Few more Nov Covered Calls for analysis

Three more months to end this year. Time flew by too fast.

Anyways, these are some of the November covered calls (expiration is Nov 21) that may be worth analyzing. Plug & analyse these into the spreadsheet for covered calls.


........ The Following are ETFs ....................

UYG is at 20.4 ; Sell Nov Call Strike Price = 18 ; Premium= 4.50; Return before comm= 14%

UYG is at 20.4 ; Sell Nov Call Strike Price = 17 ; Premium= 5.10; Return before comm= 12%

QLD is at 58.80 ; Sell Nov Call Strike Price = 58 ;Premium= 5.90; Return before comm= 9.6%

DDM is at 57.04 ; Sell Nov Call Strike Price = 56 ;Premium= 5.3 ; Return before comm= 8.2%

UWM is at 48.05 ; Sell Nov Call Strike Price = 44 ;Premium= 7.2 ; Return before comm= 7.7%

UNG is at 34.02 ; Sell Nov Call Strike Price = 33 ;Premium= 3.30 ; Return before comm= 7.4%

SSO is at 54 ; Sell Nov Call Strike Price = 51 ;Premium= 6.40 ; Return before comm= 7.2 %


........ The Following are Stocks ....................

FTO is at 20.67 ; Sell Nov Call Strike Price = 20 ;Premium= 5.3 ; Return before comm= 10.5%

AIG is at 3.15 ; Sell Nov Call Strike Price = 3 ;Premium= 1.15; Return before comm=50%

LCC is at 6.15 ; Sell Nov Call Strike Price = 5 ; Premium= 2.05; Return before comm=22%

DAL is at 7.95 ; Sell Nov Call Strike Price = 7.5 ; Premium= 1.80 ; Return before comm=22%

NT is at 2.55 ; Sell Nov Call Strike Price = 2.5 ; Premium= 0.60; Return before comm= 16.7%

GM is at 9.76 ; Sell Nov Call Strike Price = 9 ; Premium= 2 ; Return before comm= 16%

AMD is at 5.16 ; Sell Nov Call Strike Price = 5 ; Premium= 0.62; Return before comm= 16%

TSN is at 12.69 ; Sell Nov Call Strike Price = 12.5 ; Premium= 1.55; Return before comm= 12%

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Few Nov Covered Calls

Analyze the November covered calls using the above screen capture as a reference.


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Oct CALLs n PUTs

Analyze & calculate the returns for following October covered calls. Strike prices (SP) are mentioned based on the current closing price as of Sept 23.

DDM -SP=55 or 54 ; GM -- SP= 11 ;QLD -- SP=58 ; FTO SP = 20 ; TSO SP= 20 ; DAL SP=10 ; UYG SP=20 ; FLR SP=57.5 ; AMD Sp=5 ; F SP=5 ; GM SP= 10 or 11 ; AIG SP=5 or 6 or 7

Analyze & calculate the returns on selling the following PUTs:

UYG : Sell Oct 16 or 17 PUT ;

AIG: Sell lOct 4 or 3 PUT

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Selling Oct PUTs

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Analyze the strategy of selling PUTs for October. When a PUT is sold, one has the obligation to buy the stock at the strike price should it close at or below the strike price on expiration. So for 10 contracts (1000 shares), one needs that amount set aside or the amount based on the margin requirements set forth by the brokerage in the event the PUT gets exercised at expiration. Or one can buy back the PUT (but to close) to simply close the position.

So assuming 10 contracts for the analysis, calculate the return with margin. Note that the screen capture shows the return without margin.

Also, investigate the probabilities for these positions.
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Writing PUTs: AIG, DAL, MER

Perform an analysis of the following Sept PUTs so as to get an idea about this strategy to either earn premium if Strike Price (SP) is not reached, or if a trader won't mind to buy a stock at a lower price. Of course, margin requirements have to be met with the brokerage firm so as to fullfil the obligation should a stock go down & hit the SP.

Stock: DAL ; Sell to Open PUT for Sept; SP= 7.5 ; credit = 0.75

Stock: MER ; Sell to Open PUT for Sept; SP= 17.5 ; credit = 0.56

Stock: AIG ; Sell to Open PUT for Sept; SP= 15 ; credit = 1.18

The obligation that a trader has is that if the stock closes at that strike price (SP) at expiration, the trader will buy the stock.

This is considered as a way to earn premium if it does not reach the SP, or a way to get a stock at a cheaper price becuase trader has pocketed the premium in advance.

If SP is not reached, trader keeps the premium. The premium received divided by the obligation to purchase is the ROI.

If SP is reached, then:

- The trader owns the stock at a lower price than SP, & can hold on to the stock or can turn around & sell a covered call against the holding.

- Or, if the trader does not want to own the stock & wants to bail out & not purchase the stock, then a reverse order needs to be executed to "buy back" (Buy to Close) the PUT & incur some loss/profit.

