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February Portfolio Income Report

 February 24, 2011 01:55 PM


Great month for all our strategies. With the market rallying higher (subsequently falling more than 5% this week) we have fared very well. This month we did not close out any trades early nor did we close out any trades at a loss.

As it stands right now we have a few very good March positions already working hard for us – but with the recent spike in volatility there will be great opportunities to sell options at higher premiums later on. I actually prefer volatile markets like this because it allows you to get further from the market and still make money!

Credit Spread Strategy: 9.49%

What a great month for the Credit Spread strategy – very profitable and back on track from last month. I think we did a really good job this month selling spreads below the market and letting the market rise which helped our positions. Our one Call Spread did get a little close at expiration but expired safely and profitably. Next month we will look to add more Call Spreads with the market falling.

[Related -Sector Detector: Caution Flag Stays Out as Stocks Continue Their Consolidation]

To re-cap this month's income, let's look at what we made in premium vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:

RUT 705/700 PUT SPREAD – $40/$460 = 8.70% Return

RUT 845/850 CALL SPREAD – $70/$430 = 16.28% Return

SPX 1,200/1,195 PUT SPREAD – $20/$480 = 4.17% Return

With regard to TOTALINCOME and RETURN, the February portfolio produced $130 of income after investing just $1,370 in margin. That means we saw a total portfolio return of 9.49% this month.

Naked Puts/Calls Strategy: 2.34%

[Related -3 Ways To Profit From The Inevitable Sell-Off]

Well as you can see our "Put Heavy" portfolio during February was very profitable and posed little risk. As the market rallied each position lost value fast which turned into profits for our members quicker than usual. Not always the flashy return, but it sure is consistent don't you think? Still more than a year and a half without a losing trade!

To re-cap this month's income, let's look at what we made in premium vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:

SPY 111 PUT – $27/$1,100 = 2.45% Return

IWM 69 PUT – $18/$690 = 2.61% Return

QQQQ 50 PUT – $9/$375 = 2.40% Return

IWM 66 PUT – $12/$660 = 1.82% Return

With regard to TOTALINCOME and RETURN, the February portfolio produced $66 of income after investing just $2,825 in margin. That means we saw a total portfolio return of 2.34% this month.

Iron Condors Strategy: 11.11%

Really solid trade for the Iron Condor portfolio this month. Since these are a little more complex, our members know that we will tend to only enter 1 or 2 of these per month. Ignoring the recent volatility following expiration, this was a great trade for the non-directional market. Next month we should see higher returns as volatility has spike considerable which helps stretch premiums.

To re-cap this month's income, let's look at what we made in premium vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:

IWM  69/70-85/86 Condor – $20/$180 = 11.11% Return

With regard to TOTALINCOME and RETURN, the February portfolio produced $20 of income after investing just $180 in margin. That means we saw a total portfolio return of 11.11% this month.

As we usually point out, our calculations assume that you enter just 1 (ONE) position for each trading alert. Those members with a higher capital base should be entering multiple contract positions each week to fill their respective portfolios.

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