Hi Joey, RE: " How would you analyze the volatilty of individual stocks then?"
What are you seeking to do?
One example of volatility is, the premiums from writing covered calls are much higher for volatile stocks like Amd, than stable stocks such as Intel, Cisco, and Microsoft.
After Amd tanked a lot, I purchased some Amd and wrote covered calls on it, just to get their higher premium, then applied the premiums towards purchasing more intc or csco, etc. But Amd has a bit too much risk for my personal comfort level to hold for a long period of time, so these are generally short holds with quarterly expiry.
Intel doesn't have that much volatility by comparison to AMD, so the premiums are smaller but the underlying stock is a lot more secure.
While Intel's premiums are smaller, the advantage you have with Intel is not only stability of the underlying stock eventually recovering but the calls generally expire worthless during a downturn so your stock isn't called away. But since the economy is recovering, am easing off the pedal.
But rather than writing covered calls all the time, I'd like to see the stock simply go up for a change. This downturn felt too long.
Regards,
Amy J |
