Hi Ray, It's a bit complicated but basically one has to use a bigger account so that the minimum size of the trade is 100 shares at a time. Lower price positions make this easier. It is also best to chose a high volatility position to make this work.
Connecting with AIM is a two part process. First one selects a position that one wants to get into and sells a PUT at a price you select. I'll use $25 as an example. Say the PUT is at $0.60/share, that means $60/per contract. One wants at least $20,000 per position, so one would sell 4 contracts and also put in a GTC for $24.40 for 400 shares as well.
Okay, assuming both orders are fulfilled, you would now have 800 for a cost per share at about $24.40 or a total of $19,520. Next one selects the next buy price and the next sell price. Lets say that you find a PUT option at $22.00, you'd sell a PUT for 100 shares, one contract, about 12% of total shares. If the PUT would sell for $0.50/share this would mean you'd get the shares at a net of about $21.50, assuming it dipped that far before the option ran out of time.
The other thing one needs to do is select a CALL option at roughly the normal SELL safe price. In this case you would sell 4 contracts at about $27.00. Say the option price is $0.45/share or a total of $180.
Okay, let's assume that the price does not move outside the range of $22 to $27, assuming both options sold, this would mean that you would have collected about $230 at the end of option life, assuming you used monthly options and that you kept the length to less than 60 days, you would have made about 7.5%/year on your investment plus any dividends.
Assuming the price dropped you would then have 900 shares at a total cost of $21,670, an average cost per share of $24.08.
If the price when up you would be left with 400 shares and would have collected $10,800 from the assigned shares plus the $230 from selling the PUT and CALL, or roughly 45.8%/year on your total investment, in this case over 60 days or so. Not at all bad.
You could make a bit more if you did a sale of the 400 shares left over at a bit over the $27 market price. If one used 10% of the remaining shares, 40 at a bit over $27, say $27.50, that would bring in a net of about $120 more, nice but not critical.
This seems to be better if the total involved is at least $30-35,000.
I'm still playing with this to work out better details but this is what I have so far.
AI
