Call Writer's Playground

No more stocks. It's time to play commodities!

2008-07-05T11:45:00.000-07:00

That's right. No more stocks or stock options. The markets have been beaten down and I'm done with stocks until this bear market ends (6-24 months I would guess).

Commodities are still Hot. High amounts of leverage can be used to trade Gold (CBOT mini and 100oz), Silver (CBOT mini), Corn, and Soy Meal. Leverage can be a double edged sword, but if used correctly, a trader can make large capitol gains each day.

A new indicator I found will help determine profitable entry and exit points.
I will demonstrate with a diagram below.

Product: Soy Meal

Chart: 1 minute with SMA 10 and SMA 18 (SMA=Simple Moving Average)

How to use it: Watch the SMA 10 (RED LINE) break above SMA 18 (BLUE LINE). Almost always trade in the direction of the SMA 10 beacause the upward divergence signals a new or continued up trend. The trade is exited at a profitable spike or closed out when the SMA 10 touches the 18 and heads under the 18.

Anticipation of the SMA 10 moving upward, right before the averages touch, is an even better time to go long. Anticipating too soon will become more speculative than trend following. The goal is to simply ride a trend and then exit at a profit, or set a trailing stop to protect profit.

The Sexiness of Soy Meal

The sexiness of futures is in the leverage. A $1.00 gain in Soy Meal translates into $1k of profit for each contract. Every .01=$10 which can magnify gains and losses, so it's important to have a good entry point.

Or if soy meal doesn't suit your fancy, look at CBOT mini silver, Gold, Corn, Wheat among many other commodities.

Next week I will be posting my P/L each day.
My profit target is set around $500-2000 a day.
Stay tuned.

Dow FALLS more than 200 points!

2008-06-20T13:28:00.001-07:00

Ouch. This is a tough market for traders and investors.
Oil/natural gas is still profitable, as well as the oil/nat. gas companies.
Crazy speculative gains...

June has been a disappointing month. Gains are being erased and the Dow, Nasdaq, and S&P are slumping.

Insiders at STX are selling their shares. I'm going to be following the trend and dump my STX shares. There will be better buying opportunities down the road. Thankfully I'm only down about 0.60 per share and I've hedged by selling my options.

I'm also holding these stocks (which most will be assigned because the options are ITM):

DSL
MBI
EGO
CPSL
HL
NYNY
PEIX
EP
WM

Wall Street Warriors

2008-06-17T12:32:00.000-07:00

This series has been a good source of entertainment...

Finally, a new gain to offset loss. STX running up.

2008-06-16T12:42:00.000-07:00

STX is running back up after it hit support in the 20's. Partially attributed to the shorts covering and buying interest. I would expect it to test or break through resistance around 22. The pattern is displayed in the last couple of rallies.

Today's purchase:
10 contracts of June 22.50 STX @.10

If it continues to run up as shown on the chart, this option can reach $1.10, which would result in a $1.00 gain x 10 contracts (1000 shares). It's a good risk to reward in my opinion (certainly I am speculating, but not risking much).

4 more days of option trading for the month. Updates later.

2008-05-31T22:10:00.000-07:00

Phew, the week is over. There was too much doom and gloom, which was profitable for some things.

Along with options, I'll be shorting stocks. I've been keeping my eye on :

http://www.timothysykes.com/

Not related to options at all, but still helpful. More of a trading strategy...
Don't "invest" in penny stalks, short them after the pump and watch them dump.
Micro cap oil has been surging and is looking to collapse, more info next week...

I think PDO and MXC are way over bought.
Stay tuned...

SLAUGHTER OF OIL PIGS

2008-05-23T07:30:00.000-07:00

I started shorting PDO (bullshit pumped penny stock) at the high of 21.82!

Need I say more?
Get shorting!
if you can find the shares...scottrade could only get me 100, wtf is that?

Updates later!

DJIA FALLING
S$P FALLING
NASDAQ FALLING

OIL IS SURGING, WHAT NEXT?

2008-05-22T20:36:00.000-07:00

I'm so sick of the hype. It's all speculation for the most part. Some oil stocks have already started to turn downwards...afterall, a company's stock can't double if the fundamentals don't change. Hype hype hype...

