ETF Covered Calls

Just heard on the late night news that Bush is planning on speaking tomorrow morning at 0700 and that makes me think that the stock market will be closed tomorrow.     We’ll see what happens, I don’t see any point of him speaking tomorrow if Congress isn’t planning on convening until Thursday.

As a result of the news, I’m running and posting a special ETF-Cashinator tonight.   Choose your poison carefully, you might find riches beyond your dreams somewhere in here but be very careful

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

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I just sold 5 October $42 (DUGJP) contracts for $2.65 to rake in about $1300.00.    The goal here is to hopefully be called and force a sale of my shares at $42 even though I purchased them at $43.50.   Here’s the math:

• I purchased 500 shares of DUG at $43.50
• Immediately sold 5 contracts for Oct $43 (DUGJQ) strikes at $4.30
• A few days later  I bought back those same contracts for $0.80
• I’ve just sold 5 contracts for $42 strike for $2.65

What will happen is either:   DUG will be trading at or above $42 on October expiry in which case I’ll be forced to sell my shares at $42 meaning ($43.50 - $42.00 = -$1.50)   I’ll lose $1.50 per share BUT I’ve made ($4.30 - $0.80 + $2.65 = $6.15 - $1.50) = $4.65 per share or 11% in under 30 days.

or

DUG will drop in value again and I’ll buy back those contracts cheap  or they’ll expire worthless and I keep the full $6.15 then rinse and repeat.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

With 21 days till October expiry, the market continues to be erratic and that means every ETF has high yielding covered call opportunities. There are five pages of ETF’s listed and like last week, you need to choose your poison carefully. I’m holding DUG, XHB, DDM, & SSO currently along with a large cash position.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

I just bought back the 5 contracts for $0.80 that I sold last week for $4.30.   I actually made the 80% profit threshold I wrote about recently and decided to buy the contracts back.   I sold them for $2141 and bought them back for $408 with a net profit of  $1733 or 8% profit in 4 days.    I still suspect that DUG will rally as oil prices drop abruptly once we get past these government market shenanigans but anything can happen.    I could sell January 09 $43 strikes for about $3 to rake in another $1500 but I’ll wait to see what happens with DUG over the next couple of weeks.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

Here’s an update on my current positions.

Arbitrage Account:

• Own 800 400 XHB @ cost of $22.72 (400 @ $22.72, 400 @ $19.80) : XHB closed at $22.33 (position at -$156.00) : Cash Flow $2,058 Note: 400 shares of XHB have been assigned at $20.00 so profit of $80 comes in as 400 were purchased at $19.80 and assigned at $20. I still own 400 shares of XHB with 4 contracts for Dec $23 strike option sold.
• Own 400 DDM at cost of $74.30 : DDM closed at $60.08 (position at -$5,688) : Options Cash Flow $685.00
• Own 500 DUG at cost of $43.50 : DUG closed at $35.19 (position at -$4,155) : Options Cash flow $2,141.00

Mini Account:

• Own 200 DDM at $77.80 : DDM closed at $60.08 (position at -$3,544) : Options Cash Flow $2,502.00

Power Account:

• Own 500 DDM at $71.95 : DDM closed at $60.08 (position at -$4,105) : Options Cash Flow $1,100.00
• Own 200 QID at $46.75 : QID closed at $47.78 : Options Cash Flow $926.00
• Own 400 SSO at $65.65 : SSO closed at $57.29 (position at -$3,344) : Options Cash Flow $1,335.00
• Own 500 SDS at $64.00 : SDS closed at $66.60 : Options Cash Flow $1,947.00

QID sold at $45.00 (options assigned) originally bought at $46.74 (-$348 loss + $926.00 options profit = $578), SDS sold at $64 (options assigned). Approx. 50k cash.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

Over the past few months, the volatility in the markets has created an interesting opportunity and I’ve been considering adjusting my ETF Covered Call strategy slightly.   As a general rule, I usually hold the options through options expiry and wait to be assigned or let the options expire worthless but because the market will violently turn up then down or vice versa, it has become prudent to buy back the options when the option profit reaches above 80% and either resell them again when the market shifts or sell next month’s options at the same or better strike price.

I’ll try to follow this rule moving forward with my existing holdings and will continue to sit in cash until this rudderless Titanic steers a new course.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

The market isn’t crazy any more, it’s bipolar schizophrenic and deadly. Fortunately, many of my calls got assigned as XHB, SDS and QID are now off my hands and I’m sitting in cash. I’ll post an update this weekend on my positions but I’m glad I’m partially out. The ETF-Cashinator cranked out pretty much every ETF as the ban on short selling makes it a no lose proposition to short any ETF but that’s where things get deadly. The lawsuits will start flying and the ban may abruptly end on October 2nd which may send the markets crashing. Choose your poison.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

Posted in ETF Cashinator, ETF-Putinator | Edit |

I bought 500 shares of DUG at $43.50 and sold 5 October $43 strikes for $4.30 to rake in about $2150.    This represents a 10% return in 30 days till October expiry if I don’t get called and 9% if I do get called..    I’ve watched UYG and with AIG going under (a big component of UYG), I decided it wasn’t worth the risk for me.   Russia is in a total panic and has just cut their oil tax to try to raise revenue.

I think oil will drop over the next 30 days and this will impact O&G companies negatively which is why I went short Oil & Gas. I hope to be called on DUG but anything can happen, even a rally in Oil & Gas.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

Another crazy stock market week.   WAMU is on the verge of having it’s stock head to zero.  Lehman is being shopped around so things may get ugly here for a bit.   UYG is still tempting but SKF still shows strong on the ETF-Cashinator.   I’ll hold off until the Fed decision next week before any more trades.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

© ETFCoveredCalls.com

It’s been a very volatile  week and will likely continue on to next week with what I’m seeing on the ETF-Cashinator.  Here are this weeks ETF-Cashinator picks…

       


ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance. 

© ETFCoveredCalls.com