Position can be closed at a profit (if stock goes up, PUT loses value) or loss ( if stock goes down, PUT gains value) even prior to reaching the SP by simply buying back the PUTs

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Sept 5 thoughts on a down day

Analyze

.... Covered calls ....

LCC, US AIRWAYS SEPT 7.50 ;
HANS , HANSEN NATURAL OCT 25 ;
AIG, OCT 21
TIE, Oct 12.5

.... Calls ....
Jan 2009 -- BA , the 65 Call , symbol BAAM position looks good. Once the strike issue gets resolved, & the tanker contract comes thru, it will be worth it.

.... Bull Put Spread ....
ICE - Sept Short 80 & Long on 75 for a 9-10% return
SPX - Sept Short 1190 & Long 1185 for a credit of .85 for 5 dollar margin (17% rtn)

.... Condor using 2 spreads ...
RUT , September -- Bear Call leg of Sell 750/ Buy 760 credit = .95 ; Bull Put leg of Sell 670/ Buy 660 for credit of 1.15 ; net credit of 2.1 for a margin of 2

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Covered calls for analysis

Analyze the following October Covered Calls: AEO (SP=15) ; TIE (SP=12.5) ; SBUX (SP=15) ; HUM (SP=45) ; GM (SP=11) ; ; TSO (SP=20) ; BRCD (SP=7) ; INTC (SP=21) ; IBN (SP=30) ; HANS (SP=25) ; SBUX (SP=16).

Watch for reversal in - Oil, energies, airlines, steel, & financials.
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Sept - Oct Covered Calls

In a direction-less market driven by emotions, it is hard to take prudent steps whereby Calls purchased will deteriorate & not recover. So, it may be best to look for covered call strategies where equities may be at or near bottom and sell calls either near or ITM. Selling calls works in the favor of the trader where time works with them & the position sold will decay. If the equity appreciates & expires ITM, then the stock will get sold automatically at expiration to cover the short option position.

Analyze the following covered calls on paper/spreadsheet & calculate the return on investment. For ROI, calculate the minimum & maximum returns.

Majority of the strike prices here for analysis are ITM.

I) September Expiration : MBIA (SP=15) ; DAL (SP=7.5) ; AMR (SP=10) ; UNG (SP=36) ; & AIG (SP=21) this has taken a big beating over past few months; FED (SP=15).

Returns are decent whether one looks into the short term for Sept or a combination of well distributed positions for both Sept & Oct.

II) For October expiration: XLF(SP=21) ; UNH (SP=31) ; IBN (30 or 35) this is a great bank ; EEM (SP=40); TSO (SP=20) this is at the bottom ; VLO (SP=36); HON (SP=50) this is a stable company ; F (SP=5) Ford is too cheap to ignore;

You may also choose to analyze GM for both Sept or Oct. If you doubt F or GM, do some research. These companies are too big & own several product lines.

Watch JPM & MER for pull back.

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Post rally analysis

In general, a large upswing occurred on Tuesday. Whether it can be sustained will be a TBD. Expect a pull back due to FRE reporting losses. That may bring down FNM & various financials & make C, MER, WFC, WB, XLF attractive. Up one day, down the next.

Also, for August 6th -- Watch how the following perform so as to confirm an uptrend of staying above the recent trigger(s) of any of the recent corresponding 9 day or 22 day or 40 day SMA.

BA, WMI, UNH, CVH, PCP had one of the triggers.

WLT is yet to confirm its trigger, although volatility is very high. So analyze a vertical for same month or an Aug/Sept diagonal.

RIG announces earnings prior to market opening.

PSA is poised to make some moves prior to earnings on Aug 7th.

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Financials , Transport, Storage & Insurance

Analyze PSA: Earnings will be announced on Aug 7 after market close.
Buy Sept 75 & Sell Sept 85 Calls OR Buy a Sept 85 call for 3.9 or 4

Analyze JPM: Buy Dec 42.5 & Sell Sept 45 call for debit of 2.55


Analyze the following for returns-
MER BULL PUT SPREAD : SELL 22.5 & BUY 20 ; credit= .50 over 2.5 dollar spread for September


COVERED CALLS: (selling them for Sept)

Buy WFC at $30.5 ; Sell to Open Call STRIKE PRICE Of 31 -WFCIM at $2.10

Buy AET at $41.80 Sell to Open Call STRIKE PRICE Of 45 -AAFII at $.90

Buy UNP at $79.61 ; Sell to Open Call STRIKE PRICE Of 80 -UNPIP at $4.30

Buy XLF at $21.4 ; Sell to Open Call STRIKE PRICE Of 22 -XLFIV at $1.24

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JEC, ABT, FLR, RIG, PSA ... more - Watch n Analyze

CLF, V, SWN, and FSLR will hopefully have a nice ride. Will MA follow the same path of V , is to be determined. AET will announce its earnings too.

The following are some additional positions to monitor and analyze application of a few theories to see the performance.

