ETF Covered Calls

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.

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ETF Covered Calls 11-14-2008

RichSlick — Fri, 14 Nov 2008 22:33:00 +0000

There are three years of history on this blog to look back to get a small historical perspective. I’m going to link to the equivalent weeks for November 2006 and November 2007 so you can understand what I’m talking about when I say there is way too much volatility. If you click on the links, you’ll see that in November 2006 there were about a dozen ETFs which had high yielding call options > 3% over the next few MONTHS (not week)! If you look at November 2007, there were two to three dozen ETFs with high yielding call options > 3% over the next MONTH!

Now that you have that context, take a look at what the ETF-Cashinator kicked out for the next few DAYS (Not weeks, Not months):

There are about twelve dozen ETFs with high yielding covered call options for the next 5 DAYS! In a “normal” stock market we would need to be looking at December or January to get some decent premiums on call options but because of the crazy volatility, we can look at the next five days and get great deals. Next week will be another crazy week and unfortunately, I see a pattern of complacency. People buy when the Dow hits 8000 or slightly below then sell when it rallies toward 8900 and above. It’s this kind of pattern and complacency that will lead to a huge fall off when the market doesn’t rally as expected and we’ll be down to the next leg down (Dow 7000 or 6000). Be careful how you invest and make sure your strategy meets your goals. Good luck.

Market Update

RichSlick — Thu, 13 Nov 2008 02:14:38 +0000

I’ve been running the ETF-Cashinator every day this week and it’s not pretty. With 9 days to go before November options expiry, the calls and puts premiums are crazy. The ETF-Cashinator cranked out almost every ETF as having high call premiums. It’s going to be a rough nine days from here on out. The market may rally but I’m expecting it to fall off the cliff. The only glimmer here is I’m deep in DUG and that has been rallying while the market is dropping. Good luck.

ETF Covered Calls 11-07-2008

RichSlick — Sat, 08 Nov 2008 01:25:10 +0000

Two weeks left till November expiry and the ETF-Cashinator still shows a great deal of possible volatility. There is major hedge funds redemptions on the 15th of November so we’ll see what the week brings; I’m looking for opportunities to sell DUG or OIH calls for November expiry at a profitable price

ETF Covered Calls 10-31-2008

RichSlick — Fri, 31 Oct 2008 20:30:42 +0000

November expiry is 21 days away and if you think this week’s rally means it is an uphill climb from here you might want to think again… The ETF-Cashinator kicked out over 10 pages of ETF’s with extreme premiums. The ETF-Putinator kicked out more than the usual opportunities with very high premiums. There will be more market volatility in the coming weeks. I’m guessing the election is going to make some people very happy and some very mad which may not bode well for markets in the short term. If OIH rallies on Monday, I’ll try to sell calls or sell out of OIH to revert to cash but we’ll see what happens. Here are this weeks ETF-Cashinator picks…..

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!

ETF Covered Calls 10-24-2008

RichSlick — Fri, 24 Oct 2008 22:56:51 +0000

Another bloody week in the stock market. The next 8 stock market days will be remembered forever from my perspective but we’ll need to wait and see what happens. The ETF-Cashinator cranked out a ton of investment ideas and I’m only going to list the top 6 pages.

Trade - Buy/Write UYG/UUFKH

RichSlick — Fri, 24 Oct 2008 18:37:20 +0000

I picked up 200 shares of UYG in my mini account for $7.95 and sold 2 contracts for November $8 strikes @ $1.40 to rake in about 18% ($260) today. I think UYG may drop further but I’m comfortable holding it from here but who knows, maybe all these banks will go bankrupt in the next 30 days…..

DUG Options Crazy

RichSlick — Fri, 24 Oct 2008 03:06:20 +0000

I’ve been keeping an eye on DUG this week and the option premiums are crazy. Warning: This stock has been swinging wildly $8 to $12+ more daily and is highly correlated to the price of oil. With OPEC meeting later this week it’s anyone’s guess what will happen with this ETF. When oil goes up, DUG goes DOWN and when oil goes down, DUG goes up. The in-the-money options are trading at $7 which is a 15% return in under 5 weeks till November expiry. I’m tempted to purchase 700 shares and sell the calls to rake in $4900 but I’ll wait until OPEC meets or I have more information on where oil is heading.