"An Approach to Successful Stock Trading Combining Company Fundamentals with Chart Technicals"

Sunday, March 23, 2015


The Married Put Trades with TSM Stocks

Married Put Strategy (MPS):  TSM stock trades (building capital) are executed over the short term: on average, each trade takes 6.7 days. The TSM Short Put trade (generating income) will average less than 30 days. The third leg of the TSM system, the Married Put trade (income and capital in an iffy market) will last 6 months or longer. In an uncertain market, you want to use strategies that hedge risk, and that's what the Married Put Strategy does.


The MPS marries a long TSM stock position with a long in-the-money Put.  It's goal is to generate income and capital in a risk free way.  It's a simple concept, probably best seen by an example.  See the following table.



1 - MGA, an Example of the Married Put Strategy  (Complete 3/31/15 for 9.76% Annualized Yield Over 99 Days)

  • TSM stock that I'm willing to take a 400 share position (trading at $106.67 on 12/26/14)

  • 12/22/15 - Buy 200 shares and 2 long Puts (June $110 strike) for $9.90

  • My per share cost: $106.67 + $9.90 = $116.57 plus $4 commission for the two trades ($21,334 invested in the trade)

  • The long Put guarantees me that I can exit the trade at the June expiration (6 months from now) for $110 so I really start the trade with only $6.57 per share at risk, and my goal becomes to generate cash to eliminate the entire risk

  • 12/22/15 - Immediately, I sell Calls ($1.30) and sell Puts ($0.75) {potentially build the 2nd half of the position} to reduce my risk to $4.52; note, on a per share basis, the commission for each of these trades costs $0.01

  • 02/20/15 - As the trade progresses, I buy those short positions back and sell more so by February, I had reduced my risk to $1.32 as MGA's price had fallen back to $103.97

  • 02/25/15 - Five days later, as MGA's price had climbed to $110.03, I rolled the long Put (June $110) up to the June $115, which generated more income ($2.06)

  • 03/17/15 - Rolled the $115 long Put in to the April $115 Put, which again generated income ($1.45); at this point, I was $2.31 beyond a risk free position, i.e., MGA could fall to zero, and I would still earn this amount

  • 03/27/15 - I received a $0.44 per share dividend

  • 03/31/15 - I closed the position:  sold the long Put and the 200 shares (note, MGA split 2 for 1 when it paid the dividend, but I did not show that here for ease of computation

  • I ended up making $2.82 per share, while MGA shares increased $0.57 from $106.67 to $107.24 during these 99 days




       2 - UVE, Another Example of the Married Put Strategy (3/18/15)



Richard Miller, Ph.D. - Statistics Professional, is the president of TripleScreenMethod.com


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It should not be assumed that the methods, techniques, or indicators presented in these pages will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these pages are for educational purposes only. These setups are not solicitations of any order to buy or sell. The author assumes no responsibility for your trading results. There is a high degree of risk in trading. I am not recommending that you purchase or short stocks or options using the techniques and methods presented in this report. Trading should be based on your personal understanding of market conditions, price patterns, and risk. I present here information to contribute to your understanding a technique that has worked well for me.