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Nice it seems someone else was mentioning hedging their options on the same stock. I'm really liking this options thing (my first one ever bought last monday) due to not having to tie up your cash or margin holding the stock instead just buying the option plus the chance for much higher %'s or losing (was hating it last night when the Senate didn't pass the automakers bill) luckily we closed green.
Calendar Spreads/Option backed Covered Calls
Ford
Long Jan 2010 $2.50, Short Dec $3's (first month)
UYG
Long June 09 $7, Short Dec $7's (Second month now)
Long Calls
CBI - Jan $12.50, (Cashed out my base when it popped, now just letting the profits ride)
CY - Jan $5
Don't mind a bit. Holding
PCX JAN 7.50 CALLS
UYG JAN 5$ CALLS
URE JAN 6$ CALLS
I like all 3 of these and used to trade the stocks alot especially PCX and UYG have been good to me. So what options are you holding.
what are you holding if dont mind me asking?
I agree I'm holding all calls
Good stuff, congrats.
I have a feeling we may be seeing a pretty good week next week.
From the calls from our technical analyst, could be good if we hold the 818 level on S&P as we are going through the inverted head and shoulders.
Next week we also have on tuesday the fed meeting and most likely cut. Also, like hte lask week to trade before the following holiday week.
I finally have a green call option my URE 6$ JAN call is green weeee! (small weee for small amount green LOL). Since I'm such a newbie to options and you were asking me the other day I thought I would share my good news. I'm buying JAN options instead of DEC in this unpredictable stuff lately. GL Dave
If you are writing short term months, direction really doesnt matter.
If you are doing Buy writes as they are designed... you only really should care where stock is at the expiration. Yet, I know how we cant help ourselves but to look at the market daily.
Thanks for your response. I have a strong core holding in AUY from about $4.5. I have most shares uncovered to let it run. But I have a few April 10 and April 12 calls for about .5 to pad the yield.
What I was thinksing is that it has made a large run-up and might be falling in a near-term if market dives. So (to protect a percentage of the shares) the Apr 6 calls would be good downside protection and a 33% yield if the stock climbs.
Is this wrong thinking?
I haven't had good luck in the past with next month options. I usually guess wrong about direction, and the small OTM premiums don't really protect that much. Very confused guy! In short is it bad strategy to try to time the market using covered calls?
Kiss GM goodbye, Vote failed. Lets see if Paulson can pull something out of his butt.
Ok, so just did the numbers.
The aprils are good, the only thing is, you are just playing the premium. Considering the stock is at $5.98 and a strike of $6, you are not leaving for upside and can get called away.
annualized yield is about 100%
Personally, I would Buy now, and write the Dec 6's for $.45
In 8 days, next monday, Write the Jan $7.50's for another $.45 and upside.
Otherwise, write the dec's, let them expire, if stock pops, write the next options chain then. Anytime you have a write on it, esp since auy is showing strength, you are capping upside.
All depends on if you are happy being assigned, how much it would cost you to get assigned, as well as if you would be happy with 33% if AUY pops to $10
Will reply in full later, but just wanted to say... I was thinking the exact same thing about AUY. =)
Vote on Bailout to begin in 5 mins, tentative deal done.
http://www.c-span.org/Watch/C-SPAN2_wm.aspx
I'm looking forward to following your forum. I've been buying DITM vertical spreads in the past, and doing very well - unitl Sept Oct wiped out all the spreads. Trying now to work my way back.
I thought it was an interesting lesson today about gold and oil. The commodities had a strong opening, gold dropped off at the end of the day but oil was strong all day. The stocks related to those commodities had a strong lift early in the day when the markes in general were flat, but when the markets fell in the afternoon those same stocks got crushed.
Showed me that the market is very much more influential than the underlying commodity.
About covered calls: what do you think about AUY covered by april $6 calls @ about 1.5? Brings the cost down to 4.5 with a profit of 1.5 (33%) if called. There a a few stocks that are cheap with high vol now, seems like a good bet for strong stocks like AUY.
appreciate any comments you have.
This is going to sound horrible but I'm a pretty honest Joe...I bought the UYG because I'm familiar with that stock and the price was cheap almost a "test" buy with an option if you will. After losing 25$ I think I figured out better to chose a month out like January on an option. Do you like buying the current month or a month out or does it depend on the stock option?
