Maksims Covered Call Options Forum

[bobwilliams]

Anyone tried Born To Sell's covered call screener? Although they don't make trade recommendations, they do offer a Top 10 list, which is the 10 most commonly held covered calls by their members. Currently the list includes: AAPL, MU, M, T, TGT, INTC, AMD, CVS, FB and MSFT. Curious about your experience with them.
Bob

[maksim]

Covered Call for BBRY.

Blackberry has been pretty good here. Right now see a really nice short term play.

Buy BBRY @ $10.64.
Sell Dec 2014 BBRY $11.50 calls for $.32 or so.

You have $1.18 upside in less than 3 weeks if BBRY closes above $11.50, and if not, a really nice premium.

[maksim]

Russian Covered Call Ideas, VIP, RSX

The chart on VIP looks pretty darn good, liking it, and I do own it outright in my 401k account. Will likely buy some in the money calls anyway as they are quite cheap.

The Covered Call contender is actually RSX, the Russian ETF.

Current Price 25.25

Looking at:

Sept $25.50 Strike @ $.85

Investment Required (Full Cash Basis)
Total Cost of Stock $12,625.00
Stock Commission:
Total Premium Received $425.00
Option Commission: $15.00
Investment Required $12,215.00

Results at Expiration Stock Unchanged
Value of Stock $12,625.00
Dividends received: $-
Initial investment: $12,215.00
Profit/Loss $410.00


% Return on initial investment: 3.36%
Annualized return: 49.01%


Stock Above Exercise Price
Exercise Proceeds $12,750.00
Exercise Commission:
Dividends received: $-
Initial Investment: $12,215.00
Profit/Loss $535.00

4.38%
63.95%

Downside Protection
Breakeven Point: $24.43
Downside Protection: 3.25%


Overall, while a 5% or so gain, the annualized return is quite good. October numbers on annualized basis just a bit lower.

Alternatively, this should work well on a Calendar Spread basis. That is you buy a longer term, in the money call, and write a shorter, high strike against it.

[maksim]

Howdy Folks! To the 5 Followers left. =P

Been swamped with everything else going on, in my financial services business and otherwise. Was away but now seeing some good ideas coming up for covered calls so will throw some up here.

Got a great success story with one of my clients that I will share too.

[Fred Kadiddlehopper]

Wow, this is a dead board. Even Maxim doesn't come around here! LOL
-Fritz

[maksim]

Covered Call Ideas for this week.

So getting some free time (ok... who am I kidding), so wanted to start up this forum again.

The theme for these are good companies to own, that you can write some premium on, will not be mad if they get called away, and as a bonus, all yield over 5% dividend!

1. STD - Banko Santader
Buy 100 @ 10.28.
Write 1 Sept 2011 @ 11.00 for $.40 premium,
Expected dividend of $.16 per share.
61 days till expiration.
Net cost $1984.95.

Profit if Unchanged $102.15. 5.15%, 30.79% annualized.
Profit if called - $246.15. 12.40%, 74.20% annualized.

Break Even $9.77, 4.97% downside protection.





2. LLY - Ely Lilly
Buy 100 @ 38.33.
Write 1 Sept 2011 @ 39.00 for $.42 premium,
Expected dividend of $.49 per share.
61 days till expiration.
Net cost $3799.95.

Profit if Unchanged $82.05. 2.16%, 23.88% annualized.
Profit if called - $149.05. 3.92%, 43.38% annualized.

Break Even $37.51, 2.14% downside protection.



Some non dividend paying Buy Writes

1. MTL - Mechel Steel
Buy 100 @ 24.73.
Write 1 Aug 2011 @ 25 for $1 premium,
33 days till expiration.
Net cost $2381.95

Profit if Unchanged $91.05. 3.82%, 42.28% annualized.
Profit if called - $118.05. 4.96%, 54.82% annualized.

Break Even $23.82, 3.68% downside protection.

[maksim]

Bought another 50 Jan 2011 $4 calls for $.05

[maksim]

Just an update. I am really liking the way the chart is coming together on this.

Purchased 50 Jan 11 $4 calls at $.05
Purchased 10 Mar 11 $3 calls at $.90

The largest firearms show is coming up in Vegas in Jan, right around options expiration.

[maksim]

SWHC - Covered Call June 11

For the firearms enthusists.
I love this company, they are making a great product at a great price. They are turning around the company, and a good long term holding, either for a turnaround story, or a buy out.

