I'm letting my GLD calls run. Yesterday I bought the GLD Mar 91's for 2.15. As of this writing I have moved my stop limit up to 2.95 so profits are locked in. I've been slowly moving the stop limit up. If the market sinks today gold should continue it's rise. If it rallies I will probably get stopped out. In any event, I'm not sure I want to hold these over the weekend because there may some news over the weekend that would cause the market to gap up on Monday and my calls to gap down.
With the market in turmoil gold has seen another run up. It bounced off of it's higher low support level supposedly to it's higher high resistance level. I think that there is a good chance that gold will move above $1000 unless the market starts a significant bear rally.
The last few days were great days to sell puts or buy calls on gold issues. As I've stated I've adapted and not written any puts for a while on stocks that are not precious metals because even 40% out of the money isn't safe in a slow bleed environment. Stocks are sinking faster than time decay erodes.
I'm probably not going to enter new covered call positions for a while because the market is in slow bleed mode and that is not enough downside protection. In addition, when the market rallies it will probably be a violent move up and the covered calls will limit gains.
I hope every one's portfolio is protected with index puts, healthy cash positions and tight stops. This market has been an incredible learning experience. [Note: out GLD calls at 3.45 for a 60% one day gain. I just didn't want to hold over the weekend. Nice few days with SPY puts and APOL puts. Diggin' playin' the dark side with tight stops...all cash in taxable. Have a good weekend.]
"Adjusted for Inflation, Dow's Gains Are Puny" WSJ
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I am convinced that we have hit (or are very close) to a short term bottom. I am planning to write OTP options on safe stocks or ETFs starting Monday. I am probably going to focus on 1 or 2 stocks starting with one contract and average up in case the option price increased. My favorites so far are RIMM and EWZ. Any other ones you would suggest? Thanks.
My strategy for a while now, for what it's worth, has been writing puts on the SPY. This week I wrote some March $60's. I realize you don't get as much premium compared to individual stocks, but the volatility is less and I'm not subject to severe fluctiations of individual stocks either. I figure if I can get somewhere between a 1-2% total return on a monthly basis by writing puts that are 15% out of the money, that's not a bad return especially in this market. Good luck to you!
Smart - good to hear from you..I continue to like GLD, SLV, GDX and TBT.
Anon - you've probably been doing pretty well, huh?
I unloaded a GLD JUN 82 call back on 2/25 for a 45% gain. I should've reloaded yesterday but held off. I'm also long SLW and TBT.
You call this a slow bleed? I'd hate to see what a hemorrhage looks like.
3percenter - haha...good point...it's only been a slow bleed for my accounts due to hedges and precious metals...SLW and TBT are some goodies. do you frequent the Cara board at all? they love SLW there
I read the site 1option.com recently. The guy has very good daily analysis and looks quite experienced with options too. Although nothing is for sure, but I like his analysis. By the way, I have a strong feeling that insiders bought GE on Wednesday since the volume was about 7 times the average volume and the stock has a positive trend on that day. I did some day trading on ERX with tight stops today and ended up with some fast gains. I kept half of my positions for possible continual rally. If you put tight stops it can give you "very" quick gains. In the last few minutes it jumped more than 10%. If short covering happens, it can easily fly to around $30. But I don't recommend selling puts on ERX as it is very risky.
Smart - yeah I read Pete's site fairly often...he's a naked put seller.
Did you check the SEC site to see if GE had insider buying? Their real estate exposure sucks.
ERX is fun to trade. I'm just going to keep writing calls on the stock I hold. I'm not worried about it at all.
The Fibonacci and Elliot Wave people are calling for a huge relief rally soon. ERX is a great way to ride the wave.
I'm looking at buying puts on GS and APOL when things are going down in addition to SPY puts.
Have you checked out the 10Q Detective? He's on my blog list. This guy finds problems and after he does they usually tank...but everything has been tanking lately...
What is SEC file. I want to check. Thanks.
Securities and Exchange Commission. Try www.sec.gov
PC, I like the idea of writing March $60 puts on SPY. They are about 0.8/contract. But, I feel the return on margin is much more than 1-2% Anon mentioned. Can you calculate the ROM for me? I think the return is around 8%.
Smart - things would really have to cave to get hurt on those March 60's, huh?
The missing variable is the margin maintenance requirement and that varies from broker to broker. But you can safely assume that is won't be more than 20% of stock price if put to you. In this case 20% of 6000 is 1200. 80 (the premium received)/1200 is 6.6% for 12 days or 200.74% annual. You would have to deduct from premium received your commissions so that would lower it a bit but that's how it's calculated.
As the stock moves closer and closer to the money the margin maintenance requirement can increase.
Good luck
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