Covered Calls for Fun & Income

February 22, 2009

February 2009 Expiration – It Wasn’t Pretty

The week of expiration was one of the worst I have ever seen. All my positions finished OTM and one ATM. This is the first time this has ever happened to me. Thankfully the underlying stocks didn’t tank.

What I will do with each position is a mix of technical and fundamental analysis to determine if I want to write more calls against a stock, wait to see if the stock recovers and either write calls or sell for a gain, or close the position for a loss and move on.

One position I have is MBIA (MBI) that I had a FEB 4 Call on. Since the stock closed at 4.00 it will be interesting to see if it gets called. My broker tells me that any stock $.01 ITM will automatically be assigned, but I had one position last month that was $0.12 ITM that did not get assigned. Their explanation was there was no interest in exercising all the open calls. So a word or caution regarding that. Of course my answer to that was to sell the stock on Monday as it rose and add another 22 cents to my gain.

Jeff

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2 Comments »

  1. Jeff,

    How long have you been using John Brasher’s CallWriter service? What are the key attributes of his methodology/approach for consistently identifying and selling winning CC trades?

    Regards,
    Troy

    Comment by mounddweller — February 24, 2009 @ 9:09 AM

    • Troy,

      I have been using his service for slightly over a year now. His approach is pretty conservative, but his real-time lists are the primary reason for me signing up. Prior to that I was a OptionsXpress customer mainly for their covered call scans. Once I had John’s lists, I dumped OptionsXpress (high fees) and went with an old friend, Interactive Brokers (very low fees) due to my high volume of trades.

      A point of clarification: John doesn’t recommend trades, his primary goal is to provide tools and information to assist traders in making high quality decisions. Via his service, you can scan for prospect (real-time lists), research potential trades (research page) and track real-time returns on your trades and roll/exit options (Trade Management Calculator). In addition, about once a month, he has a webinar that is highly interactive.

      All this just makes the game more fun and profitable. I like to do my own thinking.

      PS – I am an affiliate of his, so please use the links on my blog if you are considering his service – Thank You

      Jeff

      Comment by Jeff — February 24, 2009 @ 9:58 AM


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