A.I.M. Users Bulletin Board

[SFSecurity]

Hi Toofuzzy, I confess I do not understand your logic in buying deep in the money calls. Yeah, they are cheap but, given the low volatility currently it seems likely that the 60-80% expiration worthlessness that is often mentioned for buying calls will happen, losing what you spend on the call. The other thing is that having sold your positions you will be sitting on cash that is earning 0.01% or so. Hardly worth it.

What I have done is transfer a bit less than half of my cash to a credit union account that earns 1.75%. Not as much as inflation but one hell of a lot better than 0.01%! This leaves me some handy money to meet any GTC orders of PUTs I have sold. In addition I have set up ACH transfers in both directions so should I need more cash in my trading account I can get it in a day or so.

So far this approach is earning me more money than straight AIM. I haven't had any AIM directed trading for the last several months.

There is another approach to getting in, do it on a down tick on a position that often happens on an ex-dividend day. SMHD, for example, was down a bit over 5% today at the opening of the market, not bad.

SMHD has two months of low dividends and then a monthly dividend that is, typically, 5-8 time bigger than the prior months. This seems to trigger a sell off so following the AIM rule, buy from the scared, is likely the right thing to do.