ETF Covered Calls » Arbitrage Account Trades

Trade – Buy To Close DDM JUL 17 CALL $48

RichSlick — Tue, 01 Jun 2010 17:47:53 +0000

Back in January 2010, I sold 4 contracts on DDM July 17 $48 strikes on the premise that the Dow would take a hit by summer. Well summer is almost here and the Dow has tanked. I bought back my 4 DDM contracts for $0.35 today after selling them in January for $3.20. If this is some type of market correction then we may get a pop in a few weeks and I’ll sell some contracts on DDM for October. The $48 strikes for Oct 2010 are currently selling for about $2.00 and if the market pops it will likely venture back up to $3. If I can do this a couple of times, I will eventually either break even or make some additional profits.

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Trade – Sell 4 HXDGV

RichSlick — Tue, 12 Jan 2010 00:36:02 +0000

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.

Trade – Sell DUG

RichSlick — Thu, 20 Nov 2008 16:29:48 +0000

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.

Trade – Buy To Close DUGKY

RichSlick — Fri, 31 Oct 2008 18:59:44 +0000

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.

Trade – Buy/Write DUG/DUGKY

RichSlick — Mon, 27 Oct 2008 16:59:55 +0000

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!

Trade – Buy To Close XXJLW

RichSlick — Mon, 20 Oct 2008 17:40:19 +0000

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.

Trade – Sell DUGJP

RichSlick — Mon, 29 Sep 2008 14:25:17 +0000

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.

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.

Trade – Buy To Close DUGJQ

RichSlick — Mon, 22 Sep 2008 17:32:34 +0000

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.

Trade – Buy/Write DUG/DUGJQ

RichSlick — Thu, 18 Sep 2008 18:27:34 +0000

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.

Trade – Sell XXJLW

RichSlick — Mon, 11 Aug 2008 18:38:02 +0000

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.