Morning again elpolvo:
Over the past few years I have been looking and experimenting with various investment techniques and styles, trying to develop something that would suit my purposes. Now we are all in this to make money (which somehow sounds dirty when said to blatently). After watching my investment valuation dwindle on a regular basis over the past 20 years (because I was foolish enough to place my trust in a stock broker, I decided to take matters into my own hands and began trading on my own nearly 3 years ago. I went through the day trader cycle and found that to be too stressful jumping in and out of stocks in a matter of minutes, if not seconds. It was too easy to find myself lying at the wrong end of a trade. Playing options was also interesting. Most of my trading experience was through trial and error and on various posts on SI. As I have indicated on prior posts, wisdom is the scar tissue of our past experiences. I used to sell long term cc with dell for the few extra points, but found that i was married to the call for too long. I would sell cc shortly before options expiration trying to squeeze out some extra shekels 1 week or less before options expiration. After reading Votaire's method of gerneating montly income, and also observing that even with runaway stocks, they usually come back down by options expiration. Here was a method with apurpose of generating income up front. This month alone, I sold cc on 500 Cree (at slightly above the money, 165, 500 brcm ATM (all april, not including rolling 2000 brcm from the 3/200's to the 4/230's), and the 500 rmbs at 4/350's. This resulted in a payment of $45,000 for the month just for the premiums for calls expiring in April. I still have my positions in JDSU, JNPR, ELON, and QCOM that have not been optioned. Will I be "upset" if rmbs goes to 450 by next month? I'd be lying, if I wasnt, but I have also made peace with this decision to sell these calls. This is also part of a larger experiment to see if I can get these lofty premiums from either these stocks or other new stocks that may become the volatile superstars for that month. If I can can produce these numbers on a fairly regular basis month after month, I can then make some decisions as to what I want to do with private practice. I hate the hours, the paperwork and the insulting reimbursements. I'd rahter work for free then have to deal with the beauocratic crap that has me buried deeper and deeper in paper with no end in sight. Selling these calls up fron for the instant gratification may not yield the potentially greatest yield of return (if rmbs goes to 450), but it will be more then enough to pay for my childrens' schooling and all home matters and will allow me to stay home (I'll probably move and set up a small practice in my home, and perhaps teach in the hospital) knowing that I have the freedom to do what I want, when I want and to actually see my children grow up. Now regarding seeing my wife more often, that's another matter <g>.
Now with RMBS, I figured that qcom may not make a move for a period of time. I still have a position in it and also own calls and leaps in it, RMBS, was given another boost by having the talking heads giving it a target price of 500 (when? don't know, but that's how QCOM shot up last year), Buying RMBS with 50% marginability and a 43 point premium for the 4/350, gives me a 25% return for the month (not to mention the additional 14 points, if it goes up to 350. If it goes down from the 336 purchase price, I have a 43 point cushion. Also, I almost always see some type of pullback near options expiration. In any case, it's going to be an interesting (and long month). This does remove some of the moment to moment stresses of point shifts, sine the profit is up front. Rgarding the issue of perhaps only selling the cc on half of my position on rmbs, that was a viable option, but my rationale for buying rmbs was for the option premium. Watching rmbs and other crash down in the beginning of the week, served to remind me that stocks are not invinvible and that if the MM deem that the market should turn around, it will. If I blow my extra profitability by having rmbs in the money by options expiration, I may elect to roll them, as I have with brcm over the past 3 months from 2/180, 3/200, 4/230 (which has also produced seveal thousand dollar per month based upon the differential in valuation as the older option was approaching expiry (usually 15 minutes before the closing bell on options expiration friday).
As I have said, I am still experimenting and learning in the process. I do have to thank everyone on this thread and SI for opening my eyes to the possibilites that are out there for us to grasp. To me this means freedom and inner peace, which is becomming more precious with time. Besides, It allows my mind to go into free form association to joke around. If it makes people laugh and smile, well it made my day, and to those that may consider it to be irrelevent, then I apologise for taking up their time.
Best regards to yuo and all,
(it's too late to correct any typo's, besides, I can't get the correctotype off my screen).
David |
