ETF Covered Calls

ETF Covered Calls 03-05-2010

RichSlick — Sat, 06 Mar 2010 01:05:22 +0000

Nice market rally today but will it hold? The ETF-Cashinator is showing extreme xolitility with only 14 days till March expiry and it could go either way. There has been so much relentless negative pessimism that I have started to walk away from the edge of the cliff; following the herd over the cliff is never a good idea BUT anything can happen. The market may continue to climb through March but the really worrying thing is energy inflation spiking to absurd levels. Why is oil at $80/barrel again when demand is down? What does that mean if the economy is starting to take off, oil at $300 per barrel?

Here’s the google link.

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ETF Covered Calls 02-26-2010

RichSlick — Fri, 26 Feb 2010 23:31:09 +0000

The stock market is all over the place and it doesn’t look like it is going to get any better. The spillover of this crazy xolitility has now been extended thru April and May but March may be the linchpin of what happens next. As bad as things may be in the U.S. they are far worse in Asia and Europe at the moment and that bodes well for US markets as the flight to safety rests here for the moment. I’m long on energy for the long term and short on energy for the short term.

Here’s the Google Link.

ETF Covered Calls 02-19-2010

RichSlick — Fri, 19 Feb 2010 23:58:19 +0000

February expiry is gone! It’s time to look to the future so I powered up the ETF-Cashinator to get a glimpse of tomorrow! It looks like insurance policies and bets are being made that China, Oil and Gold are going to drop and it’s not surprising since the Fed raised the discount rate and may have similar plans for the immediate future. The xolatility is just as crazy as ever and anything can happen over the next couple of expiries!

Here’s the Google link.

Trade – Buy/Write SWN/Sep 18 2010 $45

RichSlick — Thu, 18 Feb 2010 23:50:54 +0000

Call it greed or call it savvy investing, I just couldn’t help myself and bought 200 shares of SWN at about $45.00 and sold September $45 strikes for $5.54. That’s not a typo I sold the calls for $5.54 to rake in $1,100 and September is only 7 months away. I normally don’t ever do covered calls on stocks but I made an exception this one time because of several factors:

1. There is a high probability that these natural gas heavy companies will be picked up by a major.

2. The premium here is a bit ridiculous at 12% for just 7 months away.

3. I believe we are possibly getting to the bottom of this recession and the climb back up might start this year.

4. If the recession is coming to an end, then energy demand will rocket and I’m trying to capitalize on that now!

We’ll see how this pans out in a few months. BTW, if SWN tanks, I will buy back the calls cheap and hold for the long term.

Trade – Sell 4 March $120 2010 on OIH

RichSlick — Wed, 17 Feb 2010 19:23:20 +0000

I just sold four contracts on OIH for $5.10 to rake in about $2000 in cold hard cash. This will amount to a 4.26% return in under 31 days if assigned using $119.52 as my cost basis. Note: I’ve already raked in additional cash on this puppy in previous transactions. I actually anticipate OIH dropping in March below $120 so I can buy back my calls cheap and sell into the future (April, July, January 2011). My anticipation on drop is based on winter going away thus lowering demand for heating oil and natural gas. Natural gas prices have been in the gutter lately and that gutter is about to get nastier. Note: Long term natural gas and energy prices will spike up and have been priced into markets already so please don’t send me troll posts asking why I am both shorting energy and long energy – it’s complicated!

Trade – Buy/Write FCG/June $18 2010

RichSlick — Wed, 17 Feb 2010 19:16:25 +0000

With natural gas prices continuing to be depressed and likely to go down a bit more I decided to buy into some natural gas producers long and sell short using FCG so I purchased 500 shares slightly below $18 and sold the June $18 strikes (2010) for $1.58 to rake in about $800 or (8.8% return) in less than 4 months. If we have an economic recovery and energy prices climb up I’ll likely be called and sell my shares, if the economy plunges into the abyss then I’ll be happy holding FCG for the long haul….I gotta make me some money in this market!

ETF Covered Calls 02-12-2010

RichSlick — Sat, 13 Feb 2010 00:50:21 +0000

Only 7 more days till February expiry and the ETF-Cashinator is showing tremors which may lead to a catastrophic earthquake in the financial markets. Back in January I was seeing an increase in xolatility for February and March and predicted a Dow slide down and now I’m seeing an extension and increase into April of the same xolatility. It is an indication that there may be a sudden jerk up or down in the market and I’m still biased to the down side. The big news is sovereign defaults and a domino effect of cascading defaults which will plunge all into darkness but there is always hope.

Here’s the Google Link.

ETF Covered Calls 02-05-2010

RichSlick — Sat, 06 Feb 2010 01:01:26 +0000

Only 14 more days till expiry or 10 trading days depending on how you like to countdown. With the Dow down so much I did attempt to buy back my DDM calls cheap but the trade expired as my target wasn’t hit. The main concern with the markets are sovereign defaults of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) and that is one of the main reasons I bought USD call options for March expiry in the event major panic hits and the world runs toward the dollar. The USD calls were also protection against OIH dropping hard. I honestly don’t know where we go from here as the ETF-Cashinator is showing high yields on almost any ETF. It’s crazy!

Here’s the google link.

Trade – Buy To Close OIH Feb 20 2010 120.0 Call @ $1.39

RichSlick — Sat, 06 Feb 2010 00:33:27 +0000

Back in December I sold 4 OIHBD (February $120 strikes) for $5.67 and today I closed that position at $1.39 to keep about $4.28 in profits. If you keep an eye on OIH, it bounces up and down like a basketball and I missed an opportunity a few weeks ago to close my position when OIH dipped to $116. I didn’t want to miss this opportunity so I bought back and hope that OIH goes above $120 again over the next couple of weeks. Energy prices are very volatile so I think it’s a prudent move.

Wall Street Is Turning Into One Huge Casino

RichSlick — Fri, 05 Feb 2010 02:21:10 +0000

Wow. I ran the ETF-Cashinator tonight to see what was happening and the volume on leveraged ETF’s is totally insane. Wall Street has turned into one giant casino. Check out the movement of EDZ and over 2x the normal trading volume today at 13 million shares vs average of 6 million! Almost any leveraged ETF (FAS, FAZ, QID, etc) has had huge increases in volume. When there seems to be a clear indication that the market is sliding or climbing, investors (i.e gamblers) pounce and load up on these ETFs and options. I have a sinking feeling in my stomach that this isn’t going to end well and the whole thing will get “ripped” apart under the stress and strain of ups and downs. It’s no different than a jumbo jet that goes through too many periods of compression and decompression until the fuselage rips open. Be careful.