Comments on: Brokers Report Earnings This Week http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/ Tue, 06 Jan 2009 07:35:44 +0000 http://wordpress.org/?v=2.1 By: Jeff http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-123 Jeff Mon, 10 Sep 2007 23:47:52 +0000 http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-123 Well said John, good info. I know that none of those financials met my criteria, or the general critierea outlined on your great website, but I'm sure there have been folks that sold calls on them. I know many of them have made the lists because of the way the filters are set up, but they don't pass many of your sites reccomended tests, or my own. A protective put would be great insurance at this point. Don't wait until the stock goes below it's support level though, or the put will no doubt cost more than the premium received for the call. I'll buy a protective put if I am bearish at all on a position once it's opened. Unless it's a slow period with not many trades that meet my criteria I don't do many trades as a buy/write and then immediately buy a protective put. I know some folks that do so on a regular basis, and it can work, though it obviously eats into the trades profit. Well said John, good info. I know that none of those financials met my criteria, or the general critierea outlined on your great website, but I’m sure there have been folks that sold calls on them. I know many of them have made the lists because of the way the filters are set up, but they don’t pass many of your sites reccomended tests, or my own. A protective put would be great insurance at this point. Don’t wait until the stock goes below it’s support level though, or the put will no doubt cost more than the premium received for the call. I’ll buy a protective put if I am bearish at all on a position once it’s opened. Unless it’s a slow period with not many trades that meet my criteria I don’t do many trades as a buy/write and then immediately buy a protective put. I know some folks that do so on a regular basis, and it can work, though it obviously eats into the trades profit.

]]> By: Jeff http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-124 Jeff Mon, 10 Sep 2007 23:50:09 +0000 http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-124 I forgot to mention that I really like the new lists, and appreciate the effort to launch them. Look at some of the MADI numbers on the Super Put list, whoa! I forgot to mention that I really like the new lists, and appreciate the effort to launch them. Look at some of the MADI numbers on the Super Put list, whoa!

]]> By: John Brasher http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-125 John Brasher Tue, 11 Sep 2007 00:36:34 +0000 http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-125 Glad you like the lists! I think they will be popular. For some reason right now, the MADI is wrong on a lot of stocks. The really high MADI numbers are almost all wrong. The long-term protective put placed on trade entry makes the best sense when 1) you are not really bullish on the stock, 2) it typically has great premium because of a backdrop of high volatility expectations, like GM, ATI and the brokerages, and 3) and the put is very cheap in relation to the current-month call. I would be OK writing the brokers as a CC now, but it would not be a first choice - except for BSC I think they are probably solid. However, I like them much better as superputs. The thing about adding a protective put when insecure is that the stock may move too fast for that. I agree that a protective put is not a necessity to make consistent money, but it does free the writer up somewhat in terms of loosening trade selection criteria. Glad you like the lists! I think they will be popular. For some reason right now, the MADI is wrong on a lot of stocks. The really high MADI numbers are almost all wrong. The long-term protective put placed on trade entry makes the best sense when 1) you are not really bullish on the stock, 2) it typically has great premium because of a backdrop of high volatility expectations, like GM, ATI and the brokerages, and 3) and the put is very cheap in relation to the current-month call. I would be OK writing the brokers as a CC now, but it would not be a first choice - except for BSC I think they are probably solid. However, I like them much better as superputs.

The thing about adding a protective put when insecure is that the stock may move too fast for that. I agree that a protective put is not a necessity to make consistent money, but it does free the writer up somewhat in terms of loosening trade selection criteria.

]]> By: Jeff http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-126 Jeff Tue, 11 Sep 2007 02:04:08 +0000 http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-126 I've just spent some time checking out the super puts, very, very cool. Something wasn't making sense to me with regard to the math of figuring the returns, I'm going to go back over it, and if I still can't figure it out I'll drop you a line. Callwriter continues to be the best cc site out there. I’ve just spent some time checking out the super puts, very, very cool. Something wasn’t making sense to me with regard to the math of figuring the returns, I’m going to go back over it, and if I still can’t figure it out I’ll drop you a line. Callwriter continues to be the best cc site out there.

