Covered Calls for Fun & Income

April 2, 2009

New Entry – Sun Microsystems

For the last several days, JAVA has been popping up on the NASDAQ 100 list at CallWriter. Now I know the stock gapped up on the announcement that IBM wanted to buy them. I was skeptical and wanted to wait for some further indication on what the price was going to do. Well, it came back down, bounced on its rising 20 EMA and headed back up again.

Other aspects that attracted me to this stock are the IV on the 7 Call at 145%, HUGE downside protection of 19.08% and the seer volume/open interest on the options. It also met 5 of my entry criteria and only 15 days to expiration.

As mentioned previously, I now have enough cash for one more position. Based on my allocation, the cost basis will have to be lower that $50. I will probably wait until Tuesday or Wednesday to make that trade, knowing that the shorter the holding time, the lower the risk.

BTO Stock & Price

STO Option & Price

Option Exp/Strike

Cost Basis

ITM Return

Downside Protection

JAVA 8.12

SUQDH 1.55

APR/7

6.58

6.55%

19.08%

– Jeff

“A child of five would understand this. Send someone to fetch a child of five.” Groucho Marx (1895-1977)

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: