Comments for John Brasher's Covered Call Blog http://www.callwriter.com/blog Sat, 22 Nov 2008 03:10:02 +0000 http://wordpress.org/?v=2.1 Comment on Expiration and the Assignment Trap by John Brasher http://www.callwriter.com/blog/2008/07/18/expiration-and-the-assignment-trap/#comment-208 John Brasher Sun, 16 Nov 2008 16:21:47 +0000 http://www.callwriter.com/blog/2008/07/18/expiration-and-the-assignment-trap/#comment-208 Hi "John Brasher": Yes, you can trade the long put. An example would be to sell the long put when the stock has declined sharply and appears to have found support. Obviously, you have to be right! Hi “John Brasher”:

Yes, you can trade the long put. An example would be to sell the long put when the stock has declined sharply and appears to have found support. Obviously, you have to be right!

]]> Comment on Climax Soon? by John Brasher http://www.callwriter.com/blog/2008/10/10/climax-soon/#comment-207 John Brasher Sun, 16 Nov 2008 16:18:44 +0000 http://www.callwriter.com/blog/2008/10/10/climax-soon/#comment-207 Agreed. While many feel that the market has bottomed, we have no guarantee of this. Our SuperPut strategy is ideal for protecting covered call positions. Agreed. While many feel that the market has bottomed, we have no guarantee of this. Our SuperPut strategy is ideal for protecting covered call positions.

]]> Comment on Climax Soon? by Writing Covered Call http://www.callwriter.com/blog/2008/10/10/climax-soon/#comment-206 Writing Covered Call Sun, 16 Nov 2008 11:15:56 +0000 http://www.callwriter.com/blog/2008/10/10/climax-soon/#comment-206 it's important to cover our covered call position with a put in a downtrend like at the moment. it’s important to cover our covered call position with a put in a downtrend like at the moment.

]]> Comment on Bailout Bustup - Covered Call Alternatives by John Brasher http://www.callwriter.com/blog/2008/09/26/bailout-bustup-covered-call-alternatives/#comment-204 John Brasher Sun, 28 Sep 2008 15:02:03 +0000 http://www.callwriter.com/blog/2008/09/26/bailout-bustup-covered-call-alternatives/#comment-204 Marcos, I am not saying that any day will be another Black Monday, but that investors and traders both should be aware that the potential for huge volatility exists right now. The market did not collapse on Friday 9/26 because the market made a reasoned judgment that the Republicans were grandstanding (the Dems have enough votes to push it through, anyway) and that a deal would be reached SOON. At some point, if the bailout does not materialize, panic will ensue and the market make a serious swoon. We can't give advice on trades, but I personally would not touch Fannie or Freddie as a CC play under any circumstances. Since no bailout plan has been finalized, I have no confidence that stock in them is safe by any standard of measurement. I only write covered calls on stocks that I deem conservative. Stocks in failed companies that are propped up only by shareholder bailout (assuming they actually will be propped up) don't meet my test. Thus my only advice to you on these trades is this: don't put money into them that you can't afford to lose. Fannie and Freddie may benefit enormously from finalization of a bailout (or might not), which is why speculators are all over these stocks. These stocks are inconstant right now, because speculators are inconstant. I think these stocks can - rationally - only be approached as speculative plays ("sucker" plays in Cramer's words). There may be other shoes yet to drop on F&F. Marcos, I am not saying that any day will be another Black Monday, but that investors and traders both should be aware that the potential for huge volatility exists right now. The market did not collapse on Friday 9/26 because the market made a reasoned judgment that the Republicans were grandstanding (the Dems have enough votes to push it through, anyway) and that a deal would be reached SOON. At some point, if the bailout does not materialize, panic will ensue and the market make a serious swoon.

We can’t give advice on trades, but I personally would not touch Fannie or Freddie as a CC play under any circumstances. Since no bailout plan has been finalized, I have no confidence that stock in them is safe by any standard of measurement. I only write covered calls on stocks that I deem conservative. Stocks in failed companies that are propped up only by shareholder bailout (assuming they actually will be propped up) don’t meet my test. Thus my only advice to you on these trades is this: don’t put money into them that you can’t afford to lose.

Fannie and Freddie may benefit enormously from finalization of a bailout (or might not), which is why speculators are all over these stocks. These stocks are inconstant right now, because speculators are inconstant. I think these stocks can - rationally - only be approached as speculative plays (”sucker” plays in Cramer’s words). There may be other shoes yet to drop on F&F.

