The Challenge to Keep it Simple

It should be so easy.

Time adds to the value of any contract. Here is where “not-so-simple” begins. Time is an extrinsic value. Intrinsic value is easy to see with simple math. The difference between the current price and the price you paid is the intrinsic value. They say, “Time is Money.” I can think of no better place to demonstrate this concept.

Enter a contract with a “drop-dead” date and make a decision before it expires. Simple, right?

Selling a July CALL on AFRM and agreeing to sell hundreds of shares purchased for under $32 will net a significant profit.

If you believe the price of AFRM will be higher than $32.50 before July 19th, you can also buy the CALL contract one strike higher. 

My mistake was introducing the idea of a spread (see the blue text above and the text of my email message in the image below).

Trading involves a lot of psychology. Your mind will sometimes work against you, asking questions to express doubt about your intentions and expectations. Write those down. Do your own research on the value of keeping a trading journal.

Your questions may be answered in one of a few ways — by someone who claims to have answers, by your own mind (conversations with yourself are wonderful!), or by the market when it shows you what comes true later. Keep a journal and learn from your mistakes, as well as learn from your success. Write down the answers, and keep track of the sources of those answers. Do things that generate profits.

Here is an image of the message I sent on Monday morning.

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