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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (188357)	1/26/2015 6:21:31 PM
From: Bearcatbob	3 Recommendations Recommended By CommanderCricket roguedolphin Salt'n'Peppa Respond to of 206325

"BTW I've been meaning to ask you, being the option guy, what you think about doing covered calls at this point for the more conservative investors. For CHK I can buy the stock for $20 right now and sell a $20 July call for about 2 bucks and get about a 10% return assuming the stock price stays where it is, not a bad return for a 6 month investment. I believe that while most of the material carnage on the oil price is over, we are going to have a "U"-shaped recovery, not "V". This view seems to fit well with a covered call strategy for options about 6 months out." Why would you do a July 20 call for $2+ when you can do a Feb 20 for $1+. The objective is to play the game month month after month. Play it again Sam? Bob

To: Ed Ajootian who wrote (188357)	1/26/2015 9:18:17 PM
From: Keith J	1 Recommendation Recommended By CommanderCricket Read Replies (1) \| Respond to of 206325

Ed, Couple options. Agree with Bob July is probably too long in time. If you need/want to do buy/write, I'd look at the March 20s for ~1.50 or 21s for ~1 if you want to give yourself a little upside. If under your strike at expiration, just rewrite 2 months out. Or, you could sell at the money put - March 20s for ~1.40; or slightly out of money 19s for ~95 cents. Essentially gives you the same return for the 20s at the money. Lower return on the 19 puts vs. the 21 calls, but you need the stock to perform better to obtain that return. Credit Suisse has a 21 target for CHK, so they aren't overly optimistic on price improvement from here. FWIW. The 19 puts are the most conservative investment here, and is pretty aggressive given uncertainty in the energy market. Or could go further in time and sell July 17 puts for ~1.10 or 18s for ~1.45 if you want to trade time for more price protection. Or possibly the April 18s for ~88 cents if you don't want to go quite so far in time. KJ

To: Ed Ajootian who wrote (188357)	1/27/2015 8:52:08 PM
From: CommanderCricket	Respond to of 206325

Ed, Statistically the sweet spot is writing (selling) puts and calls at 45 days. June in my opinion is too far away. Sell Feb or Mar and don't worry about a "V" shaped recovery. If it happens, sell puts against the calls. Take advantage of the juicy premiums