Covered Calls

[choad]

CROX Looks like the principals are buying this one. The 250 should be 250k.
http://investorshub.advfn.com/boards/read_msg.asp?message_id=28032130

[Joe Stocks]

Be sure to follow up with your trade. I am very interested.
TIA

[gtober]

Hmm.

FXI Jan 2010 Strike $100 LEAPS. Buy at $48.

Immediately sell May 2008 Strike $140 calls for $8.80 and almost eliminate the TP in the LEAPS entirely.

or

wait for the LEAPS to go up and then sell May/June calls and have no TP in your LEAP position. And it can just pay you money every month for a fraction of the cost of the common.

I will look closely over the weekend and dip in maybe next week.

[jwalk]

Yes, that definitely needs to be one of my watch candidates. Thanks for that, Joe.

[Joe Stocks]

I think FXI is a wonderful covered call candidate. I believe strongly in China's future, and FXI would be one I would not mind owning lower. Another that is interesting is PGJ. Cheaper and not so big a bite out of the portfolio for 100 shares if you have a small starter position portfolio. I have 200 shares in the $25,000 starter port I am tracking here.

[jwalk]

FXI calls
Pretty late in the day for me to be mentioning it, but this morning I did finally sell the FXI Apr 135s for 8.50. Tried for 9, but after the first half hour, it was evident I wasn't going to get that. I'm thinking that if FXI trades back down to the 130s in the next few days, I will buy them back. Might be able to do a couple of trips this way.

[Joe Stocks]

YGE - Bot @ 18.55. Sold the May 20's for 2.00.

Solar stock with very low projected PE.

[blackcat]

ELN - I own a very LT position, which I write calls against only above $25, and also a trading position which I write monthly calls against. I agree with buying back for cheap a few days early to get more premium for the next months calls.

I wanted to point out ELN because it's one of those few with the $1 stikes. Close today was 21.26. For Apr, there are the regular stikes up to 12.50, but then there are 14, 15, 16, 17, 18, 19, 20, 21, 22.50, 24, 25, 26, 27, 28, 30, 35, and 40.

Regards,
Cat

[Joe Stocks]

TMA has about 28.75mil in preferred stocks outstanding in series C,D,E,F. Volume today is 1.1mil across the board for all. Not a big move to get in or out with the news today.

I don't see any reason why someone would take the tender offer to get out at $5 unless you felt these guys are going BK. Me thinks they will have to sweeten the deal to get takers.

Just a thought.

[gtober]

Iron Condor Paper Trade. May as well learn this right now.

NEM April options.

Buy April 42.5 put, sell April 45 put. Net gain of 0.71 (1.36-0.65)

Buy April 52.5 call, sell April 50 call. Net gain of 0.45 (0.95-.50)

I realize that writing combo orders will likely yield better overall premium.

Total collected premium is 1.16
Total potential loss is 1.34 (2.5-1.16)

Right off the bat, the thing I am most uncomfortable with is the nearness off the strikes that I have written the options against. To me, the loss seems very likely.

However, in order to mitigate that risk one has to go further out in strikes and the loss of premium is significant.

[gtober]

I would like to learn more about exactly those types of strategies. bull and bear spreads. I have looked at many stock and index options and it just didn't seem all that profitable to me, so I need to know more about exactly what to look for.

I have been thinking about buying Larry McMillan's latest options book, but I read reviews that it was long on theory and short on trading strategies, so have held off.

If you know of a good book, let me know. These are definitely strategies to learn more about. So much so, that I am wondering why I would even own the common at all. However, I do need to know precisely how to evaluate the numbers and maximize the profit.

[gtober]

I don't have any specific rules about the timing, just that I have found it to be more profitable getting a bit ahead of the crowd. Of course, if you're looking to do a play and get taken out at expiration, you can't roll ahead. The thing is, the market makers know this and I have seen it where the last couple weeks before expiration have no time premium left. If you let the trade sit, you're allowing the next month's TP to dissipate before you actually write them. So, I just do a calendar spread trade on the options and roll ahead.