Dennis Gartman's Trading Rules
GARTMAN'S SIMPLE
RULES OF TRADING
1. Never, Ever, Ever, Under Any Circumstance, Add To A Losing
Position... Ever! Adding to losing positions will lead to ruin. You can count
on it. Ask the Nobel Laureates in Economics at Long Term Capital!
2. Trade Like A Mercenary Soldier: As Jesse Livermore said, it is not
ours to be bullish or bearish, but to be right.
3. Mental Capital Trumps Real Capital: Capital comes in two types;
mental and real. Holding losing positions costs measurable real capital, but
immeasurable mental capital.
4. We Are Not A Business Of Buying Low And Selling High; We are,
however, a business of buying high and selling higher. Strength begets
strength, and weakness further weakness almost always.
5. In Bull Markets One Can Only Be Long or Neutral, and in bear
markets, one can only be short or neutral. This may seem self-evident, but
very few understand it, and fewer still embrace it.
6. "Markets Can Remain Illogical Far Longer Than You Or I Can
Remain Solvent." J.M. Keynes. Illogic does often reign, and it is our duty
to learn to handle it as best we might.
7. Buy Markets That Show The Greatest Strength; Sell Markets
That Show The Greatest Weakness: Metaphorically, when bearish we
need to throw rocks into the wettest paper sacks, for they break most
easily. When bullish we need to sail the strongest winds, for they carry
the farthest.
8. Think Like A Fundamentalist; Trade Like A Chartist: The
fundamentals may drive a market and need to be understood, but if the
chart is not bullish, why be bullish? Trade when the technicals and
fundamentals, as you understand them, run in concert, one with the other.
9. Trading Runs in Cycles; Some Good; Most Bad: In "good times,"
even errors turn to profits; in "bad times," the most well researched trade
will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed
confusion; simplicity breeds elegance. The great traders we've known
have the simplest methods of trading. There is a correlation here!
11: In Trading/Investing, An Understanding Of Mass Psychology is
Often More Important Than An Understanding of Economics: Simply
put, "When they are cryin', you should be buyin'! and when they are yellin',
you should be sellin'!" This is psychology at work and its most elegant.
12. It Takes Buying And Lots Of It To Put A Market Up; It Takes
Only A Lack Of Buying To Put Any Market Down: Gravity is an amazing
force of nature; it is even more amazing in the world of investing.
13. There Is Never Just One Cockroach: The lesson of most markets
is that bad news follows bad... usually hard upon and always with
detrimental effect upon price, until such time as panic prevails and the
weakest hands finally exit their positions.
14. Be Patient With Winning Trades; Be Enormously Impatient with
Losing Trades: The older we get, the more small losses we take each
year... and our profits grow accordingly.
15. Fear Turns To Greed At Break Even... And Vice Versa: Know
this; understand this; accept this and deal with it.
16. Do More Of That Which Is Working and Less Of That Which Is
Not: This works in life as well as trading. Do the things that have been
proven of merit. Add to winning trades; Cut or eliminate losing ones. If
there is a "secret" to trading (and of life), this is it.
17. All Rules Are Meant To Be Broken.... but only very, very
infrequently. Genius comes in knowing how truly infrequently one can do so
and still prosper, but when one must, one must!
A Must have free daily newsletter....
no, not mine... but Dennis Gartman, as seen on CNBC, Bloomberg, etc, has a free daily newsletter that goes out.
Great and respected technical analyst. Down 5% this year, vs 30%+ for market, and alot of others.
http://www.thegartmanletter.com/
Go, subscribe.
VIP - Calendar Spread Buy Jan 9 $10, Write Dec 8 $10.
Buy Jan $10 for $1.25
Sell Dec $10 for $.50
Let it expire in 9 days, sell to close out. Or essentially buy Jan 9 $10 Calls for $.75. Would be happy with both. Stock being accumulated.
This is a Russian cell phone provider.
UYG Covered Call - $6.21, Write Jan 9 $7
Options are pretty expensive for these etf's. I am assuming other sectors will be just as good. I currently am doing a covered call for these, but may get out and do traditional covered call.
Return if Price Stays the same: 15%, 150% Annualized.
Return if Called: 29%, 291% Annualized.
$5.38 Break Even, 13.37% downside protection.
UYG will probly have a dividend of $.10 which will be nice.
I added commissions to calculate those numbers.
MTL Covered Call - $5.80, Write Jan 9 $7.50
Just put together a great covered call calculator. First numbers are if stock price static, second if called.
