ETF Covered Calls

I sold 600 DUG @ $44.84 to essentially break even on all my DUG transactions.   I had made about $4,200 in options profits and I took about a $4,200 loss on DUG so I’ve broken even.   I’m actually pulling 40k out of the market as I have ZERO confidence in this market.   As an investor, it’s impossible to figure out what going to happen next with all the government rule changes, bailout meddling, and banking chaos, I’ve concluded that I don’t want my arbitrage (borrowed) funds in this mess.   I’ll keep the other 125k I have in play (long term) in the market but I’m pulling all my short term money out.

Good luck.

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.

I just bought back my DUGKY contracts that I sold a few days ago for $9.00 at $2.00 so I’ll keep a full $7.00 x 600 = $4,200 in profits and be clear of any options obligations.    I didn’t get the full 80% but it was close enough!  I was hoping this would happen as I expect a brief rally next week in the market and then a precipitous plunge but anything can happen.

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.

I picked up 600 shares of DUG @ $51.80 in my Arbitrage account and sold 6 November $51 contracts @ $9.00 to rake in about $5,400. This will be an 18% return if I’m NOT called and 17% return if I am called. I sold in-the-money because I don’t want to be left holding the bag here but I don’t think oil will rally significantly over the next few weeks. If it does my OIH holdings in my Power Account will make some profits for me hopefully! This is a phenominal premium with about 4 weeks left till options expiry!

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.

I purchased back my 4 XHB contracts (XXJLW) for $0.15 today for $60 total.   I breached the 90% barrier on gains on the call options so I decided to close out and wait for XHB to rally and resell those contracts (hopefully).   I’m now back in cash (35k) in my arbitrage account and still hold 400 XHB & 400 DDM.   We’ll see how the market turns this week.

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.

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

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

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

Sold 4 more contracts on XHB.  Sold December $23 strikes for $1.50 to rake in about $600.   This represents 7% return in 131 days till December expiry.  I executed this trade because this now brings up my total return on XHB to 24% as the previous trade brought me up to 18 pct.  My goal is to make at least 2% per month and I’ve now achieved this goal.   I’ll just hold on to XHB till December.  If XHB drops, I’ll buy back the calls cheap, if XHB rockets up then I’m happy with 24% return for the year on this ETF.

So far, XHB has netted me 24% return for the year.

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.

Looks like XHB popped today (finally)!  I had purchased 400 shares back on 5/27/08 for $19.80 so I just sold September $20 strikes for $1.10 to rake in about $432.00.   This represents 6% return in under 40 days.  The XHB “well” had been dry for a while but it looks like its starting to gush out cash again.   I had purchased another 400 shares at $22.72 on April 10th that I’ll still hold on to but I feel confident about it climbing back up over the next couple of months.

So far, XHB has netted me 18% return despite the ETF being down 14.25% and that’s what ETF Covered Calls is all about.

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.

Here is a break down of my positions after June expiry.

Arbitrage Account:

• Own 800 XHB @ average cost of $21.26 (400@22.72, 400@19.80), XXJFT expired worthless
• Own 400 DDM at cost of $74.30. DDMFX expired worthless

Mini Account:

• Own 200 DDM at $77.80, DDMFX expired worthless

Power Account:

• Assigned 1000 DXD at $57.00, account now holding cash.
• Own 200 QID at $46.75, Sold 2 QIDGU at $0.75

So what to do next? It’s a waiting game; Mini account will have to wait until DDM gets back up to at least $76 while arbitrage account will wait for XHB to pop up above $19 and DDM pops above $72. I’m holding a big chunk of cash in my power account and I may buy 200 share blocks of DDM and sell at-the-money calls over the next few days AFTER the Fed meeting but anything can happen.

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.