btw, I work in the nuclear powered engine room on the submarine and have an instructor code with my nec since I taught in new york for three years. And if the navy didn't keep paying me them bonus checks, I would have left a long time ago.
If you see a choppy market and want to hedge your longs and protect yourself and maybe even make money on the downside, you may want to think about the following. It is not covered by pitbull or anywhere else. The covered call strategy got me started on the idea and I have been looking at it mathematically and it may work well in this kind of market.
Take your longs or boughten stock and sell some covered calls. (hopefully the premiums are good and preferrrably better than put premiums and calls usually are) Now, check what the puts are trading at for the next lower or lower strike price and use you premiums to buy more puts than you sold calls and preferrably some puts with a longer time horizon. If you get called, oh well, you can buy back or wait and buy on a dip and do it again. If the price does drop (usually does on stocks with high premiums and volatility), You not only protect your long position, but may end up making quite a little on your put position.
In a bear market, the opposite will occur. the puts will be higher priced than the calls and you can sell short and sell covered puts; then use that to buy some calls to protect yourself.
I have not tried this yet, but the paper trades I have used it on work out pretty well.
The more it changes, the more it stays the same! The premiums on the puts and calls will always be there due to fear and greed and the fact of leverage. The hard part is to make the system work for you.
For a good analysis on the covered call strategy, herm's thread is quite good. I am known as the bear contibutor on that thread since most of my picks have been on the short side recently.
As far as 5 to 10 percent a year. That is easy. My goal is 5 percent a month.
I hope this helps. Good luck and good trading. I see you made the top 10 in the si stock contest. I was #13, but would be doing better now since I was early on my gold longs. |