Buy 1000 SWHC @ $3.85
Sell 10 June 2011 $4 calls @ $.40 to $.50.

$3500 or so out of pocket, $400 if it goes nowhere, and $650 or so if called away.

Alternatively... for those that can... consider writing a cash secured put. Jun 11's for $.50

[Fred Kadiddlehopper]

Welcome back, Maksim!
I'll check in with you frequently.
Good luck!
-Fritz

[maksim]

Ah... Forex.

Just wanted to to update this. Forex went extremely well until it blew up on me. It was fairly easy to call the trend and get on the right side of it... I started I believe with $300 or so, and within a few weeks it was over $5k.

What blew up my own account... I was a bit leveraged, and there was a temporary spike overnight... when I woke up in the AM, I was extremly happy to see my call was correct, however came to login into the account and see that I was stopped out, and ended up being forced to take a huge loss. I was highly disappointed, especially since I had a fairly safe margin.

The issue with many forex shops, there is still very little oversight of the firms, almost as little as Credit Default Swaps. Meaning... if the fx firm says you were stopped out, there is little to no one you can plead with.

For that reason, got away from it.

Stocks, Bonds, Options.... I understand, and considering my past on Wall St... I feel I know the ins and outs of them...

Ooh, come to think of it... I can finally come out and say it.

I was a financial advisor/broker with UBS when the forum was started. =) So had access to great reports, and great colleagues, including former Options market makers helping me out with my thought patterns along the way.

I have since gone independent, and do these trades in my personal account, and a few friends/clients who want a tad more diversified approach. The vast majority is in managed money such as mutual funds, and third party money managers.

[maksim]

BKS Barnes & Noble Call Spread

Buy 10 April 11 $14 for $1.45
Sell 10 April 11 $16 for $.50

Net outlay is $.95

Max profit $1.05 ($1050)
Max loss $.95 ($950)

Break Even... $14.95

Barnes and Noble was just approached by Borders to be purchased for $16 per share. Giving until April for it to go through.

Disclaimer: I do not shares of BKS, however will likely be purchasing this call spread.

[maksim]

BGP Covered Call May 2011

Buy 1000 BGP $1.39
Sell 10 May 11 $2 Calls $.25

Total cost of stock $1,390
- Premium Received - $250
Investment Required $1,155


Results at Expiration
Stock Unchanged - 20.35%, 45.28% Annualized.
Profit/Loss - $235

Stock above exercise - 73.16%, 162.83% Annualized.
Profit/Loss - $845

Downside Protection : 16.91%
Break Even - $1.16

Total cost of stock $1,390
- Premium Received - $250
Investment Required $1,155


Discussion:

I really like Borders. It is a beat down stock, for reason. However I do believe they will survive. The management is serious behind it, and Pershing Square (Bill Ackman) ramped up his ownership stake to 37% of the company, and has agreed to finance the purchase of Barnes and Noble for $16 a share.

Disclosure: I am a long shareholder of BGP. Will be adding some more shares shortly, and some call spreads.

[maksim]

Ok.... Now I am back. =)

Just purchased my premium membership and will be back to run the show.

The goals are as they were... great growth and income with covered call and calendar spreads.

Will update later today some ideas I have for my favorite book seller... Borders.

[maksim]

To keep it brief... I am back.

Was quite hectic actually, but I am back.

Some familly issues, was part of the advisors who was laid off at UBS.

Still transitioning, but I am glad the covered calls we setup in Feb... all worked out pretty well.

[maksim]

Hey all, just an update.
Been extremely busy here in the office past few weeks. =)

MTL is back in action.

Overall grand scheme of things... market can rally 25% from here according to most managers I talk to.... but... and big but... the us economy still has serious issues, in terms of fiscal and monetary policy and would not be surprised to see dow hit 6k, s&p at 600.... but year end should bounce back and close above open.

[maksim]

NYB Covered Call.

Great shape vs all others. Took too steep of a drop.

[maksim]

Could be good, good luck. But be careful, lots of institutions may now be starting to roll out of treasuries as they have to rebalance portfolios. Since last year... treasuries became wayyyyy to strong.

