Covered Calls for Fun & Income

April 28, 2009

New Positions – AFL, CROX

Filed under: Covered Calls — Tags: , , , , , , , — Jeff @ 4:23 PM

It’s a crazy market and crazy times right now. Who knows what effect the Swine Flu will have on the markets or what sort of whacked out news will come from Washington, NY, Detroit or California. How the heck can GM avoid bankruptcy while selling cars that THEY are willing to make the payments on if you lose your job? My God, what is going on? All we can do is follow the plan until it doesn’t work any more and then adjust.

The two trades I entered today taped me out for May expiration. My remaining cash is about 10% of my balance, so I will enter into a monitoring mode and watch for opportunities to possibly exit one of my positions early.

AFLAC is a very good company even though they are in the insurance industry. Their offerings are unique and don’t seem to be affected by the financial crisis as much as other insurance companies. AFL was on the CallWriter High Volatility list and I had a choice of writing a 28 Call for a higher return or the 27 Call for less risk – I chose the less risk route. Earnings are due tomorrow, but they have historically reported in-line and that is what I expect tomorrow with little effect on the price.

Crocs is a different story (CROX was found on the CallWriter Under $10 list). A real high flyer a year ago – never could understand why. Comfortable as they might be, their shoes are butt ugly! Technically they are on a solid run with some accumulation going on. Even though their earnings are on May 5th, I figure it would only take me 3 months to recover if their price drops to 1.50. From the fundamental perspective, they have a B+ financial score, earnings surprise last quarter of +28% and a technical buy rating of 88%. Since this is a relatively risky play, I am happy with the 20% downside protection.

As mentioned, that will be it for this month. Besides, my wife has kindly made an extensive ‘to-do’ list for me. Wasn’t that nice of her? Even though I probably won’t do any more trades, you know I will have plenty to say – so check back often.

– Jeff

“The English have no respect for their language, and will not teach their children to speak it.” George Bernard Shaw (1856 – 1950), Pygmalion (1916) preface


Date

BTO Stock & Price

STO Option & Price

Option Exp/Strike

Cost Basis

ITM Return

Downside Protection

4/28

AFL 27.99

AJOEU 2.94

MAY/27

25.06

7.74%

10.8%

4/28

CROX 2.21

CZLEN 0.41

MAY/2

1.81

8.49%

20.5%

4/27

TXT 11.29

TXYEJ 1.41

MAY/11

9.89

11.22%

12.8%

4/24

AKAM 19.41

UMUED 0.96

MAY/20

18.46

8.34%

4.9%

3/23/09

UAUA 8.04

UALEA 0.40 #4

MAY/5

5.63

-7.79%

N/A

3/9/09

USO 27.65

26.10

5.6%

3/3/09

GERN 7.94

GQDEU 0.44 #3

MAY/7.5

6.94

7.1%

N/A

Advertisements

Blog at WordPress.com.