Reviewing Options for Monday

Looks like I will have to go into management for F, LCC, PMI, TIE and VLO. Sell Jan 09 or 10 lower options at a minimum of 10% return and wait for them to drop in price to net about 4%. Requires I watch closely incase stock reverses and starts back up (price crosses over) short term MA). It stock reverses I buy back for what ever return is available and hope it is not for a negative return.

Other stocks in holding will be sold for July covered calls and I will determine what new postions to enter. I may not enter any on Monday if we are in a down market.

F, TIE, AUY & LDK - All Over 6% Income in June

My net monthly percentage returns for June. Some were held less than a month so the annual percentage return is better than approximately 12 times the monthly. All percentages are based on either the price paid for the stock or the call sale date market price of the stock, if it is higher than my cost.

Called in June (excercised) or bought back and stock sold:
GRA 3.8%, SIMO 2.5%, SAY 3.9%,

Not Called in June (expired):
TIE 9.2%, AUY 6.2%, LDK 8.5%, XHB 3.1%, VLO 1.7%, F 15.5%, LCC 1.8%, SCHW 1.5%

No Action Today

Today was just a day ow checking to besure no action was necessary prior to expiration day tomorrow. I will be closely watching VLO and LDK to besure they are not called out tomorrow and will start to review actions for Monday once I get a firm feeling for how many positons will be exercised and provide funding for new positions.

VLO & LDK Bought Back and Sold for Quick Cash

I bought Jun 45 LDK back for $13.25 and sold Jun 40 for $51.74. This results in an additional call income of $38.69 for this position for June. An increase of about 12% in the call income.

I bought Jun 52.5 VLO back for $10.25 and sold Jun 45 for $15.74. This results in an additional $5.49 for this positon for June. An increase of about 7% in the call income.

I use this technique to increase call income in the last couple of days of the call period. It is not always a positive option because of commissions.

Gold AUY Needs More Legs

I am hoping AUY will keep going up so I will be called on 300 shares at $15.00 this week. If it goes I will take my 6.2% for the month and be glad to be called. AUY has been good to me over the months.

The Big Plunge

I finally made the decision to contact my financial advisor and tell him to sell a large chunk of my mutual fund holding that are not in my IRA. I am going to wire the funds to the brokerage by the end of the month and start selling covered calls for bigger income returns. I started 6 months ago with about 33K in an account and it is now about 40K so I have completed my learning period.

I will keep the new funds in a separate account since I will draw down some funds some months to supplement my SS and IRA withdrawal. I want to try to grow my total estate rather than just count on the advisor to earn enough for me to live to 100. Financial advisors seem to be happy if they get you a net of 5-6% per year. That amount does not keep up with inflation and draw down to live on.

Will let you know when I get start selling calls on the new account as-well-as keep posting relative to my learning account.

Steel, Fertilizer, Coal for Bearish Market Strategy

The bearish market trend has caused me to rethink my strategy for covered calls. I normally sell calls ATM (either 1st in the money or 1st out of money). I will be trying to find good stocks to buy with covered call returns greater than 3.0% for 2nd call in the money starting with new positions in Jul. Some candidates based on closing values 6/13 are: X 165 Jul 08 4.2%, MON 130 Jul 08 4.2%, AA 35 Jul 08 2.8%, JRCC 40 Jul 08 5.4%, RIMM 120 Jul 08 3.8%, ACI 65 Jul 08 3.8%. These are not recommendations. They are only a thought on a strategy for a bearish market.

Recent Down Stock with Returns - F and LCC

A question relative to examples of recent stocks where I purchased out month calls and then bought back for return. Following are examples:

During June a did Ford Motor (F) 3 times:
VFOAU Jan 09 sell at $177.74, bought back at $163.25, net $14.49 after commissions
VFOAA Jan 09 sell at $231.74, bought back at $188.25, net $43.49, after commissions
VFOAA Jan 09 sell at $316.74, bouth back at $283.25, net $33.49, after commissions

Total return for June $91.47 - I paid $835 for 110 shares - In addition, I have a quick cash Jun 08 return of $11.74 for FGJ that should expire and increase total for June to $102.94

Did US Airways
ZTGAA Jan 09 sell at $610.49, bought back at $519.5, net $90.99 (on 200 shares) - I bought back to soon.

This were the only ones I need to treat in this manner during June.

Cash in Down Market

With covered calls we must be careful in a down market. If a call is sold for a lower strike price to get income, it may be exercised at a loss on the stock or it may have to be bought back at a loss on the call to prevent call out of the stock.

In a down market, I sell covered calls in out months. My target is at least a 10% return and then I buy back the future call to get a return of 4-5%. I place a GTC buy back as-soon-as I sell the future call. NOTE: If the stock reverses and starts back up, I buy the call back for what ever return is available. I am not gready.