[Fred Kadiddlehopper]

TBT chart: looks poised to roll over next week.
Plan is to use the put profits to buy back the covered calls at a lower price. After that, we'll see.
Good luck!
-Fritz

[Fred Kadiddlehopper]

In the mean time I bought TBT Feb 44 puts @ $2.00 today. I think it's topped out after a nice run and looks like it needs to pull back a bit, at least for a day or two.
Good luck!
-Fritz

[maksim]

Yes, odds are it will not be exercised until options expiration week, and most likely last day or two.

[Fred Kadiddlehopper]

Yes, saw the insider buys at BoA. I was surprised but in the end I think the large banks will bring more pain.
Bought some GG and will write some covered calls today if I get my price.
My TBT covered call was at a 43. It's now itm but the stock (at near 45) has not yet been assigned. Is it typical for the call holders to normally wait til expiration and let their bet ride?
Good luck!
-Fritz

[maksim]

knock on wood, going quite well, quadrupled my account so far.

What I am finding is that technical analysis is working very well in fx as expected considering it is a far more liquid market where 90% of the volume is institutions, as opposed to the stock market where six pack joe is freaking out.

Trading off of Bollinger bands (both 1 and 2 standard deviations), as well as macd and cci.

As far as stocks. Still holding my UYG calls. Ford is a good buy write.

Looks like market is going to calm down and perhaps put up some good numbers.

Did you see the article on BoA execs loading up on shares past few days? at $5 a share for BOA, $3 a share for Citi.... scary, but can be scary good upside long term as long as things get back t o at least normal in grand scheme.

[Fred Kadiddlehopper]

How's the Forex going for you, Maksim?
I just signed up for a practice account. Trying to familiarize myself with the interface and charting setups.
Looks like it could be fun and profitable but I'm proceeding cautiously.
Good luck!
-Fritz

[Fred Kadiddlehopper]

Yes, with T-Bill rates so low there is very little down side risk with TBT, IMHO.
-Fritz

[maksim]

Nice.... great pick. One of the commentaries I read today was on the reversal pattern in the treasuries. It is a bubble that will blow up... just a question of when.

Oil blew up, real estate, tech, over leveraged hedge funds....

2009 bubble will be treasuries.

[Fred Kadiddlehopper]

Sold TBT Feb 43 covered calls for $.95 today. Should be able to reel them back in a few times before OE next month.
This is my second go at this on my TBT holdings. So far so good.
-Fritz

[maksim]

there is always tomorrow.... but perhaps the obama bounce will happen once he is office. Who knows. it is all bucket 3. From our traders at the floor, just a lack of buyers out there right now.

Some of the best deals to be had though are corporate bonds paying nice yields, and munis yielding long term returns of the market.

Will post more on forex a bit later on.

[Fred Kadiddlehopper]

I got smoked on GE and qqqq calls as well. I over-optimistically commited to an anticipated "Obama bounce" in late December. Seemed like a good idea at the time LOL.
I'm intrigued by your foray into Forex. What's your strategy? Just playing the Yen swings?
Good luck!
-Fritz

[maksim]

Just an update.

wow, what a week. Just been busy at the office and didnt really have time to post.

Talk about call options being taken out. =P Looks like I am done on the AUY and GE calls, good thing it wasnt a large percentage of portfolio.

CY saved me and basicly broke me even, slightly up for the month by playing the Calls on the way up, and the puts on the way down. Will see tomorrow if to close them out or to move it out to Feb or March Puts.

Ford covered write is doing well. BGP as a stock is holding up pretty well, still not able to be filled on the Jan 10 $2.50 calls for covered write at $.30.

Lately been playing with the forex micro account, up nicely on the account, not going to post here exactly but easily doubled.

Initial impressions.... much better and more fairly priced so makes technical analysis more sound.

As far as speculating stocks... will just keep doing the covered calls, and covered call UIT's. If there is one guarantee.... time value on options goes to $0 at expiration.

[maksim]

SAY Covered Call
Current Price $1.19, sell July $2.50 for $.65
87.4% if unchanged, or 171% annualized
293.70% if called, 576% annualized.
$.64 Break Even, 46% downside protection

It is a gamble... depending on how bad the books are cooked.. but gives some fat premiums. Proceed with caution

[maksim]

Just started playing with it yesterday... put in my $50, and got the $25 dollars from CNBC and started playing with it...

not bad. got up to $100. May throw in 1k or so and open up a full fx account that has slightly lower spreads.

Since the fx market is the most liquid market... should be better for trend. With the leverage involved, a small move in a matter of a few mins can yield some good results.

