SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Dnorman who wrote (7813)7/2/1998 8:52:00 PM
From: Tom K.  Read Replies (2) of 14162
 
Dennis, here's what I've been doing, but remember everyone's risk quotient is different.

1. I maintain a list of quality stocks (good fundamentals and moving up);

2. Each month, I look for issues on the list that happen to be at the low of their natural cycle at the moment.... I'm influenced by the Bollinger Bands, RSI, and the previous performance;

3. I then use some models to assess the various PUT trades that are available for the next month... nothing heavy here, just which OTM's have the best return for collateral required;

4. Place the order and monitor... this is where the risk is. If the issue drops significantly, there is a decision to close the position and take the loss or to get PUT the issue. Since the issues I pick are what I don't mind owning and are rising, I either don't get put or I generally will take the issue (need to have the funds set aside).

5. If put, another decision arises based on the movement. Generally I'll wait for the issue to begin to climb back (this waiting is hell for a person like me with little patience) and sell the same strike CALLs on strength. Usually I can't wait and just immediately sell. This gives me a second premium.

6. If I get called... that's OK. If not, I shift to a covered call strategy each month until it's gone.

In my approach, I am focused on a steady level of cash flow and I can't get greedy. I'm also not tied to the stock other then it's a solid one. My target is an annualized 40%. It's worked for the past year, but I'm not naive, we've been in a bull market and that hides a lot of weaknesses in strategies. I'm cautious and watch and adjust as I need.

Hope this is helpful. Let us know if you try something. If you learn from me, I can assure you I'll also learn from you.

Tom
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News