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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (1908)	9/17/2014 6:03:31 PM
From: Jerome	1 Recommendation Recommended By Kirk © Read Replies (1) \| Respond to of 26899

Hey Kirk.... .I look at buying calls as gambling. It's always a gamble....but the risk factors can be used to the call buyer's advantage. On a rolling 12 month basis I'm up 128% in spite of last months and this month's sell off. Here are some general guidelines I try to follow. Nothing is carved in stone. I'm flexible. Buy call options on terrible down days like Monday of this week. I prefer stocks that trade in high volume. (INTC, BAC, CSCO, MU, GE, HPQ, ABX etc) The call option should be at least four months out and after an earnings report; I have about 10% of my portfolio value in call options that expire in every month from Sept to next January. That way if a given month becomes a disaster it only hurts a small part of my option portfolio. I keep every option I buy to within a few days of expiration. When I buy an option I use up the entire time value. I never roll options over because that just increases trading costs. In the past twelve months I have had 4 ten baggers in options. (MU, HPQ, SUNE, INTC). I prefer stocks that have a beta between 1.75 and 2.... If the beta is too high then the time premium is too expensive. (example of an expensive option I would stay clear of is First solar FLSR..).. Normally my option contracts have value of 3 to 5 hundred dollars as a starting point and they all are about one to two dollars in the money. I pay no attention to what the FED is going to do or not do. I'm not a market timer. I usually ignore the multicolor charts with the impressive trend up or trend down lines that impresses the uninformed. For me candle sticks are ideal for when the power goes out and not for predicting stock moves. So for those interested enough to read through all of this rubbish...here is my starting point for the next few weeks. The oil drilling stocks are near or at 52 week lows. NE, ESV, RIG, SDRL are in my sights now for call options going out at least six months. The combination of covered calls and call options is reasonably safe because of the high dividend. Seadrill ($30.34) pays a quarterly dividend of $1.00 per share. (about 12.5 %) and the company has recently stated the this dividend is safe through 2016. This is interesting because if you buy this stock on margin at 5% and get a dividend of 12% and then write a few covered calls for extra income. (The Oct 32's are worth .40/.50 at today's close) Nothing is guaranteed....but this is far more interesting than buying an ETF that grows as fast as a California water parched lawn. Note I own all the oil stocks mentioned above and have no plans to unload any of them. I'm not a financial advisor.....and I have no interest in a lavish lifestyle. To me its a math game. I plan to leave what I manage to accumulate to a few favorite charities and to my dog. My dog will live well, as I adapt to a new lifestyle.