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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (4416)4/21/2006 9:39:55 PM
From: Jerome   of 5205
 
Hi Uncle.... In tech stocks I use the same group over and over each month. I generally use AMAT, NVLS, TXN, HPQ, and MOT. In Energy I use CHK, EP, WMB and PKD. This week I get called out of TXN and will move to another tech stock that is in the bottom of some channel. I get to keep MOT for the fourth consecutive month and CHK for the third Consecutive month. This will be my second month with NVLS at the 25 strike.

HPQ is in a nice uptrend for the past six months or so and the premium is worthwhile.

If AMAT drops below 18 I'll be a buyer and then decide if I use it as a short term trade or cc stock. I would like El Paso better if it would stay closer to 13. WMB which is a play on natural gas is volatile but overall hangs around the 20 to 23 price range.

Tech and energy are great teeter totter stocks. When energy rallies like today tech stocks crash and when energy crashes tech stocks rally.

It is my viewpoint that a good entry point on a stock is more important than the covered call premium . WMB under 22 1/2, AMAT under 18, CHK under 32 1/2 NVLS under 25. EP under 13. These are the positions that worked well for me since last October.

A modest gamble would be GM at todays price and a cc at the 22 1/2 strike on the 1st of May when April sales are reported. With about 23 Billion in cash GM will survive and recover. JMO

Have a good week-end......Jerome
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