I’m going to be quick today as I got caught up doing a new Buy List for Members.
This is my new favorite picture and I used it in this morning’s Alert to lead our Members in prayer and warn them: Dear Lloyd, lead us not into temptation…
I was VERY worried yesterday that I might have to send CNBC a box of chocolates and apologize for calling them a pack of dangerous fear-mongering morons who would trade their viewers souls for ad dollars but, it turns out I was right after all, as we quickly recovered from the 2nd CNBC-inspired market meltdown in one week and held my bottom targets on both the S&P and the Russell.
That was good enough for us to bring cash off the sideline and we went 100% against Jim Cramer’s (who began the panic with his Dow 9,500 call on Monday night) advice and sold not one but 3 naked puts to the panicking crowds in my 9:47 Alert to Members yesterday morning:
- USO June $30 puts sold for $1, now .70 – up 30%
- SSO June $30 puts sold for $1.60, now .80 – up 50%
- FAS June $17 puts sold for $1.45, now .77 – up 50%
Pretty good one-day profits, aren’t they? I explained why Cramer was totally wrong in the Weekly Wrap-Up, so no sense in going back over it here. I’m sure he’ll say something else that I can correct any minute now… By the way, I don’t have it “IN” for Cramer. He can press all the buttons he wants and bark buy and sell orders at his viewers but DON’T, Mr. Cramer, start giving out bad advice on options, especially advice that is so bad that it can really hurt people – that’s when I get pissed. Telling people that selling naked puts is dangerous is simply ignorant or misleading – you can decide which Jim is.
If I REALLY want to own USO long-term at net $29, then why shouldn’t I sell the June $30 puts for $1? USO barely touched $31 briefly yesterday yet we were able to score either a $29 net entry on the stock (if USO finishes below $30, the stock will be assigned to us for $30 a share) or, if USO remains above $30 through June expiration, we keep the $1 and that’s our profit for the month. Do that 12 times a year and you are getting paid $12 for NOT owning the stock (37% of…
