I would like to see other opinions about what is the best strategy when the price of the stock is lower then the strike price at the expiration date. Early April, I sold a put contract for JNJ at 150 on 04/19 for $1 premium without realizing that JNJ has earning day in the same week with the expiration price. The earnings where not so good and the price dropped at 145 on Friday, 04/19. Here were my options: 1. Get the shares assigned at 150 and keep the 100 premium. Start selling CC or wait for the shares to recover and then sell CC 2. Buy back the contact for a 400 loss ((150-145)*100 + 1*100) 3. Roll over to another expiration date and get additional premium I did the third option and I rolled over the contact for same price 150 on May 24 (one month away) for an additional 185 (1.85*100) premium. Even seems a good action (285 premium) the risk is if the stock goes even lower and it might be a big loss. Any other suggestion of what could do to minimize the potential loss?

My wife will be giving birth soon. So I will be slower in terms of responding in the community. As we welcome a new member into our family, ​it is good to consider the plan for the next 20 years, especially university tuition. ​I expect the tuition cost will increase by at least 2-10x in the next 20 years (due to inflation and competition). This is why I plan to invest early when the child is between 0-5 to cover the university tuition when the child is 18. ​Based on my calculation, if I can put away $10,000 per year for the first 5 years of the child's life, it will take care of the university education and housing cost in the future using my long-term strategy. For such long-term strategy, you want to ensure it is a set-and-forget strategy. You want to ensure that the long-term average return meets your expectations (For example - I aim for 15-30% per year) While timing helps, it is more important you have the discipline to contribute early on ​and let compound interest work for you.​​​​​​​​​​ Are you thinking ahead for your children's future?​ Cheers, Eric ---- Eric Seto Chartered Professional Accountant (CPA) Chartered Investment Manager (CIM) Founder of 5MinInvesting.com Free webinar - how to get 30%: https://5mininvesting.com/free-case-study/ In May, my goal is to help 20 people without a financial background to master investing. Investing Accelerator is designed for people without a financial background. The goal is to achieve 30% return per year. In the first phase, you will learn long term investing and targeting 30% for tax free compound growth. This will help accelerate your overall wealth. In the second phase, you will learn monthly passive income to provide a more predictable cash flow (target 30% per year) which can cover your expenses. This will help accelerate your retirement goals. If you are interested, then let's hop on a call to see if you can benefit from the strategies in Investing Accelerator and get 30% per year.

When it comes to earnings, hedge funds have poured millions in trying to profit/predict how earnings would go. The opportunity for AAPL is quickly coming to an uncertain area where price can either go up or down. Here's how I think about it. 1. Previously, AAPL got downgraded in the beginning of January which caused prices to go down. This makes AAPL getting a jump after earnings highly likely. This is also why I entered at $182. 2. Two days after I entered, Bank of America upgraded AAPL to $200. This caused the potential value gap to close quickly. The price shot up ​to $195 as I am writing this email. 3. This pushes AAPL to all-time high which ​is also a major resistance area $200. I expect that price will likely be near $200 as there isn't enough momentum to push past this level. ​This is where AAPL is in a pickle. If AAPL ​​​​​​​​​​is at $180, $185, I am sure most investors think that it will be a no brainer and invest. If AAPL is at $190-195, some investors will still invest. But AAPL near $200, this is where a good % of investors will wait and see (hoping for AAPL to drop back down below $180 to re-enter). (You know this, I know this and hedge fund knows this)​ So now you understand the psychology of AAPL investors. $180 a steal, $190 is okay but $200 will wait. This also means there is a lot of buying pressure at $180-190. This also means that you will not likely see $180-190 anymore. This also means that if AAPL earnings is good (or surprisingly good), ​then AAPL will not drop back to $180 anymore. ​​​​​​​​​ ​ That's how I think about AAPL's upcoming earnings.​ Cheers, Eric -- Eric Seto Chartered Professional Accountant (CPA) Chartered Investment Manager (CIM) Founder of 5MinInvesting.com Free webinar - how to get 30%: https://5mininvesting.com/free-case-study/ In February, my goal is to help 20 people without a financial background to master investing. Investing Accelerator is designed for people without a financial background.

I have a few trading accounts most follow the calendar spread. Returns beat the market on a yearly basis. I have one that does not do to IRS and brokerage limitations. I am not able to do spreads. I can buy/sell, cash secure puts and covered calls. I tweaked this account to only trade leaps on five companies, rebalance anytime the option price lets me sell or buy with staying at the set allocation balance that's established each calendar year. To my surprise this has done dramatically better up 94% for last year, and already up 24.21% Everyday we are learning and new methods can be developed. If I see another double this year big changes will be coming..

Recently @Eric Seto made a post about Sharpe ratio. You can see we had a short exchange on that with Eric. At the same time there has been some posts / exchange on LULU. I wrote about my bull put spread trade that Eric commented to as risky. Do you guys want to have a discussion on risk management and use LULU as an example? Collectively analyze LULU from the time Eric made a pre-earning post and where we are now.