Still Covered Calls

This years trading has been going very well. My trading that is. There is proof that you can make money in any market with a disciplined approached and with proper money management. Also, the covered call trading strategy that I use is a big factor as well.

Currently I'm in the following trades:
SPWRA - Long at 24.04
Sold the Aug $24 calls (Stock flew up to $32 - I wasn't covered on all my shares so I sold them at 32 for a huge profit.)

FUQI - Long at $21.87
Sold the 21 Aug Calls
Sold the 22.50 Aug Calls
** Split the calls to different strikes. This way you hold your risk down, while allowing some shares to run up a few points if possible.

SQNM - Long around 5.76 and 5.86
Sold the $6 Aug calls

BMI - Long at 40 (originally purchased via naked puts reducing CBasis to 38. Then sold the Aug 40's and further reduced the CB to $36.

Now I will sit tight and wait for options expiration Aug 22.

New Month of trading

Last Month was pretty good for my trading with several stocks going nuts on the upside and thus maximizing my potential profits. Also, since I got called out I started the new month of trading ALL in cash. Hmm, where to go from here.

Since I like higher premium stocks I constantly am screening stocks with volitility and of course several other parameters to get the best possible return (without risking my money unwisely).

Lately the Pharm stocks have had the volitility I like and in the range of trading that is desireable to me also. My latest venture is RIGL. This stock trades in the mid $11 range with high premium options. My current CC holdings include: FAS, RIGL and TIVO - for now. I have these in various accounts.

Options Expiration

Options expiration is 6/20 but effective in the market today (6/19). For many financial traders selling covered calls is not a good method because they feel that you lose when the stock goes up and you get called out. However, looking at my last post where I reveal that I'm up 165% in year 2009, this only shows that the covered call method (with my own proprietary tweeking) works great EVEN when you get called out. In fact, I prefer it. Getting called out means that you get the cash, maybe a little bit on the stock increase as well and obviously you aren't stuck with a stock that has tanked in value and with your money.

I'm getting called out today - and that means I'll have cash to start on Monday...ALL OVER AGAIN.

Up 165% in 2009

It's been a really good trading year thus far for me and I plan on keeping it going. My trading strategy is filled with safeguards and protecting the downside while taking in income on a monthly basis.

Options expiration is set for June 20th (19th trading day) and I like to sell naked puts on the last week of options X. On Monday I sold Naked Puts ($7.50) strike for SVNT for $0.95. The stock is trading in the lower to mid $9's and this just seemed like a great play. If the stock is put to me at $7.50, my adjusted cost basis is $6.55 per share. So the stock has to drop almost $3/share this week before expiration for me to be under water.

Current CC positions: FAS, MBI, SVNT.
Current NK Put: SVNT ($7.50).

I'm writing a program to calculate at what point I need to buy long Puts as a protection device for my covered call plays. More on that later.
Happy Trading!

Trading update

The last few months have gone very well for my trading strategy. I have hit the jackpot several times buy selling just out of the money calls (covered) and then seeing the stock run up getting the premium and called out. This past month I took a more conservative approach as I was on such a strong winning streak I didn't want to feed into an over-confidence approach.

I found highly volitile stocks and sold in the money calls (near month). While the stocks have gone up - mostly, I feel good about the downside protection by adjusting my cost basis dramatically. My current positions are in: DNDN, FAS, MGM.

Back in the Market

After a break from serious trading (personal accounts) I have been back in the market for awhile now. I saw my IRA taking a drastic hit after flying high with CROX which dropped about 25% in a single day. Then after being invested in the S&P 500 and seeing it move negative I realized with basic trading I could do better than the market. I went back to the basics and the best strategy for a flat or down market (or even an up market) - Covered call writing.

I've done pretty good holding to the basics of this easy strategy while making a few modifications as the volitility and market dictate. I'm finding high premium stocks and selling the calls just barely out of the money. If I get called out, I make money and if I don't I simply write another call the next month. I've also done a few collars by buying a put (out of the money) along with selling the call.

Currently my stock/option positions are:
FAS, HIG, LEN and LNC.

Dumping the RSI 5 method

I took the short option position and then watched the market move lower putting my "puts" in the money. I had a short stop loss placed but was expecting about a $0.25 move in the option. It got to $0.20 and then the market took off. My stop-limit order was not filled as the market moved through the position after it was triggered. Then we witnessed the market close at record highs for the following two days.

I have had some serious reservations about the RSI method as it takes a "counter" approach to the market and might be more useful for using equities with a large position size, tight stop-loss and small profit targets. I'm not that trader and therefore I'm looking for a new method that properly captures the trend and stays with that trend instead of trying to fight the heavy wave.

