Replies to post #142 on Hawaiian Holdings, Inc. (HA)

[JLS]

Here's what I would do now:

Well ... on Monday. And it's what I did to get into HA.

It's what I do very often to enter (or continually trade) stocks at lower risk while also guaranteeing some steady income. Of course to lower risk, there is generally a price to be paid which can temporarily limit your gain.

For HA this is a good time to do what I suggest because there is one week left till this month's HA options expiration.

Trade: buy the stock then sell May Calls against all shares. In other words, you want the market to pay you to get into the stock. Doing this, you are getting in cheaper because the Calls are paying you back; but, depending on the strike of your Calls (and what the market decides to do) your stock may be called away at options expiration this coming Friday. That's not necessarily a bad thing, as you will then have the opportunity to (maybe) buy them back cheaper.

A way of eliminating the chance of shares being called away on Friday (but receiving more to enter the trade) is to sell next month's Calls after buying the shares. You'll get a lot more for those Calls because of their greater time value, but you are also increasing the risk that your shares will be called away next month. But that's not so bad after all because you will have a lot more time to trade both in and out of those Calls -- and that can substantially increase your gain over the next several weeks during that process.

I like this Buy-write strategy so much that I do it virtually all of the time. Granted, I miss a lot really great leaps higher in the particular stock I'm trading, but it's made up over time as there is always that steady weekly income from selling Calls (even if the stock does poorly).

The only thing I don't like about HA is that it only has monthly options -- I have a strong preference for stocks that have weekly options because I get to sell Calls more often. But it might turn out that this could work better because there would be more opportunities during a monthly period (compared to weekly) because there would be more time available to flip in and out of the Calls.

So, in case you haven't figured it out, I really like the CC trading process. It's like owning your own company with the advantage that you can write Calls against the shares and its income is your dividend: now you have a pay-your-own-dividend company, and there is no shame in being greedy about that so pay yourself often.