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Strategies & Market Trends
Covered Calls For Income Production

An SI Board Since December 2014

Posts	SubjectMarks	Bans	Symbol
32	2	0	NLNK

Emcee: J.B.C.	Type: Moderated

Introduction Market Data Compact

My purpose of creating this thread is to develop an income strategy utilizing covered calls. Nothing new, but my strategy is a post retirement strategy which is not for a few years. One problem I recognize is that if you're invested in top stocks you're not necessarily generating income if those investments don't pay dividends.

1st I am a Point and Figure follower. I subscribe to the Dorsey Wright web site:

dorseywright.com

Dorsey has developed trading strategies based on Relative Strength

Throughout the day, DWA does a market sweeps to find attractive covered call scenarios. Usually 4-6 months out, and have an annualized return greater than 20%.

These trades will be loosely rules based but follow this general basis:

- Trades to develop these strategies will be paper trades but from time to time I may also make the trade for my own purposes in my actual accounts
- The starting account position will be $500,000 cash
- The intent will be to hold ~ $100,000 in any one month expiration position
- Positions will be made by buying equities from the top 5 ranked sectors in DWA based on relative strength
- Positions will be generated on a real (current) market value. I'll not look and say: "oh I could have made that trade" after the moment has past. I've done buying the equity and concurrently selling the call in this manner, so this is real.
- I will generate trades based my review of point and figure charts for those top sectors.
- The stock must be in a positive trend
- The stock is assumed to have been called away if the call ends in the money on the expiration date
- At this time I haven't determined what I will do with an equity that hasn't been called
- Trading reviews will begin after January 1st 2015.
- As on-line trading is so inexpensive, I won't account for the cost of trades
- I care less about the fundamentals of stocks, I trade solely based on a great Point and Figure patterns
(so if you're a fundamental trader, you might not get anything from this thread. I'm not here to argue merits of one vs the other, P&F works for me and that's all I need)
The top 5 ranked sectors (of 40 total) by RS are (Date 12/30/14):
Biomedical
Aerospace
Drug
Textile
Healthcare

- Writing Covered Calls is a bullish strategy.

Questions, critiques, participation are welcome.

***
A recent trade I made (late October) as an example of this strategy:

I purchased NLNK for $39.35
I was able to sell the April 40 call for 15.18
I am currently down on the equity trade less than 1% (as of 12/30)
I am currently up on the covered call ~24%

At the time of this trade, a called trade produces an annualized return greater than 90%. It is not usual to see this great of a return. but sometime they occur.

Go to reply# or date (mm/dd/yy):

Reply	Message Preview	From	Recs	Posted
32	According to my matrix, I will have at least 3 expirations coming. I will revie	J.B.C.	-	5/13/2015
31	I haven't kept up with this very well, things are personally going balistic,	J.B.C.	-	4/15/2015
30	I closed the PHX trade at a loss. I will post details when I have the opportuni	J.B.C.	-	3/13/2015
29	New Trade: SYNA Stock Cost Option Income Days to expiration Strike price M	J.B.C.	-	3/10/2015
28	New trade, a little dabble in the oil fields as they've been so beaten up:	J.B.C.	-	2/13/2015
27	Stock BMRN 200 90.43 18086.00 Open 1/6/2015 CALL July 95 2 10.07 2014.00 Open	J.B.C.	-	2/12/2015
26	New Trade: PANW Stock Cost Option Cost Days to expiration Strike price Mon	J.B.C.	-	2/12/2015
25	I need to update this chart when I have time. I have ~ $200,000 invested of a $	J.B.C.	-	2/10/2015
24	New Trade: NFLX Stock Cost Option Cost Days to expiration Strike price Mon	J.B.C.	-	2/10/2015
23	UAL Stock Cost Option Cost Days to expiration Strike price Month 700 Shares	J.B.C.	-	2/6/2015
22	New Trade: UAL 68.28 June 70 Calls @ 8.20 600 Shares	J.B.C.	-	2/6/2015
21	So far: Qty Cost Total Cost Status End of contract Value Missed Op Date Exe	J.B.C.	-	1/20/2015
20	I've changed my target investment value up to ~$35,000 - $50,000 depending o	J.B.C.	-	1/20/2015
19	AMBA Purchased: AMBA Stock Cost Option Cost Days to expiration Strike price	J.B.C.	-	1/20/2015
18	A Buy - Write that showed up, I'll look Tuesday at the opening and see if it	J.B.C.	-	1/17/2015
17	I'll work to save my paper trades to Excel this weekend.	J.B.C.	-	1/17/2015
16	Another issue I've noticed that I've been looking at the covered writes	J.B.C.	-	1/17/2015
15	As I said in the header; writing covered calls is a bullish strategy. In any of	J.B.C.	-	1/17/2015
14	New Trade - Real Time but a paper trade: American Air AAL Stock Cost Option	J.B.C.	-	1/16/2015
13	When I used "Option Cost" in my Excel sheet that I copy and paste it i	J.B.C.	-	1/16/2015
12	Interesting issue, the trade was recommended at $9.90 for selling the call on IS	J.B.C.	-	1/16/2015
11	Trade for this test account and for real: ISIS Stock Cost Option Cost Days t	J.B.C.	-	1/16/2015
10	Trade: (Real Time) 700 Shares ANAC Shares 32.50 Sell May 35's @ 2.95 An	J.B.C.	-	1/16/2015
9	BMRN Trade calculations: Annualized called return =(((strike price-stock	J.B.C.	-	1/16/2015
8	Top 5 sectors has recently changed. They are: BIO Aero Precious Metals Drug He	J.B.C.	-	1/15/2015

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