Trade Management: ERX 3X Energy Bull

1/20/09 Bought ERX @ 30.19
1/21/09 Sold Feb 30 call @ 6.00 (expired)
2/23/09 Sold Mar 25 call @ 3.10

This is a trade that I've done in my Roth IRA. With the latest premium received I have downside protection to $21.09. If ERX is called away my returns will be 18.54% for 57 days or 118.72% annual.

I thought about waiting for ERX to rise before writing this but the returns are fine dropping the calls to the 25's. Basically, I got a real good deal when I first entered this trade. I thought about writing the 30's but I've got to manage a lot of ERX in several accounts and thought it would be best not to bet too heavily on ERX rising.

The option premiums on ERX have dropped since it's inception. In addition, the bid/ask spreads have improved but are still fairly wide. While I may continue to trade ERX I will also trade my old fav's XLE and OIH. As I've stated before, XLE has a few extra strike dates which allow us to get an extra few bites at the apple.