When we first set upthis virtual portfolio on April 10th we set out to utilize $100,000 as safely as possible in a well-hedged and well diversified set of stocks.

Although we deployed very little capital (less than $20,000) in our first month due to a fairly unstable market outlook, we did manage to cash out positions with $4,340 worth of profit so far. As 22% in a month is considered a decent return, a lot of new members are very impatient to jump on these trades but I would urge them to go back to the basics we discussed back in April. We have a “New Member’s Guide” which pretty much lays things out with these standard assignments:

  • If you are new to options, read Sage’s Book
  • Read 1 full month of my posts and all comments, you will get a good feel for the site, the kind of trades we do and also get to know a bit about the people in chat. Knowing people’s various expertises and understanding their market philosophy and position makes the next live comment they make much more informative…
  • Read Option Sage’s articles under his tab, many were co-authored byme that highlight various option stratgies with real-world examples.
  • Watch The Man Who Planted Trees, a short video about that characterizesa solid investing(and life)philosophy.

AFTER you do those things, then we are ready to talk about setting up a portfolio, the design of this portfolio is to allow us to track trades weekly with a minimum of fuss, selecting trades that do not require a lot of babysitting during the week. Ideally, as long as you maintain some of the master hedges, the positions we use here should be valid for new entries -even if you missed the earlier positions as we attempt, at all times, to keep a fairly sensible balance.

If fact, we haven’t done an update since May 12th, there simply was no need to adjust as we had our June options and the market is doing exactly what we expected it would do (dip back to test the May lows) and, as this is a better hedged group than some of the riskier trade ideas we pursure during the average week, there was no need to make adjustments even as I made a call to cash out our other positions.

That is the idea of balance, as we discussed in yesterday’s post “How To Vacation-Proof Your Portfolio.” There are benefits to…
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