Let's wait and watch these dogs tumble, and when the time comes, short em!
Short term pull backs are expected, but I think crude will just keep climbing.

Don't take my word, read all about it
http://www.timothysykes.com/

Field petro corp.
http://finance.google.com/finance?q=fpp&hl=en

Covered calls? Not during this bear rally!

2008-05-21T22:45:00.000-07:00

Wait for the bulls if you want to write covered calls
sorry, but this sharp downturn calls for shorting

The overall market sold off today.

DJIA: 12,601.19 -227.49
NASDAQ: 2,448.27 -43.99
S&P 500: 1,390.71 -22.69
NYSE: 12601 -227.49

Today I will be watching ACXM at the open and throughout the day. Acxiom Corp has a terrible ROE, ROA and ROI. I found this dirty dog in my screener today, and noticed that it surged on monday only to be sold off below it's 30 min moving average yesterday. It's at a 7 month high, so it would make sense that tomorrow will be a day to trade on the downside. I wouldn't go long, that's for sure!

I now have a short watch list which includes another dog by the name of :

CENTEX CORP: CTX

Centex constructs residential houses and finances mortgages..really great profits! I love CTX with their ROA at -24% and ROI at -31% and ROE at -71%! Awesome, maybe I can set my sights on this dog to short. Afterall, the 52 week low is 17 bucks and it isn't even close to breaking the 30 minute moving average.

I'll add more possible "dogs" later.

Day Trader Radio

2008-05-21T12:10:00.000-07:00

Listen up, I love this guy's daytrading commentary:

http://www.daytradingradio.com/

And I recently discovered a good hedge for days like today!
(did you watch the sell off on nasdaq, DJIA, S&P? These ETFs would have been awesome hedgers)

Go long on these ETFs and let them do the shorting!

DXD (ETF:AMEX):UltraShort Dow30 ProShares

UltraShort Dow30 ProShares (ETF) seeks daily investment results, before fees and expenses, that correspond to twice the inverse daily performance of the Dow Jones Industrial Average (DJIA). The DJIA is a price-weighted index maintained by editors of The Wall Street Journal. The DJIA includes 30 large-cap, blue-chip United States stocks, excluding utility and transportation companies. ProShare Advisors LLC serves as the investment advisor of UltraShort Dow30 ProShares (ETF).

SDS (ETF:AMEX): UltraShort QQQ ProShares (ETF)

UltraShort S&P500 ProShares (the Fund) seeks daily investment results that correspond to twice the inverse daily performance of the S&P 500 Index. The S&P 500 Index is a measure of large-cap United States stock market performance. The S&P 500 Index is a capitalization-weighted index of 500 United States operating companies and real estate investment trusts (REITs) selected by an S&P committee through a non-mechanical process that factors criteria, such as liquidity, price, market capitalization, financial viability and public float. The S&P 500 Index is a price return index. Reconstitution of the Index occurs both on a quarterly and on an ongoing basis. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as 200% of the daily return of the index. The Fund’s investment advisor is ProShare Advisors LLC.

QID (ETF:AMEX): UltraShort QQQ ProShares

UltraShort QQQ ProShares (the Fund) seeks daily investment results that correspond to twice the inverse daily performance of the NASDAQ Index-100 Index. The NASDAQ-100 Index represents the largest non-financial domestic and international issues listed on The NASDAQ Stock Market. To be eligible for inclusion, companies cannot be in bankruptcy proceedings and must meet certain additional criteria, including minimum trading volume and seasoning requirements. The NASDAQ-100 Index is calculated under a modified capitalization-weighted methodology. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as 200% of the daily return of the index. The NASDAQ-100 Index is a price return index. The Fund’s investment advisor is ProShare Advisors LLC.

Seagate's Stock Is a Steal at Current Valuations

2008-05-19T22:59:00.000-07:00

Seagate's Stock Is a Steal at Current Valuations
http://www.smartmoney.com/Techsmart/index.cfm?story=20070316

STX down -4.88%

2008-05-19T22:01:00.000-07:00

There was a slow sell off today for Seagate (STX)

But no worries, the nest egg is safe..really!
and not much has changed fundamentally. Read on.

