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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (20365)	9/13/2003 11:22:55 AM
From: russwinter	Read Replies (1) \| Respond to of 39344

I'm a big proponent of naked call and put writing strategies. It's generated tens of thousands in steady incremental profits for me over time. Once in awhile one of them blows up on me, but the time decay factor day in and day out is pretty powerful. I like it because your timing doesn't have to be perfect as it does with option purchases. I rarely buy options. For example, I've been writing naked calls on the QQQ, every month since May. Obviously, the QQQ itself has gone against me during this period, but the premiums I've collected have decayed at a faster rate than the QQQ has advanced (gradually). For instance I sold calls on the July 31 @ 1.40, and July 32's @ .70 in late June. At July expiration QQQ was trading around 31.25, which was close to or slightly above the level of my original write price. The July 32 expired worthless (and profitable to me to the tune of .70), and I bought the 31's back at .25 for a 1.15 profit per call. Then I waited for a QQQ flurry to rewrite the Aug 33 @ .95, again expiring worthless. For Sept I wrote the 33's @ .90, so that one's still up in the air, and I have Oct 34 sold @ 1.40. I write options on individual stocks as well. In Oct, and earlier this year when I was more bullish on the market Subject 53273 I just wrote puts on names I wouldn't mind owning anyway. Most expired worthless and profitable, and when not I generally got the benefit of lower entry prices. Right now, I have calls written on names I wouldn't mind being short. I have TOL Sept 30 calls written @ 1.05. With 5 days left TOL is at 29.76. I'll just let in run down whether it trades above the strike price or not. If it gets exercised, I will have an effective short price of 31.05. If not, I may just rewrite the Oct, if the stock is trading near 30, as the premium on this one is rich. Ditto on COF Oct 60's written @ 3.00 late last week on the surge, and GM Oct 42.5 @ 1.75. In my favored long area of energy, the premiums usually aren't rich enough. The one exception is NBR, and I've written naked puts several times when the stock trades towards toward support in the 35-36 area. Note to Waterhouse users. They will hold your orders on naked trades, sometimes up to three minutes. Exercise commissions at CT at $9.95 versus $19.95 at WH. I've moved to Cybertrader for these trades, and may in time take everything there.