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Covered Call Archives - Options Trading Strategies for Consistent Income - OptionPundit

What is Options Assignment?

What is Option Assignment and Is it always bad?

By | Options Assignment | 2 Comments

Option Assignment is one word that a lot of option traders are scared of. For a primer of what is an option assignment, let me share the basic concept first. This is a detailed explanation from The Options Industry Council. You may also learn more from Pete here. The option holder has the right to exercise his or her options position prior to expiration regardless of whether the options are in- or out-of-the-money. You can be assigned if an investor or market professional holding calls of the same series as your short position submits an exercise notice to his or…

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How to Trade Fear

By | Implied Volatility, Investment Strategy, Option Trading Strategy, Trade Ideas, US Market | One Comment

So you have been watching this “interesting” stock market. One day down, next day up and in the end you don’t seem to find any “wealth effect” in your stock portfolio. And then there is this marvelous VIX, Uncle Ben’s bullish notes about subdued inflation, bullish economic data and you think everything seems to be going in the right direction. Then you see commodities surging, Gold and Silver making record high almost non-stop while US Dollar tanking. It’s an “interesting” market. VIX is almost at 3 year low and headlines will give one an impression that everything is brilliant, that…

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How to Play Transocean (RIG) via OptionTrading

By | Option Trading, Trade Ideas | No Comments

How to play elevated Implied Volatility on Transocean (RIG), was a key question in lot of trader’s mind. In fact, it still is. This post is about one of the option + stock trading strategy that can be employed to play such scenarios assuming you are willing to hold the stock for long term. A little bit of background– On April 20 Deep Horizon Oil Rig exploded resulting into one of the largest environmental disaster on the face of earth. Since the initial estimates of 1,000 barrels per day leak has morphed into a monstrous 100,000 barrels/day. Since then BP’s…

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OPNewsletter (Jul’09) +3.55%

By | OP Newsletter, Option Trading, Option Trading Strategy, Past Performance | No Comments

Last week markets tried very hard to rally but ended in negative territory. Market’s character can now be defined by more of “withdrawal of demand” vs anything else. For overall OPNewsletter, we have invested 38.7% of assumed 10K capital. As of last Friday close, we are up +3.55% x-commissions and +2.2% including commissions. I usually aim for +60% capital deployment but overriding philosophy here is “preservation of capital is more important that missing a potential investment opportunity”. As of Friday closing, here is an update on OPN portfolios- IWM is down -0.47% X is up +4.50% GDX is up +5.13%…

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OPNewsletter Jun’09 is up 7.34% (Open)

By | OP Newsletter, Option Trading, Past Performance, US Market | No Comments

A week in which Dow moved between +2.5% to -1.75%, S&P500 from +3.25% to -1.5% and RUT from +4.75% to -1.50%, and all closing in negative territory, OPNewsletter gained +2% that too after increasing capital investment by 36% over last week. Overall OPN is up +7.35% (x- brokerage commissions) and +5.3% (including commissions). This excludes bonus trade gains from GDX straight calls, GMCR and POT. We have invested almost 57.3% of 10K assumed capital across various sectors and diversified strategies. Sectors include – Steel, Gold, Transport, Overall General Market and Strategies include Iron Condor, Calendars and Covered Calls. GDX is…

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OPNewsletter : May’09 (+11.2%), Jun’09 (Opening Shortly)

By | OP Newsletter, Option Trading, Past Performance, US Market | No Comments

It feels great when a single covered call option spread (done only @ 7.3% of 10K portfolio) can deliver OPNewsletter monthly subscription fee, cover commissions and still deliver profits, without making adjustments throughout the holding period. And what if the newsletter doesn’t get a single cent if doesn’t deliver profits? Welcome to OPNewsletter (A “No Profit, No Fee” Newsletter)! It is up +11.2% (x-brokerage) and +8.5% including commissions for May’09 alone (a 16th positive month out of 17 months.). As I stated earlier, after many months of waiting, we crossed our 60% portfolio investment guideline. It’s always an advantage if…

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