]]> By: Jeff http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-127 Jeff Tue, 11 Sep 2007 02:21:21 +0000 http://www.callwriter.com/blog/2007/09/10/brokers-report-earnings-this-week/#comment-127 I think I have it figured out, but please straighten me out if my logic is off. I just looked at the first super put listed for September, for RMIX. It shows a 3.6% profit if called. Obviously if you have a net debit in the complete opening transaction of $8.30 and the stock is called away at the strike price of $7.50 in a couple of weeks, you have a loss of $0.80 at that point. I'm assuming that you arrived at the +3.6% by assuming an immediate sale of the put at the same price as you paid ($1.10), which would then net a 3.6% profit? I haven't run the scenario through my ivolatility calculator to see what the likely price of the put would be in two weeks at close to the strike price, but assume that since it's out so far that there is almost zero time decay and that the assumption of selling for close to the price paid is valid. I think it may have been Lee Lowell that touched on a strategy like this in one of his books, but you really have me taking a hard look at this now. I think that with using a volatility calculator to isolate trades with less likliehood of excercising, your point about collecting premium and continuing to write calls against the shares each month could be great. Obviously in the RMIX case, 3.6% for a two week play is nothing to sneeze at with the level of protection that is provided by the put. Where I think this could be very powerful is on companies about to announce earnings. I've done well on some companies like GRMN by buying before earnings and then selling a call on the surge after announcement. Obviously, with the protective put you could do this with companies you feel less bullish about and have the comfort of the insurance put, I suppose if you're pretty bulllish you could buy the stock and write the put as one transaction, and if the stock surges after the announcement, sell a call. If it doesn't surge, you still have the protective put and can figure out which call, if any, makes sense to sell. Darn John, I'm going to be up all night setting up some Excel spreadsheets and taking a hard look at this. In the past ten years I've subscribed to a lot of covered call sites, I think I've given most of them a test drive. You don't find this kind of continual evolution and content anywhere else. Thank you most sincerely. I think I have it figured out, but please straighten me out if my logic is off. I just looked at the first super put listed for September, for RMIX. It shows a 3.6% profit if called. Obviously if you have a net debit in the complete opening transaction of $8.30 and the stock is called away at the strike price of $7.50 in a couple of weeks, you have a loss of $0.80 at that point. I’m assuming that you arrived at the +3.6% by assuming an immediate sale of the put at the same price as you paid ($1.10), which would then net a 3.6% profit? I haven’t run the scenario through my ivolatility calculator to see what the likely price of the put would be in two weeks at close to the strike price, but assume that since it’s out so far that there is almost zero time decay and that the assumption of selling for close to the price paid is valid. I think it may have been Lee Lowell that touched on a strategy like this in one of his books, but you really have me taking a hard look at this now. I think that with using a volatility calculator to isolate trades with less likliehood of excercising, your point about collecting premium and continuing to write calls against the shares each month could be great. Obviously in the RMIX case, 3.6% for a two week play is nothing to sneeze at with the level of protection that is provided by the put.

Where I think this could be very powerful is on companies about to announce earnings. I’ve done well on some companies like GRMN by buying before earnings and then selling a call on the surge after announcement. Obviously, with the protective put you could do this with companies you feel less bullish about and have the comfort of the insurance put, I suppose if you’re pretty bulllish you could buy the stock and write the put as one transaction, and if the stock surges after the announcement, sell a call. If it doesn’t surge, you still have the protective put and can figure out which call, if any, makes sense to sell.

Darn John, I’m going to be up all night setting up some Excel spreadsheets and taking a hard look at this. In the past ten years I’ve subscribed to a lot of covered call sites, I think I’ve given most of them a test drive. You don’t find this kind of continual evolution and content anywhere else. Thank you most sincerely.

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