Will have to do more digging.

[Fred Kadiddlehopper]

Interesting, Maksim. I haven't tried my hand at forex. You play in that arena also?
-Fritz

[maksim]

Thanks. Yeah, I think the Citi/Morgan deal will be good news for market. plus options expiration, can be pretty good.

Had a guy on bloomberg today be pretty bullish.

Also, fyi, CNBC is offering free $25 to try FXCM Micro forex, just sign up for the million dollar challenge on cnbc, and it will be there a link.
http://www.forexmicrolot.com/cnbc.jsp

[Fred Kadiddlehopper]

GE open interest for JAN $17.50 calls is over 88,000 contracts.
I bet we get pretty darn close to that strike as the week wears on. Should be interesting.
Good luck!
-Fritz

[growacet]

Hey back....

Yeah, a big blast from the past...blogging away these days:

http://gordiecanuk.blogspot.com/2008/12/penny-stocks-playing-with-fire.html

[maksim]

Yeah, for $.05..... lol, will just keep them. Both AUY and GE are losers for me for this month. CY were 5x multiple winners, as well as BGP.

AUY, less gold skyrockets, is probly lost, if i can get out for like $.10 next week, i would. GE will be close I feel.

[Kamillion]

u still got auy calls?

[Fred Kadiddlehopper]

I bought back my TBT covered calls a few days ago for a 20% gain.
Spent the better part of today looking to sell some more but was waiting for TBT to show some life before going to market with them. Of course, the day came and went and TBT just sagged like an undercooked cake. LOL.
-Fritz

[Fred Kadiddlehopper]

:>)

[maksim]

hit enter to submit message before completing it. =)

[Fred Kadiddlehopper]

To get back on goal ???
Not sure what you mean.
-Fritz

[maksim]

Your welcome. To get back on goal....

Looking at a few Buy Write candidates.

SWHC - Smith & Wesson $2.79, a little overbought now, but in uptrend, wait till pulls back to $2.50 or if gets oversold around $2.

CGW - Claymore global Water $14.06, NAV $14.22
TAN - Claymore Solar ETF $8.91, Sell Feb $10 calls for $.70 or so.

[Fred Kadiddlehopper]

Got it, thanks. So as far as today's lesson learned:
options offered without a time premium are an example of mis-pricing by the market and are to be given a close look as a potential buy.
Thanks again and good luck!
-Fritz

[maksim]

I paid $1.10 for the put, so if it goes up... most i can lose is my $1.10. I would have a stop loss on it, or if trend goes up.

Also, what I can do, is buy some out of the money calls to cap my downside.

[Fred Kadiddlehopper]

Yes, I was with you on the reason for the put, i.e., that CY was overbought. I confirmed that chart wise and in comparison to other techs like INTC, NVDA, and CSCO, all of which already had their pullback.

Thanks to your comments I see that there is no time premium in the price. However, you do continue to risk a loss if the pps goes higher, no? Concretely, what would be your strategy if, in the next week, the pps goes to $5.90? How about if it goes to $6.20?

Thanks again. Your comments are very instructive.
Regards,
-Fritz

[maksim]

I am risking things if it goes above $4.90. There is one week to go before expiration, CY was $4.90, and I bought the $6 put for $1.10... meaning, I bought the put without paying for any time premium.

VS... in a covered call, we write calls to callect the time premium. So in the put situation, I bought it as if it ended today.

As far as why I went opposide side of the trade in CY... It went up a little too much too fast, the occilators are overbought, RSI is turning down from overbought, and MACD is starting to reverse.

Since I purchased an in the money put... I have more downside protection vs buying at the money, or out of the money.

[inflationista]

the premium offsets the difference between the current pps and the strike.

if it goes over the strike he picks up the shares and locks in profit selling them.

[Fred Kadiddlehopper]

Maksim:
I'm trying to understand your CY put transaction. I assume that I am correct that if the pps goes below $4.90 then the value of your puts rises. (That much makes sense to me LOL!)
But if the pps rises you are not risking anything (other than commission) because ???
Thanks!
-Fritz

[maksim]

Bought 10 CY $6 Jan Puts for $1.10, with it trading at $4.90, my only cost is the commission with no time premium that i paid for, with 1 week to go.

Look at the chart, looks like a bit of a top has formed.

Also, BGP is looking like a good buy write, speculative, but a good one.