My Systematic Writing Example (most recent):
Stock is ZZZZ (one with which I've been intimate several times since 1995).
May 17/18, I'm driving to Boston to set up for a trade show. At the hotel I'm bored and I drop by Silicon Investor for the first time in ages, since I've been putting in long weeks on a new software development project. I notice some talk on ZZZZ, due my own due diligence and decide it's going to be a good stock for Systematic Writing.
May 19, HI 34 LO 32, I sell the Jun 30 Puts for 1 1/4.
May 25, HI 36 LO 34 1/2, I sell the Jun 35 Puts for 2 3/16 .
May 27, HI 40 LO 38, I cover (buy back) the Jun 30 puts for 3/8.
May 28, Stock splits 2 for 1.
Jun 7, HI 19 3/4 LO 19 1/8, I cover the Jun 35 Puts (17 1/2) for 3/8 (3/16).
Jun 8, HI 20 1/4 LO 19 5/8, I sell the Jun 20 puts for 1.
Jun 18, ZZZZ closes at 20 5/8, my puts expire the following day.
Jun 23, HI 21 1/8 LO 19 13/16, I sell the Jul 20 puts for 1.
Jun 30, HI 20 13/16 LO 20 1/16, to get a jump on the amount I sell
the Aug 20 puts for 1 5/8.
Jul 16, ZZZZ closes at 22 1/16, my puts expire the following day.
(Note that at this point in time I'm ahead $5 / share and I've
yet to buy the stock (this year) ).
Jul 22, HI 22 1/2 LO 21 3/16, I sell the Dec 17 1/2 for 1 3/16.
(Why -- I figured 5 months to expiration, I'm ahead $5 on the
stock, and the margin is only $2.25 (this is because exchange
minimum margin is 20% minus the out of the money amount with
a minimum of 10%, thus whenever you're selling a put which is
more than 10% of the stock price out of the money, your effective
margin rate is 10%, so I'm putting up 2.25, and getting 1 3/16
for 5 months, do the math, it's 126% annualized ROI .)
Note that had I been paying attention I would have noticed that
my favorite indicator for this stock has been signaling a top.
Aug 23, ZZZZ closes at 20 5/8. My puts expire. Up 6 5/8.
Aug 25, HI 20 13/16 LO 19 3/4, I sell the Sep 20 puts for 1 1/8.
Aug 30, HI 18 3/16 LO 17 1/8, I sell the Oct 20 puts for 2 9/16.
(Hey, it worked before!)
Sep 17, ZZZZ closes at 20 13/16. My Sep puts expire. Up 7 3/4.
Sep 27, HI 19 1/2 LO 18 1/4, I sell the Nov 20 puts for 2 1/2.
Oct 18, ZZZZ closes at 17 9/16. Put at 20, keeping Oct. Up 10 1/4.
Oct 22, HI 21 3/16, LO 19 1/16, I sell the Nov 20 CALL for 1 3/8
Oct 29, HI 22 7/16 LO 21, I cover the DEC 17 1/2 puts for 1/4. UP 11.
(Actually more since this trade was larger than my typical lot size).
Nov 2, HI 23 LO 21 7/8, I cover the NOV 20 puts for 1/8. UP 13 3/8
Nov 20, ZZZZ closes at 27 7/16. Called at 20, keeping Nov. UP 14 3/4
Dec 9, HI 24 11/16 LO 20 3/4, ZZZZ gives a clear buy signal,
I buy the Mar 15 calls for 7 3/4. Thus switching strategy from systematic writing to call buying for ZZZZ, for the time being.
Dec 13, ZZZZ closes at 24 15/16. My calls are Bid 10, I still hold them. |