To be fair, I have also seen where that TP holds on for dear life too. And, to be honest one can also get themselves into trouble doing this. So, each trade has to be evaluated individually.

[Joe Stocks]

Good ideas I will be watching. Look at CSIQ and SOLF. Up 13% + each.

I haven't posted much about CSIQ here. Think I did on my other board. Hard to keep up as I do at least 5000 transactions a year now with covered calls added to my regular trading. Anyway, solar stocks have a good potential upside here IMO. Very nice premiums.

[jwalk]

I saw. Very nice. I've been trading it with some success, but I like your buy/write better. I have my current batch from 134.5, trading other shares in the 120s.

Some others to consider, but not right now:
GS if they knock it back down to the 150s.
UYG at or below 30.

Gold stocks if/when HUI gets to 380.

[Joe Stocks]

gtober, As you know I have been a subscriber to OptionInvestor.com for years. They have a section there that deals with 'Iron Condors'. They call it their "couch Potato port'. They just do a couple trades per month. Here is a the email they sent out to subs recently. I watch them every month but have never followed on onf their trades.

Fwiw...

59 OUT OF 64 & NEW SEMINAR DATE!
By Mike Parnos
What can I say? We're doing well - very well. We just notched profitable month 59 out of 64. There was chaos in the market virtually all cycle long, but our positions were strategically placed and we never got close to being in trouble. The directional traders sweated out each tick. Some of them may have made out well, but may have less hair. The others are about to register for government cheese.
Actually, we're on a seven-month winning streak. That shouldn't come as a surprise to regular Couch Potato readers. That's what is supposed to happen.
We pocketed a total of $3,550 for the cycle. (See synopsis of March trade details below). The Couch Potato Traders is promoted as a "hands off" style of trading. Well, this month was the perfect example. Despite a ridiculously volatile month, the indexes never even came close to our short strike prices. It's sure nice when things work out as planned.
Quickie Update
When you're hot, you're hot. All of our quickie trades were profitable. Our two Iron Condors expired worthless and put a total of $6,200 in our pockets.
The March quickie SPX 1365/1375 and 1255/1245 Iron Condor brought in $3,300. The March quickie RUT 710/720 and 640/630 Iron Condor brought in $2,900. Piece of cake. A risky piece of cake, but a piece of cake none the less.
Also, as reported earlier, our third quickie - the 1315 short straddle, was $1,900 profitable. We closed the position after just a few days and locked in the profit. Those who may have held the trade through settlement profited by about $4,600.
Are You A Newbie or a Veteran?
Are you new to the Couch Potato Trader? Or, are you a Couch Potato subscriber who wants to find out, in depth, how we are able to achieve these results on such a consistent basis? Consider attending one of my two-day advanced seminars. It's an experience you won't soon forget and you'll get information that can last you a lifetime. It's like going to trading school. Are you serious about trading? Are you worth the small investment? Only you can answer those questions.
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NEW SEMINAR DATE - LAS VEGAS - June 21 & 22
I just finalized the details!! I will be presenting a two-day advanced CPTI seminar in Las Vegas on June 21st & 22nd (Saturday & Sunday). Come on down!

[Joe Stocks]

I did a buy/write on FXI yesterday for a couple accounts.

[jwalk]

I will trade out of the calls if the stock drops back into the 50s. Very nice premiums on this one.

I have SOLF and have a sell in for the Apr 12.5s @ 1.50. Looks like it could get there today.

Also looking at FXI, the Apr 135s. Don't have an order in, but I'm thinking I could perhaps get 8 later today.

I traded DUG, but not the calls. Have an order in @ 39.50. I'd write calls if it spiked.

[Joe Stocks]

SMN - Long at 38.70. Sold the APR 40's for 2.50.

[Joe Stocks]

(DRYS) Interesting. I haven't thought about the shippers. I will take a look although I see a slower world wide economy ahead and think transporters of all kinds will see weakness.

Good luck with it. Hmmm....the 60's give better downsiode protection and if taken out at 60 still offers a nice 6.4% return. Downside protection to 56.

Thanks for the idea.

