Yong-Long Lai

Got assigned on my NVDA

The Trade (1st June 2007)
Shares/Contract = 100
Buy 500 NVDA @ $34.93 (-$17,465)
Sell 5 NVDA 35 Calls @ $0.85 (+$425)
NVDA closed @ 34.88 on this day

I was exercised/assigned (15th June 2007)
Sell 500 NVDA @ $35 (+$17,500)
NVDA closed @ 39.55 on this day

Net Transactions: -$17,465+$425+$17,500 = $460
Brokerage = $14.95 * 3 + $0.27 + $0.01 = $45.13

Net Profit = $414.87

Money in trade: $8,520
ROI: $460/$8,520 = 5.4% (before brokerage & fees)

Some of you may be wondering I could have sold the stock for 39.55 and made $2,335 ($4.67*500). The answer to this question comes in a form of a question. “When you open a trade, how do you know what is going to happen in 15 days?”. What I effectively did was sell away my future profits which i may or may not have on the 15th June but definitely did not have on the 1st June 2007 to somebody for 85c

Anyways, now i’ve got cash… i’m going to look for a stock to do the same thing again. 5.4% return is pretty damn good in 15 days. If you guys want something safer than this try the TeleNet Saver accounts its currently Australia’s highest interest earning internet savings account @ 6.8 pa for the first 12 months. I highly recommend this if you have spare money and have no idea what to do with it!

For me i prefer 5-6% per month (60% – 72%pa) Just a little bit better than normal savings account!

Today is option expiry – also know as (aka) pay day

Firstly the Australian market got hammered today, it fell 70.4 points (down 1.11%) – in short the market lost about one week’s gain in 1 trading day! The best thing is that it doesn’t affect any of my open positions!

What my pay check for this month?

• LHG – made $854.70
• QBE – profit $1,190.60
• WPL – profit $890.60
• WBC – profit $785.90 (good thing I closed this one early yesterday!)
• ZFX – profit $450.38 (This is my Premium Cycle Stuff)
• NWS – rolled this out yesterday so more news on this next month

Pay Check for May: $4,172.18 – Net of brokerage before and interest and taxes (Obviously the Mr Costello and his mates at the ATO will get their fair share of this along with the bank who kindly lent me the money to do this)

Sad thing about all this is that I spent more time typing all this into my blog then I did making the trade! Hope you all have a great week! I’ll be looking for some trades next week to open for June expiry. If you have any optionable stocks that you think are good to do any of the strategies I useplease register and post on this blog.

As promised, I will be using my cash buffer to do the premium cycle to generate extra cash.

Today i opened a ZFX position. Firstly, I don’t have any shares, so the only thing I can do is sell somebody the right to sell me the shares at an agreed price. The share price was trading at around $16.5 at the time, so I decided to sell 1000 options to the market. This will give the market the right but not the obligation to sell me 1,000 ZFX shares for $16.50 between now and 24th May 2007. Nothing in life is free, so they had to pay me $0.545 per option.

This is how you buy shares at wholesale prices! Its crazy, somebody is paying me money to do what I want to do.

Sell 1 put contract, X = $16.50, and receive $545 (there’s brokerage of about $100, but who cares! you are still making money)

Yes, the brokerage is painful, however I am looking at using optionsXpress to do this in the future and the brokerage should be a fraction of that)

Nik Halik’s Share Lord will teach you all this exciting stuff.