Covered Calls for Fun & Income

March 3, 2009

Caution is the Word of the Week

I feel the need to write something but I have no idea where to go with this – and that is not a good thing.

Looking at the list on CallWriter I see MAR covered calls with ITM returns of 10-20%. Unfortunately these are all banks, shipping companies and pharma. Have they hit a bottom? That what I was wondering last month and look at where they are now.

On the other hand, I see some very promising prospects on the NASD 100 lists with ITM returns of 3-6%. Those are the stocks on my watch list.

The one characteristic that differentiates the 10%ers from the 5%ers is their 20MA on a chart. While the 10% stocks have a falling 20MA, the 5% stocks have a flat or slightly rising 20MA.

Confession – Although NVDA makes me look like a genius, I am holding a few stocks that are dropping or below my cost basis. I know, it’s not according to my trade plan. So, for not following my own advice I am paying the price (hey, that rhymes!). So I am patiently looking for opportunities to write some calls against these – hopefully soon.

Overall am I bullish or bearish? Honestly I don’t know, and that makes me very cautions.

Watch List: I added YHOO today to my current list (GRMN, MICC, MRVL, MXIM, NTAP, SPLS, SYMC) all of which meet at least 4 criteria for entry in my Trade Plan and taken from the CallWriter NASD100 list. I have not pulled the trigger on any of them yet – yesterday scared the hell out of me. But, today we may get a bounce – probably a Bear Rally.

Step Lightly – Jeff

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