]]> Comment on Bailout Bustup - Covered Call Alternatives by Marcos Rayas http://www.callwriter.com/blog/2008/09/26/bailout-bustup-covered-call-alternatives/#comment-203 Marcos Rayas Sat, 27 Sep 2008 17:00:08 +0000 http://www.callwriter.com/blog/2008/09/26/bailout-bustup-covered-call-alternatives/#comment-203 So are you saying there will be another Black Monday - On Sep. 29, 2008. I just saw this blog on Friday night and did not get out of my positions on FNM - Fannie Mae. If the bailout does not occur by Sunday night are you saying to get out of all call positions and out of all stock positions. I have a position in Fannie Mae where I bought stock at $2.20 and then at $2.50 when it had gone to $2.90. At the time I sold the calls they were paying a 30% premium. I bought back the calls when stock went to $1.7. I ended up making 10% on calls but I am down on the stock. I was thinking with the bailout FNM was still pretty safe. I would either resell the calls as it went up again or leg into the call. Should I just get out? So are you saying there will be another Black Monday - On Sep. 29, 2008.
I just saw this blog on Friday night and did not get out of my positions on FNM - Fannie Mae.
If the bailout does not occur by Sunday night are you saying to get out of all call positions and out of all stock positions.

I have a position in Fannie Mae where I bought stock at $2.20 and then at $2.50 when it had gone to $2.90. At the time I sold the calls they were paying a 30% premium.
I bought back the calls when stock went to $1.7. I ended up making 10% on calls but I am down on the stock.
I was thinking with the bailout FNM was still pretty safe. I would either resell the calls as it went up again or leg into the call.

Should I just get out?

]]> Comment on Expiration and the Assignment Trap by john brasher http://www.callwriter.com/blog/2008/07/18/expiration-and-the-assignment-trap/#comment-201 john brasher Fri, 18 Jul 2008 16:40:08 +0000 http://www.callwriter.com/blog/2008/07/18/expiration-and-the-assignment-trap/#comment-201 Hi from down under. Great site very educational. What are your thoughts on trading the put in super puts. How did you know my aka. Cheers Hi from down under.

Great site very educational.

What are your thoughts on trading the put in super puts.

How did you know my aka.

Cheers

]]> Comment on Call Writers: Trade Those Calls by Click http://www.callwriter.com/blog/2007/04/18/call-writers-trade-those-calls/#comment-200 Click Mon, 07 Jul 2008 15:41:19 +0000 http://www.callwriter.com/blog/2007/04/18/call-writers-trade-those-calls/#comment-200 <strong>Click...</strong> Love that info. After reading your blog I now understand "buying stock online". Thank For the great post!... Click…

Love that info. After reading your blog I now understand “buying stock online”. Thank For the great post!…

]]> Comment on Correction Wants to Resolve, Oh Yeah by John Brasher http://www.callwriter.com/blog/2007/09/18/correction-wants-to-resolve-oh-yeah/#comment-185 John Brasher Mon, 28 Apr 2008 15:06:38 +0000 http://www.callwriter.com/blog/2007/09/18/correction-wants-to-resolve-oh-yeah/#comment-185 Hi John, There is not space here to cover all the in's and out's of covered call writing. If you are content with the notion of - possibly - giving up price appreciation in the stock in return for the call premium, then the only real downside is the possibility of loss. If the stock holds price or rises, it is a fine trade. But... suppose Sears tanks rather suddenly to $60 or $70? That call premium would be little comfort. Of course, there are techniques to manage a price drop, but sometimes they are unmanageable, because we are unable to watch the position, or it happens overnight and results in a gap down, or is simply too violent to be handled. Thus an unprotected covered call position can never be said to be in a no-lose posture. This is the reason I developed the SuperPut strategy, discussed on CallWriter.com: to limit risk while preserving our ability to pull an income out of the position. If you stick with great, established companies that are doing better than the market (e.g., compare Target to the DOW since December) and - better yet - companies that are poised for success in the current market environment, you should do quite well. If I may be permitted a small promotion here, consider buying my new book (available on CallWriter), which you can also buy with two free months of CallWriter service. It will get you off with a jet assist. John Brasher Hi John,

There is not space here to cover all the in’s and out’s of covered call writing. If you are content with the notion of - possibly - giving up price appreciation in the stock in return for the call premium, then the only real downside is the possibility of loss. If the stock holds price or rises, it is a fine trade. But… suppose Sears tanks rather suddenly to $60 or $70? That call premium would be little comfort. Of course, there are techniques to manage a price drop, but sometimes they are unmanageable, because we are unable to watch the position, or it happens overnight and results in a gap down, or is simply too violent to be handled. Thus an unprotected covered call position can never be said to be in a no-lose posture.

