Tuesday, March 29, 2011

3/29 Daily Summary

No NDX Iron butterfly in place right now, the covered calls are working out ok with this recent up move.
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2 comments:

LJF said...

Do you look for the stock to get called away or do you buy back the call? Also do you have any downside protection?

March 30, 2011 at 6:10 AM
Gustavo's Trades said...

So far, here is what I have been doing:

1) Start the trade with a cash-secured PUT: Sell a put, have enough cash in the account in case I get assigned the put. For instance: I sold a 72.5 PUT on COST, and kept $7250 on my account, this was sold for about 0.8c (~1%).

2) If the stock drops below the PUT strike, let it get assigned. Then the next month I sell the next Out of the Money CALL for about ~1% as well.

3) If the stock goes drops 8%, I close the position (either buy back the put, or sell the stock & close the short call)

Note I'm still trying to figure out the best approach here, just used these simple rules above in order to get started.

I have also started studying the low moving stocks where this strategy would work best.

Hope this helps!
Gustavo

April 2, 2011 at 3:21 PM

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