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JEC: If it crosses above 82.95, its 40 days SMA , then analyze the following trade
CALLS - Buy Oct 80 & Sell Sept 85 ; OR BUY Sept 80 & Sell 85

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ABT : If it stays above 56.34, its 9 days SMA, then analyze the following trade
CALLS - Buy Sept 55 & Sell Sept 57.5

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FLR : If it stays above 86.09, its 22 days SMA, then analyze the following trade
CALLS - Buy Sept 85 or Buy Oct ; do not sell anything yet.
It may pull back a bit bec it rallied too much recently. It is generally on steroids.

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RIG: It is approaching its 22 day SMA of 143.07 followed by 40 day SMA of 145.3
So watch this one.

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PSA : is already on the watch list from a previous posting.

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Analyze Additional August Covered Calls

Analyze the following covered calls that provide 7 to 10 % return for August expiration in 16 days.

The price may vary based on when one enters, but the return is still good.

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Buy 1,000 Shares of AMR at $9.15
Sell to Open Call 10 Contracts of -AMRHL, Strike price = 10 for $1.15

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Buy 500 Shares of MER at $25.9384
Sell to Open Call 5 Contracts of -MERHD, Strike price = 25 for $2.35

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Buy 500 Shares of FNM at $11.90
Sell to Open Call 5 Contracts of -NJWHK , Strike price = 11 at $2.2

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Buy 500 Shares of XLF at $21.2395
Sell to Open Call 5 Contracts of -XLFHU, Strike= 21 at $1.16
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Buy 500 Shares of FRE at $8.489
Sell to Open Call 5 Contracts of -FREHL, Strike=9 at $0.88

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V , FSLR , PSA , SBUX

One can analyze the verticals so as to reduce the cost & have a limited risk & limited income strategy.

Or, simply buy a Call; put a stop loss ; or sell a call later a position moves up.

Stop loss will be 1 or 1.5 dollar below the threshold values mentioned for each.

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V : Analyze CALLS if it stays above threshold 75.21 - Buy Sept 75 & Sell Sept 80

Earnings July 30, after market close for Visa

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FSLR : Analyze CALLS if it stays above threshold 270.1 - Buy Sept 270 & Sell Sept 280

Earnings July 30, after market close. This is a high flyer with high volatility, so doing a vertical preferred.

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PSA : Analyze CALLS if it stays above threshold 80.71 - Buy Sept 75 & Sell Sept 85

Earnings August 7, after market close [Wait for a Pull Back]

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SBUX : Analyze CALLS if it stays above threshold 14.81 - Buy Sept 15 & Sell Sept 17

Earnings July 30, after market close

Controversial, however with cutbacks announced & bad news already built in, this may move upwards.

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Covered Call

Investigate Buy DAL stock for 7.32 & Sell August 7.5 Call for .90
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Some Changes n Updates

Analyze:

Will BIDU , MOS , GOOG & XOI be a good candidate for Straddle? These swing quite a bit. [ Buy a Put & a Call for Sept or Oct; slightly OTM and plot the curve ]

CALLS

SWN : Sept 32.5
V : Sept 70
CLF: Sept 95
AET: Sept 35
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PUTS
SBUX: Aug 15
MA: 260
MUR: 80
CMI: 67.5

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CLF broke thru its 22 & 50 day SMA, so change previous list to a Call for it or monitor it closely for changes

MET below its 22 SMA, so monitor for PUT position.

BTW: SBUX just went below its 200 SMA.
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Paper Trade These Thoughts

The above is the pricing of the stocks as of this morning. After monitoring it for an hour and confirming that the directional move is still upwards for Call or downwards for Puts, jot down on paper & see if the paper trade for these positions would be successful.

SWN, MET, NOV, VZ seem to have bounce back in the other direction & may confirm the suggested trend. Refer to a comment & nice reasoning posted by a reader on Visa in the previous post.

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Analyze for July 28-30 Earnings

Refer to the image & if some of you can analyze & provide feedback on these or any other suggestions, it will be great.

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July 24 Spreads

Analyze these Spreads that expire in August. With small fluctuation in pricing, the positions may need slight adjustments.
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Investigate Financial Plays

Once the finance bill to help housing & foreclosing real estate industry passes in next few days thru the political pathway, it will be interesting to see the financial stocks move. For Thursday, there can be several strategies to consider for FNM, FRE, SLM, BAC, C, & of course XLF. Along with simply buying the stock, one can investigate buying Calls as well as Bull Put Spreads.

Note - SLM had earnings report on Wednesday, so it will be interesting to see how it moves on Thursday morning. A sell-off reaction, such as the one for FNM & FRE that occurred last week on their bad news is welcome so as to load it up.

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Status on analyzing pre-earnings game - July 23 closing

BIDU - (this will be painful) announced stellar earnings, so the PUT will go down south at open. A remedial step to analyze will be to either 1) Buy a call & sell the PUT 2) &/Or convert the PUT into a Bull Put Spread & Buy a Call at same time.

Other positions - we will know the picture prior to open on Thursday.

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