[Joe Stocks]

New port trade. Mar 25 LDK calls expired worthless for +1.80. I have another 100 shares in LDK with Apr 20's sold. I bought those back today as the premium was getting squeezed out and sold 2 contracts on the 200 LDK shares for the APR 25's for 2.30.

If this was not my 'Covered call only' post I would have probably held off as I think Solar may have the wind behgind their sails and could go higher before selling the calls. Yet, that thinking has gotten me in trouble before and the holdings of this port are to stay 'rented' 100% of the time.

[jwalk]

DRYS
Sold Apr 65s for 4.50

[caddman]

TMA - my 2.50s expired. Looking to sell another set of 2.50s on the pop today if TMA can get above 2.00.

Scott

[Joe Stocks]

gtober, Good points! To be honest with you this small account is not getting the attention that it should. I agree completely with what you are saying about timing and managing the trades. I pour over my accounts daily looking for ops to squeeze out some profits. Thursday I made several transactions in my larger accounts to take advantage of the long weekend time decay. I wanted to post those ideas then but ran out of time.

I am surprised you are 2-3 months out. I thought the percentage gains were best about 5 weeks out to the last week of expiration when premiums run out fast. I will have to look at the premiums closer.

I am very interested in your strategy. Please keep posting your ideas and thoughts. You have been doing this longer than I. Thanks for your participation.

[gtober]

LOL. Ok, got it. One thing I might add is consider not waiting until expiration. If it is apparent that the option will expire worthless any way, buy it back for little to no time premium, and re-write the next month when there is still a really juicy time premium. If you are spinning your wheels for just one week per month, you're losing potentially 1/4 of your earning power.

One thing I have found is that covered call writers are cheating themselves a bit by waiting around until expiration. There is time premium to be had. Truth be told, in my options portfolio - where I basically buy and hold and write options (or trade) around the position - I am usually 2-3 months out on expiry. That's where the best time premium is, and is the sweet spot in terms of TP degradation.

This is much more easily done if you are planning on keeping the stock for some time, however. If your just 'trading' this is more difficult to time properly.

[Joe Stocks]

SOLF - Long at 10.50. Sold the APR 10's for 1.65. Solar also beaten up and due for a bounce. Several folks I follow recently talked of getting back into solar. Solar strong today. FSLR up 8.5% today.

[Joe Stocks]

DUG - New port position. Bought back at 40.50, 100 shares. Sold the APR 40's for 3.00. I need/want a bearish position for the next month. DUG seem to fit the bill for me as I think crude oil stocks may underperform as the world looks to possible economic slowing.

[Joe Stocks]

PGJ - New port position. Long @ 23.68 , 200 shares. Sold the APR 24's for 1.10.

China index ETF. China has been beaten up enough. I think China stocks in general are well positioned here.

[Joe Stocks]

CROX - New port position. Long @ 18.11 100 shares. Sold the Apr 17.50's for 2.00.

CROX are still hot. We are adding the line to our hardware store. We tried knock-offs but people want the real thing. Forward PE of 6 (I could see it going higher, but still cheap) with revenues growing 99% last quarter.

[Joe Stocks]

gtober, I don't have anything that is long term buy and hold in any of my accounts. Everyday they have to justify staying part of the JoeStock's Stock Pack. <VBG>

Anyway, if the covered call expires with the stock out of the money I may sell calls for the next month or sell the stock. I had pTEN in one of my other accounts. It expied out of the money, and I did not like the pricing here to sell new calls, so I let it go. I made several trades this am that I will post soon.

[gtober]

Do you have stocks that you are buy and hold in this portfolio? That's a bit different from what I thought you were doing, but good to hear. Somebody is listening. LOL.

[Joe Stocks]

DUG - DUG shares called away from me on March expiration. My $25,000 port now shows a balance of $25,833 with positions in LDK, CFC, and ADS. I also had a call position in LDK expire OTM so I will be writing a new call today. In this port only my plan is to keep calls sold on all positions, all the time.

[gtober]

www.optionmonster.com

Good site with lots of information. Strategies, trading ideas, data.

