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Index Option: Earn a Living Trading Options – Video 2


Let’s go back to our trade position here and see what we’re doing. It’s still working and we haven’t gotten filled yet and it’s been about five minutes now so what I’m going to do is I’m going to raise this up to 16 cents and see if we can’t get out at 16 cents. We’ve got$305 of profit open on this and so we’ll capture that $305 as soon as we get out of this position. We made $40 just today on this position. Let’s try 17. So, youdon’t mind giving up a little bit of profit.

We started out at 15 cents. This is a good lesson. Like this morning I had no problem getting out at the price that I wanted which was really I think a penny off the mid-price. Here we had to go up two cents. We got out at17 cents. Westarted out at 15 cents as you can see down here. It went to 16 and then ended up gettingfilled at 17. When you have90 percent of your profit you can afford to give up a few pennies. It doesn’treally matter that much.

At this point what I wanted to do was I wanted to pair those positions down. You can see now on the April positions. I’ve got my SPY positions off. I’m not in the April position anymore and that’s the way I want it. I want out of that seven-day position because the closer you get to expiration there’s all kinds of weird things that can happen, especially gamma risk. If the market happened to get to one of our strike prices,then we get some weird stuff going on. I’m going to take my profit at 90 percent.

So we’re out of the SPY. If we take a look at our portfolio nowthe only thing we have left on there is the EEM’s and the EEM’s are looking pretty good. I’m not too worried about them. Because we do build portfolios we had a lot of different positions on here. Let me just refresh your memory.

We had a SPY positionand that’s gone. We had an IWM this morning and we took that off and we still have the EEM. And the DIA we took off this morning as well. So all those other positions are gone and the only one we have left isthis one. This one still shows some profit potential here. We can still move down on this quite a bitand still be in a profitable position. Our current profit on this is $138; with one contract.

Remember I’m talking small contracts. Imagine if we had 10 contracts. Now we’re up $1,300. If we had 20 contracts we’d be up $2,300 just on this one position. I mean how much money do you want to make? That is the only question. Once you learn how to build your portfolio and manage these positions, it’s only a matter of size.

Now this position, because the marketis falling, we’re now down 237 points. When we started out, we were down about 200 points. Now we’re down almost 240. This could go down a little bit more and we’d beeven in a better position. We made about $30 today. We have 136 open but let’s see where the expiration is. The expiration is $351 so we’ve got a couple hundred dollars of profit still in this position that we could take out of it if we hung in there just a little bit more.

Since I do not like to predict price, I only want to manage a portfolio based on numbers. Then you know what, I’ve got upside, I’ve got downside and it doesn’t matter if the market goes up or down from this point, I’m going to be in a profitable position. So I’ve got room to let this ride a little bit and I may do that just to grab a little bit more profit out of this position. So we’re going to leave this fornow but this is how you close out profitable positions. If we ever get into a losing position, I’ll do a video on that, too, so you may find one on your CD.

This is how you trade with confidence because it doesn’t matter if the market goes up or down. What you always want to take a look at is where your current profitable position is and that’s this white line here. Your expiration position is this greenline here. When you hover your mouse over your current position and live price, you can tell what the difference is between your current position and the profit potential that you have availableleft in this position, which is about $200. We’re going to hang in there I think a little bit more because we have room to breathe and this is the last position in our portfolio that we haven’t closed out yet.


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