ETF Covered Calls

This market is getting interesting.  As I stated in my last post, I’m seeing huge crazy volume in leveraged ETFs and it’s all over the place.   I’ve posted the preliminary report but I’m having problem with the google link.    Please note that this new report shows LEVERAGED ETF’s and are denoted with an ‘*’ to indicate their presence and I would NOT recommend trading in them unless you have a great deal of expertise in these types of funds .  Here’s the ETF-Cashinator report for this week:

Update:  Here’s the Google Link for the FULL REPORT.

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 spent the evening upgrading the ETF-Cashinator.  To be specific, I’ve been pruning the ETFs I track and adding some new ones.  I was recently shocked to learn that a HUGE amount of volume is now taking place in some leveraged ETFs and that is where a great deal of serious action is happening.   I would NOT recommend that anyone place covered calls on these ETFs unless you have some serious experience and understand the dire consequences if you make the wrong move.   I have denoted the all leveraged ETF’s with an * (asterisk) so readers are aware.   There is also plenty of money to be made on regular ETFs and they are still in the report as usual with the exception of a few that I plan on removing (e.g. BBH).

Here is a quick list of the new ETF’s that have been added to the list due to their explosive volume in trading:

BGU    *Large Cap Bull 3X
BGZ    *Large Cap Bear 3X
DIG    *Pro Ultra Oil & Gas 2X
DRV    *Direxion REIT 3X Inverse
EDZ    *Emerging Markets Bear 3X
EEV    *Pro Ultra Short Emerging 2X
ERX    *Direxion Daily Energy Bull 3X Shares
ERY    *Direxion Daily Energy Bear 3X Shares
EWS    iShares MSCI Singapore Index
FAS    *Direxion Daily Financial Bull 3X Shares
FAZ    *Direxion Daily Financial Bear 3X Shares
FXP    *UltraShort FTSE/Xinhua China25 Proshares
GLD    SPDR Gold Shares
JNK    SPDR Barclays Capital High Yield Bond
SCO    *UltraShort DJ-AIG Crude Oil ProShares
SDS    *UltraShort S&P500 ProShares
SLV    iShares Silver Trust
SMN    *UltraShort Basic Materials ProShares
SPXU    *UltraPro Short S&P500 ProShares
TBT    *UltraShort 20+ Year Treasury ProShares
TNA    *Direxion Daily Small Cap Bull 3X Shares
TWM    *UltraShort Russell2000 ProShares
TZA    *Direxion Daily Small Cap Bear 3X Shares
UCO    *Ultra DJ-AIG Crude Oil ProShares
UPRO    *UltraPro S&P500 ProShares
UUP    PowerShares DB US Dollar Index Bullish
UWM    *Ultra Russell2000 ProShares
UYM    *Ultra Basic Materials ProShares
ZSL    *UltraShort Silver ProShares

I’ll publish the first new report on Friday!

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 commentary on CNBC and other news outlets is always amusing.  Long before the chatter started, I predicted that the market would tank this week and that was soley based on the fact that for the last 12 years, the stock market seems to almost always tank the third week of January.   I think it is largely due to portfolio turnover and repositioning but it could be caused by anything.    The ETF-Cashinator did affirm my prediction a while ago (back in December reports) as well and what worries me is that the ETF-Cashinator is showing some high degree of “xolatility™” for March 2010 options in both calls and puts.   I’m inclined to think that something BIG is going to happen between now and March expiry and that will likely be negative on the market but some huge rally could materialize if I’m reading the thing wrong; My bias is to the negative.

Here’s the google link.

“Xolitility™” is defined as a huge variance from normal options trading pre-financial disaster.   Generally, this means that premiums on ETF’s on calls or puts is in an extremely abnormal state.  A normal premium on a call 30 days out of expiry near or at the money is generally 1% and anything above 3% is considered abnormal.  A high degree of “xolitility” means that MANY or ALL ETFs are in an abnormal state of premiums options trading.

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

Well I jokingly told a friend that the fuse for the stock market bomb would be lit this week and today seemed to confirm that as I expect the market to dip further next week.   I did a 10 year historical view of the stock market charts for January and almost without fail, the market goes down the third week in January.  It has done so for the last 8 of the last 10 years so I figured the trend would continue this year.     In the upcoming months we face the Fed draining liquidity from the financial system, a huge number of ARM resets, bank failures, global sovereign defaults in Greece, Spain, Ireland, UAE and UK and a plethora of other news that is anything but optimistic.   The ETF-Cashinator is showing that commodities are the new game in town as there is heavy interest in Gold, Oil, Natural Gas, Food/Ag, and minerals.   Here’s the report.

Here’s the google link.

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

There was little activity in my mini and arbitrage accounts and the bulk of the transactions were in the Power Account but overall I made about 17% given my weak constitution for the roller coaster market in 2009.   While no doubt some one will point out that the market is up 60% from the March all time low, I have serious doubts that anyone went “all in” in March of 2009 and loaded up on stocks.  Sure a few people kept buying and averaged their way higher but I still think I did pretty good considering the circumstances.

Also, I’m still negative on a few positions but I’m still generating cash flow and that’s the important thing.   We’ll see what 2010 holds in store for all of us this year.   You can review my 2009 transaction below:

Power Account Transactions 2009

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

For long time readers, some of you may know that I’m still carrying about 800 shares of leveraged Dow shares (DDM) in a variety of accounts.    Many of these ETFs were bought near the peak at $70+ while DDM is currently trading in the $40’s.   In an effort to unwind and/or profit from these ETFs, I am now selling calls 6 months into the future at a few dollars above the money strike.   Today I sold 4 contracts on HXDGV (July ‘10 $48 strike) at $3.20 to rake in about $1270 in cash.   If I get called, I’ll earn an additional $800 or so and be out of DDM.   In this scenario I will liquidate at an $8000 loss and try to tax harvest at the end of year or offset some gains.    I am becoming more BEARISH with this market, if you look at any graph, you’ll see the Dow moving in a near straight line at a 30 degree angle with little down movements and that can’t hold forever.    If DDM suddenly takes a dive, I *may* buy my calls back on the cheap and repeat if the market recovers.

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

So it’s a new year and the ETF-Cashinator has just been cranked for the first report of the year.   The volatility in the market is still there and there are faint signs of some stability into the distant future but the next few months remain murky and unpredictable.

Here’s the google link.

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