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JLS

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Alias Born 12/14/2004

JLS

Re: None

Friday, 07/14/2017 1:52:46 PM

Friday, July 14, 2017 1:52:46 PM

Post# of 10
Covered Calls on VRX,

Note to option newbies: never sell uncovered Calls!

CCs on VRX have been working great for the last three months. One of the reasons for that is that VRX has been trading rather predictably and is stair-stepping higher (which never hurts). Your shares get assigned at a price higher than purchase price? Who cares? You just made a profit after the assignment of your shares, and on the options you sold. Just repurchase the shares on a small dip and wash, rinse, and repeat.

Another reason it is working great is that VRX has a new CEO who has been restructuring the company to reduce debt and get better terms on debt. That is the fundamental force behind the rising shares.

Another reason it works great is that the option's IV is rather high, currently at 74. That's high compared to most stocks, and the stock is simultaneously moving higher, because the informed investors like the results of the restructuring efforts.

Do you trade TNA/TZA because they are 3X R2K and you like the 3X volatility?

Sorry, but I think that's not going to make the cut. TNA's current options IV is only 33. That's less than half of VRX's IV of 74. So, if you do your options trades in the best way you can, you'll double your income over what you're getting with TNA.

The dotted yellow lines are the resistance levels going forward. The solid Sup/Res lines are now support. I don't see much resistance between here and 22 that is nearby history.



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