Covered Calls for Fun & Income

March 5, 2009

New Positions – ERTS & ILMN

Yesterday I opened two new positions on ERTS and ILMN. I tired to get this post up earlier but other tasks demanded my attention.

ERTS – This was on my watch list off of CallWriter for a few days now. I was waiting for the right time to strike. Technically, I was attracted by the chart, with good solid support around 14.30 and resistance around 19.15, I was waiting for STO to swing up over 20 and it did that yesterday. Since the 20 and 50 MA’s are consolidating right now, I entered with a slightly OTM call. I am not fearful of an expiration OTM since the options on this have high volatility right now – as long as support is not violated I will sell the next month’s call. As far as qualifying according to my Trade Plan, it met 5 criteria. Here are the details of the trade:

Stock=15.64   MAR 17.5=0.22   Cost Basis=15.42   Exp ITM=13.4%

ILMN – What caught my eye on this one is the strength it has been displaying since mid-December. How many stocks can you find that have a 20MA above their 200MA? It met 7 of my entry criteria from my Trade Plan and again I was waiting for STO to do it’s cross. I again entered a OTM covered call based on the continued upward trend of the price and recent resistance at 35.80 which the price could easily break through. Here are the details for this trade:

Stock=31.72   MAR 35=0.46   Cost Basis=31.26   Exp ITM=11.96%


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