SeanM

Crap, I forgot the markets closed early today. Sorry about that.

CMXX is micro-cap that is going private via reverse split. Holders of < 10k shares are to be made whole via cash payment of $0.15 per share. See SEC filing for full details. A press release was just issued disclosing that the reverse split is to take effect on the 26th, meaning today is the last day to buy. Last trade was $0.1405, and if you can buy 9,999 shares at that price (I did), you can make $95 in a few days.

Compared with the suggestions offered in the comments, I much prefer your actual trade. Like you said, it's a quick money trade, and you're getting 3% for a 3 day trade! Worrying about a capped upside or unprotected downside is unnecessary (guess I should knock on wood with the VIX hitting 31 today and VXX up sharply AH). Also, selling a naked 25-strike Put certainly wouldn't solve the capped upside issue, plus commissions would eat up a very meaningful % of the dime or so of premium you'd collect. So, my opinion is you played this the right way. As for your willingness to hold the stock, over the past few weeks I've been inching closer and closer to taking a long position in MU. At 5.5x current year EBITDA, the reward/risk profile is incredibly attractive. If you're interested, here's a link to today's JPM upgrade piece.

Thanks for the follow up.

A decision you won't regret. Strangely, I think it's quite common, and normal, to develop an emotional attachment to one's broker, and the decision to move your business is not an easy one. I know I felt this way about my relationship with TradeKing. Maybe it's because the successful investments or trades we make throughout the years are so closely tied in our minds to the platform on which they're entered. I started by cashing out only ~1/4 of my TK account, but it did not take long for the satisfaction of IB commissions, at levels fractional in comparison to what I'd become accustomed, for me to cease opening any new positions at the old broker, and moving funds from any closed positions over to IB.

It's been a bloodbath. Down another 13% since the post above. I obviously got hit hard on the covered call strategy, and sincerely hope nobody was along for that ride with me. Stock is currently at $6.81, so, didn't quite hold that break even level of $15. Although the initial trade idea worked out well, my tendency to let it ride is evidence as to why "college intern" was as far as I got in my short-lived career as an equity research analyst. So, if my next speculative trade idea makes it through my internal filter to these forums, all would be wise to meet it with considerable skepticism.

Yep, as similar liquidations happened in my TradeKing account, as well. At least they sent me a message (pasted below), which would have been nice from IB, as I was in full panic mode upon realizing what had happened this morning, and for almost an hour while I was away from my computer I feared it was a result of negligent order entry on my part. Dear Investor, Please be advised that the NYSE / AMEX option exchange experienced a technical issue this morning that caused execution reports for some multi leg option orders at invalid prices. You may have a multi leg execution that could be impacted and prices may be adjusted or executions cancelled. Please contact us at 877-495-5464 with any questions. Sincerely, John Dominic | VP of Trading, TradeKing, LLC

Same thing happened to me. Open GTC orders were sold at market at 9:30 on the dot. I have been slammed at work this morning so have not yet had a chance to call. A number of calendar spreads were sold at about 1/3 of my limit price for enormous losses. I am beyond relieved to know they are acknowledging the glitch.

That's what I thought, too, until Yowster's comment suggested otherwise.

Thanks for the helpful info, guys. Yowster: I do have a few clarification questions regarding your post. The Section II you are referring to is "Gains and Losses from Straddles"? So, are you saying that Gainskeeper is classifying all of your VIX and RUT positions as straddles? And, are your VIX and RUT trades completely omitted from your F8949? Maybe some color on my situation would clarify the questions I have. I imported two .txf files into TurboTax; one from IB and one from TradeKing. The TK .txf file included all my RUT trades in the 8949, but the IB file did not. Rather, as I'm sure you know from your experience, IB provides a separate G/L from 1256 contracts. However, no F6781 was generated from the IB .txf import, either. I thought I was probably supposed to enter the 1256 contract totals in Section I of F6781 regardless of whether or not I have MtM tax status (I don't) but, based on your answer, Yowster, I have spiraled into complete confusion. Any additional insight from you guys would be immensely appreciated. Sean

