Genentech Inc has had a rough few months, but is still up since 12 months ago. On a chart this is getting interesting. The one year trend line using its higher lows sits around 80. DNA’s 3 1/2 month trend line using its lower highs is around 82.60. They are going to meet fairly soon. As a stock settles down between these two lines it is typically only the calm before the storm. Which way will this storm carry us is the unknown.
I’m banking on the longer trend line. I have only 100 shares in my IRA and every two months I re-write covered calls on it. If my calls would get “called away” I’d have a nice 30+% annualized return, but instead it falls and I stay close to break even. Better than a loss, but getting old. Even if DNA would stay flat I’d be pulling in a 13% annualized return in my IRA which I’d be happy with, especially since I’m using companies like HAIN, PCU and AAPL to juice it up a little.
I’m not writing naked puts on DNA yet. The OTM premiums just aren’t there and there ITM puts offer too much risk for a stock that I don’t feel better than 90% sure on.