Category: Beginners

When I wrote about the S&P 500 Chart two weeks ago I said I expected the 741 line to hold support, but if it broke to expect a steep sell off.  Well, it broke and dropped another 75 points in just a few days (which happened to be an intraday low of 666 and change for those who like the macabre).  The break below 741 took a few days to play out.  …

For the second time I took a round trip ride on Monsanto (MON) covered calls.  Last week I closed my covered call on MON and then sold the same covered call as MON rallied.  I sold the second MON covered call near the high of the day and saw it nose dive after that.  I would have saved more money by dumping my shares then, but didn’t, so I have to go with what I did.  …

I’m still expecting support to hold for the next few weeks on the S&P 500 at 741 after testing that level again on Monday.  I rethought my position though.  I originally paid $432.24 for my SSO March 19 long calls.  The issue with that trade was that SSO needed to be above $19 to retain any of the option value and above $20.50 to make a profit.  The most I could lose was $432.24, but I …

USO
I started the day by selling covered calls on my 300 newly acquired USO shares I had to buy at $31.00 (I paid $9,319.99 with commissions) from the February 31 naked puts that expired in the money (ITM).  USO started up and then headed south with the rest of the markets.  While USO was trading at $24.30 I sold three USO March 25 covered calls (UBOCY) for $1.65 each and received $482.75 after commissions. 

I considered the March 26 and March …

Today I charted the Dow Jones Industrial Average ($DJI) since the beginning of 2002 through this past Friday, September 26, 2008.  Michael Santoli pointed out an interesting technical achievement for the Dow Jones in September 29th’s Barron’s that I thought would be interesting to look at.  We’ve hit the 50% retracement level from beginning to end of the bull market and then bounced. 

This is what he was referring to - If you take the high of October 2007 (14,198.10) and subtract low of October 2002 (7,197.49), divide …

I was way overdue for an update on my Current Portfolio page before today.  I just updated my my list of stocks broken down by sector and then noted deeper by industry.  This is an important table that I should keep updated every couple of weeks.  This gives me a clear view of how diversified I am or how overloaded I am on each sector. 

At just a glance I can see where I cannot …

I run the following drill one to three weeks before options expiration when I start to wonder if my holdings are still situated in a relatively safe place.  What I find almost every time is that I’m better off than I expected.  As much as I try to keep emotions out of my trading, it’s only natural to feel anxious when the markets move down with such dramatic moves as we’ve seen over the past four trading days - down nearly 400 …

A couple of days ago I placed a limit order to sell naked (uncovered) calls on Shutterfly (SFLY).  I’ve profited on SFLY calls twice in the past few months doing the same thing and figured little has changed for it’s near term future and dove back in for more. While SFLY was trading at $15.67, I sold four June 17.50 naked calls (QFYFW) and received $307 after commissions. 

Covered calls are a lot more popular because the risk is perceived to be lower, but that’s …

I’m starting to do this type of trade more often.  The day after earnings are released, when earnings news specific to the underlying equity shouldn’t offer a surprise before my option expires, I like to sell naked puts. That’s what I did with Intel (INTC) today.

Obviously, the premium would have been much better if I had sold the options prior to earnings announcement, but I would have taken on more risk than needed. I’m not saying this is a hard rule for …