Saturday, February 2, 2013

Mini-Options Set to Begin Trading

Mike Scanlin, CEO at Born to Sell (see link below), sent me a note calling attention to the fact that CBOE is going to begin allowing the sale of “mini-options” in March.  There is plenty of background on the internets as to how they came up with this strategy, but essentially, it targets high-priced stocks (over $150/share) and will allow trading on odd lots of 10 shares.

Mike’s post highlights the fact that there 22 S&P 500 stocks trading at prices of over $150 per share – AAPL, AMZN, AZO, BIIB, BLK, CF, CMG, CRM, FLS, GOOG, GWW, IBM, ISRG, MA, NFLX, PCLN, PCP, PSA, RL, SHW, SPG, and V.  However, it looks like only five of them will have mini options contracts available when this trading starts on March 18:  AAPL, AMZN, GLD, GOOG, and SPG. 

Because my trading plan limits me to choosing stocks rated as 4 or 5 stars by S&P, of these five, I could add AAPL or SPG to my portfolio – and I will look into it!  From that broader list, if the contracts were available, I could also choose BLK, FLS, GWW, IBM, PCP, and PSA.  So there is some promise here for the Rescue My IRA portfolio!

My next step will be to check in with Scottrade to make sure that mini-options will be offered in my accounts there. 

Here is a link to Mike’s Born to Sell blog post on the topic:  https://www.borntosell.com/covered-call-blog/mini-options

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