Ron,
Like most here, my strategy is always changing, hopefully for
the better :-)
Right now, my new trades are almost 100% options. I focus on
just a few stocks (INTC, DELL, CDN, AMD) and try to get a good
feel for how they trade. I also have a core position in INTC
that I will keep for a LONG time and that I write covered calls
against. Actually, this core position started out as a long
call position that skyrocketed after the Pentium bug mayhem.
I decided to just exercise the calls and the rest is history!
Anyway, I sell calls or puts naked based on the trading range that
I give an individual stock. If I see situations that I think are
too extreme, I will go long calls/puts heavily. This has only
happened a couple of times. Once with INTC mentioned above,
and once with DELL this time last year. I only wish I had
exercised the DELL calls like I did with INTC.
The drawback to shorting options, of course, is when big price
moves happen. I had my INTC shares covered last year when INTC
was about to reach the 52 week high (78 I think). I planned on
this number to be resistance, and kept rolling up until INTC
hit 90. I then threw in the towel and didn't write calls again
until 160, which even then I had to roll up to 170's later in Feb.
Anyway, it's not perfect, but it seems to work for me.
Jim |