% Return on initial investment: 18.07% 50.60%
Annualized return: 178.28% 499.19%
DownsideProtection
Breakeven Point: $4.98
Downside Protection: 15.31%
OCNF can be good.
Tell us about the UYG call... when did you get in, get out? rationale for it? why did you get out? Why dec calls instead of Jan's?
Update on the two calls I am holding.
http://finviz.com/publish/121008/CY1dl2234.png>
http://finviz.com/publish/121008/CBI1dl2241.png>
Letting the free money ride on the CBI calls, $1, and still long my CY calls at $.30.
Bought a 6$ call on UYG and already dumped it for a small loss. Wish I could report better luck but I did buy OCNF call for 5$ I think the trend will continue with shippers we'll see No worries if I win or lose small amounts to learn with. Eventually will get the hang of it, or course if the market would pick a direction for more than 5 minutes it would help heh heh. I hope you and others will post your plays sometimes I think it helps other traders learn strategies and learn from successes and losses.
I was reading on another trading board about the HIG calls that went 8000% and got interested heh heh.
Awesome, welcome to the world. What did you buy?
I will be adding some resources here about it in the near future, so keep a look out on for it.
Marked your board. Bought my first option on Monday getting the hang of it but need to study them alot more. Gl here.
Six pack joe gives money to the government when they move money into government fixed income funds into this 401k as they keep making contributions.
SO common SIxPackJoe has $30 billion to give to the gov't at 0%?
Yeah that makes sense. Common SixPackJoe is already out of the picture IMO.
hmm - CNBC just showed down 155 - i know it's on them because i waited for the ticker to scroll again -
alright, g'night bruh - will post up if i take an angle tomorrow -
it may go that way - futures went from 100 up to 155 down - sheesh -
Depends how high it pops. Right now, as of close, the Dec 5's were only .05/.10, so not that much. The Jan's are .30
The $2.50's are not bad as they are .40 for holding it 10 days.
16% for 10 days. Brings your cost basis to nearly $2.
But would I? I dont know. Reminds me of Wamu way too much.
do you feel anything decisive about writing some dec 08 $5 calls tomorrow on GNW's pop or should i hold for TARP and write 7.5's in jan?
been tusslin' with this all night -
A few Covered Calls I am looking to get into.
MTL & VIP for those that are not afraid to go overseas
MTL now at $5.77 a share, Write Jan 09 $7.50 for $.80 or so.
15% downside protection, 100% annualized.
Mechel is a steel producer, largest in russia and buying up overseas assets. Too much fear here, for two reasons, steel prices, as well as Russia.
For $5 i am personally happy holding it, even long term. Due to the fact that this is a steel company in russia, it is driven down, and volatility goes through the roof. Buying calls, esp since there are no LEAPS avail, is a bit expensive. Since the stock is cheap, I am happy to buy it at these levels.
It is trading at a PE of 2. Largest steel producer in russia, infrastructure will be built.
Risk? Absolutely. Putin has already fined them for price fixing. =P My strategy is to write monthly calls, to take in the premiums at the fastest rate, and keep lowering my cost basis on the stock.
Treasury Yield Falls to Zero As Investors Seek Safety
Wow, what a headline. All along, the treasury yields were almost zero, but now, it turned slightly down. Common Joe Sixpacks are tired of the volatility, and changing their mutual funds to government funds.
Little did they know, they are actually paying the government money to safeguard the cash... and yet... I know some people who are afraid of FDIC. Talk about irrational behavior.
Six Pack Joe is giving $1 to government, to get back $.99 six months later.
the bottom line is, money is fleeing the market, for now reason, and yet we are holding up fairly well.
When the market settles down and start picking up, around 9500 on the dow as per some of the analysts, it may lead to a strong rally, as six pack joes will be taking their $.99 cents back from US government, and putting it into the market.
Win win for government. Borrow money from people, they are paying you to hold their cash, you (the fed) invests it (TARP/Bailout) into the biggest/strongest US banks, and get paid 8% a year. If they dont pay, the fed seizes the bank.
Thanks for the making of this board...I need to learn as well...
good idea, ill be here to learn about covered calls and other optionstrategies!
Hello. Thanks for setting up this board. I look forward to your ideas.
Hey All, welcome.
Will fix this up as I have time, but I wanted to have a dedicated forum for covered call/ cash secured puts strategy discussion and ideas. This includes calendar spreads.
Perhaps one of the safest option stategies.
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