What Stock Are You Interested in Selling Calls On?
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What Stock Are You Interested in Selling Calls On? Tami,
Thank you for your observation regarding "the first Monday after expiration". I haven't experienced that yet, however, I can understand it not
being the best time to sell covered calls if it is a down day in the overall
market. I do agree with your other point as a seller of covered calls and
looking for any day to do business and that was the same point I was trying to
make with my comment concerning, "I have new covered call orders ready to be
placed on Monday, Aug 20th." I would be looking to place new covered call
orders using the same guidelines as I would use on any other open market trading
day. I don't have any personal timing techniques that I use when investing
in the market, I'm just not smart enough to understand market timing.
However, I have tried to attain market performance through disciplined investing
using the following guidelines when writing covered
calls:
1.
Generate enough premium income, minimum of 10% annualized return, to compensate
for the strategy's main risk, the price of the stock could drop
sharply.
2. Be
positive on the stock.
3. Sell
options that are slightly out of the money.
4.
"Sell-to-Open" in the front month is the first choice. There are
situations when I may want to consider going forward to month 2 or 3 but never
more than month 4.
5. Be
aware of Earnings Announcement dates.
6. Be
aware of Ex Dividend dates.
7. Be
aware of Relative Strength Index (RSI).
8. Be
aware of "Bearish" Technical indicators.
I hope you do well with your covered call
positions.
Butch
In a message dated 8/19/2012 4:14:56 P.M. Central Daylight Time,
tamideangelis@gmail.com writes:
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