Where is the money coming from?

Money for getting naked! SQNM

Yesterday I sold some naked puts on SQNM. The stock was about $6.12 and the Aug $5.00 puts were at $0.40. I sold the $5's for 0.40 and sat back to watch the stock for two weeks and hope to not get called out. I was already in this stock on a covered call play. Then right after the bell earnings were released and the news wasn't great. SQNM opened around $5 today and has since moved to near $5.30. I bought back my call options for a net gain of $0.40 and $0.60 and now have the shares clear to capture the run up.

Oddly the puts are worth less today than yesterday when the stock was a dollar higher! So I'm going to sit on the puts. Even if I'm put, my cost basis would be $4.60, so I'm looking good there.

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.