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

To: Robohogs who wrote (4857)	3/24/2011 6:53:45 AM
From: dealmakr	1 Recommendation Respond to of 5891

Hi Jon, This is what I looked at when opening the SVU position as far as possible return on capital. Stock purchase (33520) on 4000 shares @ 8.38 Option premium 200 on Apr 7 puts 2400 on Jul 9 calls 2600 Dividend 352 May cycle Capital appreciation at 9 if called 2480 Total return theoretically if called 5432 or 16.2% for a bit less than 4 months. If not called and the stock is still 8.38 would have taken in 2600 options premium and 352 dividend total 2952 for a return on capital of 8.80% not adding in any more trades. The Apr 7 puts were only opened IMHO as I believe that the stock will hold above 7 and the options expire (04/15) before earnings on 4/18. Usually don't open cheap puts like those for an opening leg, but looked at it kind of like a bit of return on capital for low risk. Not looking to add any additional naked puts until earnings are out Now we all know that the market can chew any trading plan to shreds, but I thought the risk/reward numbers looked fairly good. Like any other position, this one can be changed and adjusted as events unfold and risk can be added or reduced depending upon whats going on. Would probably have taken a bigger opening position, but too much going on right now in the world. Good Trading dealmakr