I've been playing poker this past year with a group of friends and have been doing pretty well. I've often read how traders use their skills for playing poker and I've realized that I've taken my risk management knowledge from trading to poker but I have totally failed to correctly impliment these skills in my trading. Basically during a game of poker I'm not betting large until I know I have a hand that has a significant chance of winning. I've had a pair of Aces (Texas No-limit Holdem) and the flop gave me nothing and I folded. Why not do the same with Trading. Look for the setup that gives you a great chance of collecting money and then go for it, otherwise just "fold." Developing......

Back in a trade

I took a short position on the Q's today as the market spiked up just before noon pacific time. The RSI 5 had gone up rapidly and hit around the 80's with the SMA 2 dipping under the price line. With the election leaning towards the Democrats, I thought the markets might not take off. However, the markets just usually don't like the "unknown" and with James Webb looking to have defeated George Allen in VA....the markets might be ready to take off. I guess we'll find out tomorrow.

QQQWQ (Nov $43 Put) purchased at $0.40.

Happy Trading!!!

Check out the golf swing

Here is a link to view my golf swing along with 3 of my friends. We are hitting in the following order:

1. Marc Dunn (About a 3 HCP)
2. Tyler Janke (who knows)
3. Greg Fayard
4. Bernie Gagain

http://www.digistreamonline.com/golf/D/SFICA/html/SFICA-12.html

Enjoy....

Ugh...what to do next.

So since I'm unemployed I haven't really been trading that much or that risky, which is good and bad. The good part is that I'm not putting money into the market unless it's a "sure thing" and yet the bad news is that my trading system would have given me about 100% profit on the last two trades alone. I could have used that money!!! But I think being more reserved and doing my homework is BETTER in the long run. Look for market updates coming soon.

Closed position -- slight loss

I had a few chances to close out this long position with a slight gain, but held on. The market tanked but has come back in the las few days. Closed out QQQ FM with a slight loss.

Peeking over the hedge

So even though the market's been in a downslide lately, I'm looking to go long. The RSI 5 has gone below 20 again and with such a selloff lately, we are poised for a short bounce up. When the SMA (2) crosses the price line I'll go long the QQQ FM (currently around $0.30).


UPDATE: Purchased QQQFM (June 39 Calls) for $0.30. Quote went $0.25/$0.30 and filled me at $0.30. Current quote is $0.30/$0.35.

OUT!

Wow, the premarket move up started coming back down just before the open (Q's were at $40.20 and opened around $40). I got out of the options at $1.20 (market order - GET ME OUT). I got a $0.45/contract profit which is a 60% profit on this trade. Nice!

Exit is coming soon

Whew! So I held on to the QQQFM calls while they dipped and stayed low, but yesterday the market took off like a rocket and this morning (pre-market) shows the Q's moving up again. I'll be poised to exit my call position today. QQQFM closed around $1.05 but should be higher this morning. RSI 5 is thru the roof and although it will probably continue up after I get out, I've already reached my $0.40/contract profit goal.

Long - again: QQQFM (39 calls)

Went long the QQQFM (39 calls) for $0.75 per contract. Currently the Q's have popped up as well. I'm looking for about $0.40 profit here and will be holding my stop quite close.

Update - Loss on the long side

Had a golf vacation and didn't update that I stopped out on the QQQ EO (41 calls) quite quickly after I got in. The Q's have dropped to the mid $38 range as of now. The entire market has really come down and I'm in the belief that we will go up quickly on a bounce. Short term move up that is. Looking for an entry point depending on what the RSI 5 tells me.

Currently the RSI 5 is at 18.01 and the SMA is about to cross the price line, telling me to go long...once again. Stay tuned...

Back in on the long side.

As the RSI 5 is so low, I have been watching the SMA (2) for a crossover with price to enter long again. This happened when RSI his 6.81. I'm back in, with the QQQ EO (41 calls) at $0.35. Up we go?

Stopped out just after the open

Q's are sliding and I wish I was still in the puts. I stopped out the calls this morning at $0.15.

Closed May 42 puts.

Q's have dipped and the RSI 5 is well under 25 (22.50) and hit a low of 9.36 today. I'm closing the QQQQP option at $0.55 ($0.10 gain) and rolling into the QQQ EP (May 42 calls) for $0.25 per contract. Looking for a move up after the market takes in the Fed announcement.

Closed and reversed

I closed out the Q calls and reversed to the short side. The calls I closed for a $0.05 profit and the puts (QQQQP - May 42) were bought for $0.50. RSI 5 spiked this morning showing a short signal.