[cy esp]

covered XOM, missed NFX cover by a dime.

[skono4]

NDN buy @10.00 sell June $10 calls @1.30

[cy esp]

sold CC on XOM and NFX this afternoon, bought back CCs on UPL and DVN this am.

[Joe Stocks]

Wanna make 10% on your money over the next month?
CFC @ 4.60. Sell the April 4's for 1.15. If CFC trades anywhere above $4 on April 18th your return is 10.9%.
Risk. CFC would have to trade below $3.50 to lose money

CFC has an offer on the table from BAC to buy at 6.84.
CFC is currently selling for just 19 cents of every dollar in book value. Worse case you make nothing and own CFC for $3.50 per share, 24% less than what the stock is selling for now.

Just an idea.

[Joe Stocks]

TMA - Covered call. Long @ 3.25. Sold the April 2.50's for 1.50. 23% return in 39 days if taken out at 2.50 or higher. Downside protection to 1.75.

[Joe Stocks]

CFC - Covered call. Long @ 4.97. Sold the April 4's for 1.50. 10% gain if CFC closes above $4, 38 days away. Downside protection to 3.47.

[Joe Stocks]

DNDN - Dendreon: FDA To Amend SPA For Phase III Trial Of Provenge

By Saba Ali
Last update: 7:52 a.m. EDT March 12, 2008

Dendreon Corp. (DNDN) said the Food and Drug Administration agreed to amend Special Protocol Assessment for the Phase III IMPACT clinical trial of Provenge, cellular immunotherapy for the treatment of advanced prostate cancer. The Seattle biopharmaceutical company said the amended SPA accelerates the expected timing of the final IMPACT results by about one year.

[Joe Stocks]

New Port Position - TMA - 1000 shares at 1.55. Sold the April 2.50's for .45. Small speculative play. I think TMA main problems have lessened here with this mornings Fed actions. Protected down to 1.10. 29% return if 39 days from now at the April expiration if TMA is still here at 1.55. up to 93% return if TMA closes anywhere above 1.55 to the 2.50 strike.

[opnion]

Hmmmmmm! So they either wouldn't mind owning DFS at about 7 OR they are really bearish. I would think that if they were really bearish they would have sold naked calls. Have to see what develops, I could see it going back to test the January low but 7.50 may be a stretch.

[JimQuinceH]

Joe, On March 5th, somebody wrote 26,000 DFS January 2009 $7.50 (strike) PUT Options for 60 cents each.

They must not expect DFS to go that low. I hope not since I am long 400 shares.

Jim

[gtober]

I think they already have. The worst thing for the USD was that stupid inter-meeting cut. Even if one believes we are in a recession and a long term bear market, there are still going to be many rallies along the way. Look at this chart. We are due one of those runs into resistance. Where the 10 ema closes the gap with the 40.

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=1990-01-14&id=p91162395753&a=127945037&listNum=1&listNum=1

[Joe Stocks]

lol! >>but how do you short something with that much strength?<<

Play it against something that is so weak. These groups are very dollar sensitive. Seems like someone has to support the dollar soon. You know the FEd with not let it go straight into the gutter.

[Joe Stocks]

BTW, LDK speaks tomorrow at some conference.

[gtober]

You're right that the chart looks good for a rise, but I am leery of anything short right now. Maybe golds and oil, but how do you short something with that much strength?

Then again, didn't someone say that about AAPL and GOOG a month or two ago?

[gtober]

I am getting less and less faith in fundamental analysis as time goes by. They all seem to be smoke and mirrors. They are all quickly becoming nothing more than flashing lights that deposit money into my account. :^))

[Joe Stocks]

BTW, Bought some SMN (ultra short etf for basic materials) fri-Mon at 36.55 and 38+. Looked like it was ready to bounce. Thought it would be good for CC's but calls are very thin with wide spreads and not worthwhile IMO.

[Joe Stocks]

Fundies look very good for it. I have some from much higher that I have been selling calls on. I thought it was cheap at 40, BWTFDIK

[gtober]

Wow, quite the sell-off there. I think I will join you if it hits 22 and change.