$20k in 20 Minutes update...

Today is options expiration day so it's time to make sure all our positions are safe. We placed 11 trades in our $20k in 20 minutes class where we showed students how to bring in a solid 20% over about 3 weeks of time. So far all 11 of our trades are profitable with just about 4 hours left to expiration. I will analyze each trade in a later blog post. But there are 2 trades in particular that I want to mention during market hours because they could be "in trouble" and I want you to see how to play this and insure you don't mess up the trade.

AMZN -
We actually placed an "Iron Condor" on Amazon, which is nothing more than two credit spreads stacked on top of each other. The top position is a Bear Call Spread, while the bottom position is a Bull Put Spread. This trade is placed on a stock that is "stuck" in a trading range and doesn't look to be going anywhere. Basically it's a double dip with the same strategy.

Everything has gone fine with the Bullish position which we placed by selling a put with a $60 strike price, and buying a put with a $55 strike price to cover our position. We will clear a full $3360 on that position.

Our Bear Call position however has reached the danger point and that's why I'm writing about this during market hours. We opened the Bear Call position by selling the a call with a $70 strike price, and buying a call with a $75 strike price to cover our position. Our maximum profit on this trade would be $2420. However Amazon has traded up over $70 and that puts us at risk of being "called out" and forced to sell AMZN for $70/share. We don't want this much exposure and AMZN has not moved high enough to use our $75 call for profit. So what do we do?

1) We're only in danger if AMZN closes above the $70 price point. So in the next 3 hours watch this position to make sure it closes below $70. At the time I'm writing this AMZN is trading just barely in the safety zone at $69.75. But it has been over $70 for much of the day.
2) If the day closes below $70 we're fine. Just let the position expire worthless.
3) However, if we're at $70 or higher the risk of getting called out is greater and you don't want that. So we need to BUY BACK the $70 call position we opened. The good news is time value has worked in our favor and we will still make a profit, even if we buy the position back.

Notice the $70 call position. We sold it for $1.21/share and brought in $2420, but now we could buy it back for only .43/share. We would clear a full $1560 still on this trade. So even though we are in the "danger" zone, we can still make money as long as we close the position before we get caught with it. To close the position simply click the "trade" button and follow the order form.



GOOG -

Our google position is an identical situation. We opened it by selling a $330 call and buying a $340 call to cover our selves. We have moved in to the danger zone because Google is toying with the $330 price point. Currently we have a few pennies to play with but we need to be cautious. Once again, to close this position with no liability simply buy back the $330 call. If we buy it back right now we will still close that position with $4200 in the bank.

This is a quick intra-day update for any of you following along at home. I'll put together a full analysis of all the trades after the market closes and we have all the trades complete.

Happy trading.