Covered Calls for Fun & Income

March 15, 2009

This Cash is Burning a Hole in My Pocket

Needless to say, I have a lot of cash in my account from last Friday. Do I wait for the Monday after expiration? Do I look for April Covered Calls this week? No, I will look for deep ITM Calls for March that I can write on Monday. I have 3 prospects from the Call Writer Deep Strikes In The Money list. These 3 are attractive in that they meet 4 or more of my Trade Plan entry criteria but alas, they are all financial stocks (well, insurance anyway). Be that as it may, they do have a huge amount of downside protection (how far the stock price will have to fall to hit the cost basis) and only 5 days of holding time. None of these stocks are big news makers – at least not TARP-wise.

Stock

Exp/Strike

ITM Return

Downside

Protection

LNC

MAR 7.5

5.63%

21.55%

PRU

MAR 15

3.45%

23.28%

HIG

MAR 5

2.88%

30.67%

I don’t intend to go all-in on these (if I do at all) – I will still follow my money management rules.

Stay Tuned – Jeff

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