I started reading through these articles a few days ago, actually, but haven't had nearly enough time to get through and digest everything. The one concern I noted right off the bat was that all historical performance / back-testing data I saw (again, I haven't read the entire thing, so I could be off with this comment) seemed to start in the early stages of the current bull market. Was there anything about how this strategy fared during 2008? 2002? I'm definitely interested in reading more on this strategy, though the author's brashness and dismissal of all other investment strategies makes me roll my eyes.

Credit Suisse initiated coverage on HIMX this morning with an Outperform rating. I have closed out the put position @ $0.05, and entered the following covered call: BTO: 100 shares HIMX @ $15.50 STO: 1 March 16C @ $0.45 7 days to expiration. Break-even at expiry of $15.05, or 2.9% of current stock price Max gain at $16+ of $95 (6.3%)

Thank you. Glad it turned out profitable. We got a great jump in the underlying yesterday thanks to a PT increase. Interesting that PLUG has come up, as I had attempted to short the stock late last week but couldn't get a borrow. I ended up shorting FCEL instead, which seemed pretty well correlated, covering the position at the close today. Unfortunately, today's move down for FCEL wasn't nearly as dramatic as that for PLUG (-17% vs. -42%), and after a day and a half of positive moves, I eked out only a very small gain. Good luck with your PLUG buy/write, QZW. I have followed Citron for a while now, and shorted quite a few of the names at the cross-hairs of Mr. Left's write-ups. His impact should not be underestimated, and I've found that if I can get in within 15 minutes or so of one of his reports hitting the presses, I've made money in each instance. The stocks almost always stabilize, or even move back up, within a day or 2, so your covered call position will hopefully work out well.

My criteria for considering selling naked puts are: A decent cushion between the current stock price and break-even price of the trade (5-10% of the stock price). Premium collected ÷ (100% cash secured amount – premium) yields annualized returns > 50%. No major events (i.e. earnings) expected prior to expiration. Most importantly, only consider companies that I'd be happy owning. The 4th rule gives me the security of knowing I won't feel forced to liquidate immediately, should the puts be exercised. Rather, I'm content holding the stock and selling OTM calls against it until the stock is called, or until my investment outlook changes. My trade idea: STO HIMX March 13 put for $0.60 Current stock price: $13.50 Himax is a Taiwanese company that manufactures display drivers for LCD screens (best positioned in lower-end smartphones, which is likely the best place to be in the smart phone realm right now) as well as LCOS micro-displays (Google Glass). I've been very fortunate to have followed this company for the past year, and bought stock shortly after it hit my radar at ~$5. The stock has been range-bound at $13–$15 for the last few months, and, as the upside for my stock stake has decreased, I'm looking to capitalize on this trading range. Here's how it fares against my criteria: Break-even is $12.40, 8.2% below the current stock price. 0.60 / (13.00 - 0.60) = 4.8% return for a 24 day holding period (74% annualized). Calculating return based on the margin requirement produces a return of 24%, or 365% annualized. No earnings event, and developments relating to the success or failure of Google Glass are likely a ways down the road. Having owned it for the better part of the past year, HIMX passes this criteria, as well. So, that's my idea. While supplying the LCOS displays for Glass has grabbed all the headlines for Himax recently, and created this opportunity by driving option volatility higher, it's only a piece of the Himax story. In the absence of a sharp market correction in the next 3 weeks, I feel this is a fairly safe trade.

I think it's the right move. Having only been a member for a few months, I can already clearly tell that the service is exceptional, as member questions in the forums are always promptly answered. And, with more members I could see liquidity becoming a problem for some of the trades we do that include a weekly leg. I'm sure it was a difficult decision, but I think you're doing the right thing, Kim, to guarantee that you'll be able to continue delivering the top notch service that members have come to value.