'll discuss index and ETF investments which are more of a basket of stocks weighted to some benchmark like the S&P 500.  In investing in individual stocks, your aim should still be performance that beats a benchmark like the S&P 500.  There are certainly times that arise, like the example above with Apple stock, when selecting individual stocks are appropriate when you feel you can outperform the benchmark because of the price you buy stock(s) at or you may just want to be overweight in particular stock names.  There are always times to be investing in an index fund as this, in my opinion, should be the core of your holdings, but at lower prices is always optimal. 

In Closing

As when you are buying anything, you are I hope trying to get it at the cheapest price though your value of it may be greater.  Investing in stocks doesn't have to be hard at all if you are comfortable evaluating stocks.  This often seems to be a daunting task that those on Wall Street seem to think Main Street cannot master; however, in my opinion, that is not the case.  If you look at it, professional money managers are losing money all the time in the stock market and they are supposed to be the experts.  They often don't beat their benchmarks after fees and costs, so how much better are they?  Is this something you could do yourself?  I would say you can if you educate yourself in the what, why, where, and how's of investing.

Look Out For and Vote On Poll

I'll post a poll where I would like you to submit stocks you have evaluated and think can be winners.  I will then post the results. 

Subscribe to my blog @ http://oslifemoneypoliticsnotherthings.blogspot.com or on the right side of this page in the Follow by Email box.  

Please provide feedback or questions pertaining to this blog post by leaving a comment below.  Also please be sure to share this content with your friends and family.  I thank you in advance.

Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!

You Have Options

What Are Your Options?

Some time back in my post, "What is Options Trading Drawback?",  I try to expose you to options trading to make you become comfortable with hearing and seeing options trading concepts and terminology, if you haven't before, with the hopes that this will start to sink into your mind.  Each month, I put on new options trades and some are a continuation from the past month of positions I am still in.  I want to start giving this each month in order to give you some ideas of what I'm positioned in and how that has been working for me.

Current Options Trades

This pass Monday, I put on the following covered call, secured put, and vertical call options trades with expiration on the 3rd Friday in July and companies are displayed with their stock ticker symbol:

Covered Call

• Sold 2 ACIA Jul17 50 Call @ $1.30 
• Sold 2 MULE Jul17 25 Call @ $1.50
• Sold 5 TWLO Jul17 30 Call @ $0.55

Secured Put

• Sold 2 NVDA Jul17 150 Put @ $4.70
• Sold 2 AMD Jul17 12 Put @ $0.59

Vertical Call

• Sold 1 TSLA Jul17 375 Call @ $16.80
• Bought 1 TSLA Jul17 395 Call @ $9.12

Long Stock

• GDX 100 shares @ $22.50

Remember, 1 options contract in based on 100 shares of stock, in my blog post, "Trading Options Secured Put and Covered Call", I breakdown some of the basics of the covered call and secured put strategies.  This is actually my first time doing a call spread, but I'll see how I do with it and let you know next month.  The above is exactly what you would see if you used the platform Options House to trade option. 

In Closing

These are currently the positions I'm working for options trades and I am doing pretty well, with hopes that a few of my positions rebound slowly to what I originally paid for them, but in the meantime, I'll sit back and collect premiums while I wait and continue to decrease my actual cost basis in these stocks.

In the spirit of the Richest Man In Babylon, from premiums I receive, I direct 10% or more to my long term portfolio in the motifs.  

Os ETF 87/13 Allocation
Os Own What You Love

Richest Man In Babylon

Subscribe to my blog @ http://oslifemoneypoliticsnotherthings.blogspot.com or on the right side of this page in the Follow by Email box.  

Please provide feedback or questions pertaining to this blog post by leaving a comment below.  Also please be sure to share this content with your friends and family.  I thank you in advance.

Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!

You Have Options

What Are Your Options?

Some time back in my post, "What is Options Trading Drawback?",  I try to expose you to options trading to make you become comfortable with hearing and seeing options trading concepts and terminology, if you haven't before, with the hopes that this will start to sink into your mind.  Each month, I put on new options trades and some are a continuation from the past month of positions I am still in.  I want to start giving this each month in order to give you some ideas of what I'm positioned in and how that has been working for me.

Current Options Trades

This pass Monday, I put on the following covered call, secured put, and vertical call options trades with expiration on the 3rd Friday in July and companies are displayed with their stock ticker symbol:

Covered Call

• Sold 2 ACIA Jul17 50 Call @ $1.30 
• Sold 2 MULE Jul17 25 Call @ $1.50
• Sold 5 TWLO Jul17 30 Call @ $0.55

Secured Put

• Sold 2 NVDA Jul17 150 Put @ $4.70
• Sold 2 AMD Jul17 12 Put @ $0.59

Vertical Call

• Sold 1 TSLA Jul17 375 Call @ $16.80
• Bought 1 TSLA Jul17 395 Call @ $9.12

Long Stock

• GDX 100 shares @ $22.50

Remember, 1 options contract in based on 100 shares of stock, in my blog post, "Trading Options Secured Put and Covered Call", I breakdown some of the basics of the covered call and secured put strategies.  This is actually my first time doing a call spread, but I'll see how I do with it and let you know next month.  The above is exactly what you would see if you used the platform Options House to trade option. 

In Closing

These are currently the positions I'm working for options trades and I am doing pretty well, with hopes that a few of my positions rebound slowly to what I originally paid for them, but in the meantime, I'll sit back and collect premiums while I wait and continue to decrease my actual cost basis in these stocks.

In the spirit of the Richest Man In Babylon, from premiums I receive, I direct 10% or more to my long term portfolio in the motifs.  

Os ETF 87/13 Allocation
Os Own What You Love

Richest Man In Babylon

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Also, next time you think to shop at Walmart online, how about clicking through on the banner ad at the bottom of my blog site.  It will be appreciated, but also check out my blog post Loyal3 10 Stock Plan.  If you are spending money in Walmart, you should be owning it too!