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Strategies & Market Trends : Calls and Puts for Income -- Ignore unavailable to you. Want to Upgrade?

To: Jeffry K. Smith who wrote (4346)	7/4/2010 5:53:36 AM
From: dealmakr	1 Recommendation Respond to of 5891

Hi Jeff, Its a tough market to trade from the NP side right now and you have to trade from your comfort level and risk profile. I usually use market volatility to add to a NP position IF I want to own the stock at that level or to get a better cost average on the premium written. Doesn't mean that I am on the right side of the current trade, but positions can be adjusted at any time depending on how the stock acts. In closing the MAC call position, more money could have been made from maintaining a short on the stock from the level where the trade was entered and even though I scalped MAC a few times from the short side, would have shown a better return by letting the position come in over a few days more with the market weak. Options are just one of the tools in trading and not the only tool. They give you the ability with naked puts and calls to put on a position for entry either long or short at the price level you want. Covered calls to produce income on a position that you believe is in a neutral or slightly bullish trend can certainly augment your income, while covered puts on a stock that you are short can be a way to cover your short stock position at a level where you want to exit the trade. Not every trade is a winner. In looking at my WFR position now under water by about negative 3 bucks/share, even with closed option premium against the position of about 1.40/share, its still a good size loss on 6000 shares. In trading the stock and options, my timing could have been a lot better on buying the stock and closing the open option trades. I did leave quite a bit on the table by not letting some of the trades expire like the May 11 puts, but by closing trades and reducing risk where it seemed appropriate, you can hopefully manage your position better. Good trading dealmakr Option Trades opened and closed last week 06/29/10 Bot Close 50 MAC Jul 45 Call .05 opened at .40 06/29/10 Bot Close 25 DELL Jul 12 Put .27 opened at .22 06/29/10 Sold Open 20 AKS Jul 12 Put .50 07/01/10 Sold Open 10 AKS Jul 12 Put .79 07/01/10 Sold Open 25 BRCD Jul 5 Put .21 07/01/10 Sold Open 10 CLF Oct 25 Put .76 07/01/10 Sold Open 10 DELL Nov 10 Put .59 07/01/10 Sold Open 22 SMOD Jul 5 Put .15 07/02/10 Sold Open 15 Dell Jan 7.5 Put .26 07/02/10 Sold Open 22 SMOD Jul 5 Put .15 Open options positions 07/02/10 Short 80 AKS Jul 12 Put avg .34 Short 30 BAX Nov 37.5 Put avg 1.02 Short 75 BRCD Jul 5 Put avg .12 Short 25 BRCD Aug 6 Call .15 (covered call) Short 100 BRCD Oct 6 Put avg .84 Short 40 CLDX Jul 5 Put avg .60 Short 25 CLDX Aug 2.5 Put .10 corrected month Short 50 CLDX Aug 5 Put avg .72 Short 75 CLDX Aug 7.5 Call avg .23 (covered call) Short 25 CLDX Aug 10 Call .10 (covered call) Short 50 CLF Oct 25 Put avg .63 corrected amount Short 100 DELL Nov 10 Put avg .44 Short 40 DELL Jan 7.5 Put avg .22 Short 85 GE Sep 12 Put avg .23 Short 25 GE Dec 7.5 Put .16 Short 25 GE Jan 7.5 Put .27 Short 20 GXDX Jul 15 Put .40 Short 25 GXDX Aug 15 Put .70 Short 50 INTC Jan 12.5 Put .335 avg Short 20 ONB Jul 10 Put .20 Short 94 SMOD Jul 5 Put avg .12 Short 50 SMOD Aug 5 Put .20 Short 25 SPWRA Dec 5 Put .17