Dear Mepci:
Thanks for sharing your thoughts. Over the years there have been good trades and bad trades. As one poster once remarked, it's OK to make mistakes, just recognise it for what it is then learn from it. Most of my option stratagies involves selling covered calls. Some of these trades have limited my profits by being called out, as with RMBS back in july. Other times, I have speculated on JDSU calls for August when it was to be placed on the SP500, which because of deteriorating market conditions, have caused me to sustain some significant loses. Usually, I try to adjust my options strategies based upon stock performance and seasonal shifts in the marketplace. One of the problems that I face is knowing when to sell a position (when it's profitable). It seems that selling short term covered calls at various times before options expiration at a strike price that would allow me to make some additional profit (usually I sell the short term call at the strike price right above maximum open interest for that month). If it reaches the strike price, in the money and get taken out, then I can't complain (too much, anyway) because I have already made a profit with the combined equity valuation and the premium of the option. Using margin more prudently is another lesson that I have taken under serious consideration. With regards to buying calls, that's a bit more challenging. I did it with success with IBM, MYGN, BRCM when the company ran into a significant pricing correction as a result of the overall negative market sentiment (read market correction) as opossed to any intrinsic change in the fundamentals of the company itself. Buying calls and leaps with QCOM has so far proven to have been a disaster, but I still have several months left to go before proving myself right/wrong.
I do appreciate any and all constructive critiques. That is one way that I get to learn from these experiences.
Regards,
David |
