Covered Calls for Fun & Income

March 25, 2009

Covered Call Weather Report March 25th, 2009

Filed under: Covered Calls — Tags: , , , , , , — Jeff @ 9:50 AM

Cool with a slight chance of rain.

Since I trade Covered Calls using the Call Writer methodology, I am urging caution on initiating any buy writes at this time. Myself? I am sitting on the sidelines, at least for this week.

Almost every stock on a majority of the Call Writer lists looks like the S&P Index below. Since my methodology depends heavily of technical analysis (70%), I am concerned with the Stochastic indicator which is above 80. This is not a tradable indicator according to my Trade Plan. Also note a recent breakout of the downward trend line. These are not contradictory, but may be an indication of a reversal of trend – but it’s too early to go all in.

It’s entirely possible that the trend line needs adjustment, but I need a few more days of confirmation. I would also look for a few more days of closes above the 50 SMA.

In a recent post, I mentioned that I was not planning any Covered Calls this week, since I wanted to wait until we are closer to expiration for April. The chart confirms that statement. Just luck, I guess.

– Jeff

“Don’t knock the weather. If it didn’t change once in a while, nine out of ten people couldn’t start a conversation.” Kin Hubbard (1868 – 1930)

0324-s-and-p-chart

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