This is the reason I developed the SuperPut strategy, discussed on CallWriter.com: to limit risk while preserving our ability to pull an income out of the position. If you stick with great, established companies that are doing better than the market (e.g., compare Target to the DOW since December) and - better yet - companies that are poised for success in the current market environment, you should do quite well. If I may be permitted a small promotion here, consider buying my new book (available on CallWriter), which you can also buy with two free months of CallWriter service. It will get you off with a jet assist.

John Brasher

]]> Comment on Correction Wants to Resolve, Oh Yeah by John Mi http://www.callwriter.com/blog/2007/09/18/correction-wants-to-resolve-oh-yeah/#comment-184 John Mi Mon, 28 Apr 2008 00:10:49 +0000 http://www.callwriter.com/blog/2007/09/18/correction-wants-to-resolve-oh-yeah/#comment-184 I am preparing myself to enter Options Trading. I really like the Covered Call strategy, especially volatile stocks that are are trading near the money with premiums that offer above average income. My strategy is to wite calls that fall under the previous explanation with 25 days or less until experiation. My long-term goal is to build capital through premium income so I may write larger calls and multiply the income even more. My question is why are more investors not using that strategy. One example: Sears Holding is trading at $99.75 a 100 May08 call has a premium of 3.5. As part of my strategy to use the premium as income, I am not concerned with the potential profit loss above 100. From the oustide looking in, it's a no lose situation. If the stock rises above the break even point for the buyer and is excercised, in practical terms I have made my strategy. If the price holds at strike or decreases and allowed to expire, again I have made my strategy. I wish to do this monthly after careful research of investments. Again why are more investors, especially non professionals like myself not using this strategy. Please explain any pitfalls other than paper losses or profit potential loss. Thanks, John I am preparing myself to enter Options Trading. I really like the Covered Call strategy, especially volatile stocks that are are trading near the money with premiums that offer above average income. My strategy is to wite calls that fall under the previous explanation with 25 days or less until experiation. My long-term goal is to build capital through premium income so I may write larger calls and multiply the income even more. My question is why are more investors not using that strategy. One example: Sears Holding is trading at $99.75 a 100 May08 call has a premium of 3.5. As part of my strategy to use the premium as income, I am not concerned with the potential profit loss above 100. From the oustide looking in, it’s a no lose situation. If the stock rises above the break even point for the buyer and is excercised, in practical terms I have made my strategy. If the price holds at strike or decreases and allowed to expire, again I have made my strategy. I wish to do this monthly after careful research of investments. Again why are more investors, especially non professionals like myself not using this strategy. Please explain any pitfalls other than paper losses or profit potential loss.

Thanks,
John

]]> Comment on Portfolio Margin - Will it Buoy the Market? by John Brasher http://www.callwriter.com/blog/2007/04/04/portfolio-margin-will-it-buoy-the-market/#comment-182 John Brasher Sat, 23 Feb 2008 22:05:09 +0000 http://www.callwriter.com/blog/2007/04/04/portfolio-margin-will-it-buoy-the-market/#comment-182 Most discount online brokers should have implemented PM by now. OptionsXpress.com offers it, and so do many others. Under CBOE rules, PM is only available to accounts with a net liquidation value of $100,000 or more, although the broker is free to impose additional requirements. Remember, PM is a pilot program, so the rules are not as well fleshed out as for Reg-T margin. The market wants PM, so nobody wants to screw it up and have the SEC look at PM with a jaundiced eye. Most discount online brokers should have implemented PM by now. OptionsXpress.com offers it, and so do many others. Under CBOE rules, PM is only available to accounts with a net liquidation value of $100,000 or more, although the broker is free to impose additional requirements. Remember, PM is a pilot program, so the rules are not as well fleshed out as for Reg-T margin. The market wants PM, so nobody wants to screw it up and have the SEC look at PM with a jaundiced eye.

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