Saturday, January 16, 2010

Option activities for January 2010


Options involve risk and are not suitable for all investors.  Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (the "ODD").  Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606.  Any strategies discussed, including examples using actual securities and price data, are strictly for illustrative and educational purposes.  In order to simplify the computations, commissions, fees, and margin interest and taxes have not bee in included in the examples used in this presentation.  These costs will impact the outcome of all stock and options transactions and must be considered prior to entering into any transactions.  Investors should consult their tax advisor about any potential tax consequences.  No statement within this presentation should be construed as a recommendation to buy or sell a security or to provide investment advice.

Summary of option activities for January 2010:

-- 30 short puts and 25 short calls contracts expired in January
-- took profit on 500 shares of BAC and 200 shares of JPM due to covered call assignments
-- offset 3 GS short calls at 1175 as the strike was threatened at a loss of US$492
-- 23 short puts and 22 short calls expired worthless
-  total profit for January option is US$3,800

I have started to execute the trading plan for February and the target is US$4,000.  The January option writing is interesting in a few aspect:  first, I have received more than double the premium received in December so that is encouraging.  second, option writing is a highly repeatable and consistent way of making a profit.  But depending on your personality, it may bore you to tears as you don't do anything most of the time except for monitoring your positions.  You also need an account size as large as possible to handle the possible risk exposure.  Third, I executed my first defensive action when one of the strikes was threatened with decisiveness that I can be proud of.

I am waiting for randomjaywalker to show me how to do "broken wing butterfly" on QQQQ,


randomjaywalking said...

waiting your Triple Screen on QQQQ, DJX, OEX


dream said...

ok, sir. will put it up tonight.