Over the last several months, I think that has been a more prudent approach than trying to enter longs on bottoms and sell calls at tops.
Yes, there will be some cases where you wish you'd waited. For example, I bought MCDT last week for 85 and sold the APR 100 calls against for 15.75...now MCDT is at 117, so obviously I would have benefited by waiting on that call sale. But for every lucky bottom catch, there is a LU out there, so I feel the timing thing is something of a wash and the focus should be on a consistent strategy. Basically, there is no upside repair, so if a stock shoots up, I count my blessings and let it be called out (more like selling near-the-money puts than trying to skim a small premium, except for LTBH in SDLI where I sell far OTM). The hope is simply to achieve a better-than-market return over the long haul.
It is also a good way for me personally to move from a strategy of highly concentrated positions (QCOM, then SDLI) to one of greater diversity. Most of these new plays are net debits of less than 1% portfolio value. That makes it easier to experiment with buying new names, and also to experiment with different types of call sales (e.g., that sale of ITM GBLX LEAPS calls).
How will you handle your LU position going forward if it should happen to recover?
I will simply allow myself to be called out. If I felt particularly bullish, I suppose I could put on a new call play on LU if it finds a base and starts to recover.
Currently I have covered call plays on the following: ADCT, ADI, AMAT, ALTR, ATML, CMGI, CNXT, GBLX, LU, MCDT, NOK, NT, NUFO, QCOM, RNWK, SDLI, SSTI, TXN, VRTA, XLNX
Also naked calls and puts on SDLI. |