Last week the NSA gave STX an approval rating for their self encryoted drives. STX shot up and hit resistance at $22. Now that the crack high is wearing off, time to pile in. I bought more STX today, despite the general pull back of the tech sector. Microsoft was also down which can weigh in on the other tech stocks.

This small pull back is justified, but I would expect Segate to remain bullish overall.
There is still plenty of upside and strength to this stock. A short term correction due to the overbought condition is now occurring. I would expect support in the 20's somewhere.

Other news:
EGO is up: closed at $7.75
EP is up: closed at $20.55
NM pulled back due to profit taking in DRYS (another drybulk shipper):
closed at $13.92

May Options-Cashing In

2008-05-16T19:05:00.000-07:00

As most of you traders and investors know,

today was the last day for May options!

Did you make off like a bandit or get caught like a theif in the night?

Here's how I did!

Here's the stats:

STXEW: Not exercised, Gross profit $2.5045 per share

STXED: Not exercised, Gross profit $0.1846 per share

NMEB: 1 contract exercised, Gross profit $ 1.8674 per share

EPER: Not exercised, Gross profit $ 1.1224 per share

EGOEA: Not exercised, Gross profit $ 1.9174 per share

And in other news...

The Consumer Price Index is up. Food prices are up 4.4% for the past 12 months. Oil and gas hitting new highs. Yeah, life is only getting worse. The market reacted negatively to CPI rising.

Let's celebrate, have a beer

Resources

2008-05-09T14:29:00.000-07:00

Option Resources

Here's a few links that may come in handy:

http://www.optionsbuddy.com

http://investopedia.com/ (overall excellent site)

http://www.coveredcalls.com/TechStocks.htm (covered calls)

2008-05-08T14:43:00.000-07:00

Evaluating Monthly Position

2008-05-07T12:55:00.000-07:00

May Returns (current gains)

Long Investments:

ELDORADO GOLD CORP (EGO) 0.23 %
EL PASO CORP (EP) 1.31 %
NAVIOS MARITIME HOLDINGS IN (NM) 11.80 %
SEAGATE TECHNOLOGY (STX) 3.44 %
VECTOR GRP LTD (VGR) 1.0 % (dumped due to low option volume)

Short Investments (covered calls only):

EGOEA May $5: $2.00 per share itm
EPER May $17: $0.95 per share itm
NMEB May $10: $1.86 per share itm
STXED May $20: $0.32 per share otm
STXED May $17.50: $1.60 per share itm

Most of my covered calls have locked in my profits. Unless the stock decides to take a crap down to $0. With covered calls you're exposed to some downside risk, but that premium acts as a buffer/warning zone. However, if a stock takes off, then you miss out on potential gains.

Other Notes:

Oh shit. I guess I won't be banking after $11.86 on Navios Maritime. NM has a beta of 1.47 which indicates that the stock is 47% more volatile than the market. NM is slightly overbought.

EP: Haha, this one is a trap! Bound to fall soon. EP has support at 15.80 and resistance at 18.80. Not a bad company with 42k miles of natural gas pipelines...oh and isn't natural gas getting more expensive?

STX: Resistance at around 20, but the gains don't stick for long. Trading flat with low priced options. STX could be held for at least 3-12 months.

That's it for now.
Stay tuned for future updates.

EP: El Paso Corp

2008-05-06T07:49:00.001-07:00

El Passo Corp is a natural gas utility company. They serve much of the southern region, western region and eastern region of the US.

Check out their impressive pipeline system on their website http://www.elpaso.com/pipelines/

Quick notes on the company:

El Paso has 42,000 miles of pipeline with expansion projects on the way.

Return on Investments (TTM) 2.0%
Return on Equity (TTM) 10.0%

P/E(TTM) 33.4x

Below: A roller Coaster!

Unfortunately EP's 1 year EPS growth rate is down 20.86%. And by looking at EP's chart, there will be resistance around the $18 range. With inconsistant earnings, this stock could easily go down, or go up for a while and then back down. Expect support at 15.50 (I would buy much more of this stock at 15.50).

Feb March April May

2008-05-05T15:32:00.000-07:00

4 Solid Months of Decent Returns
finally!

I recently discovered how to use covered calls. My returns are getting better and better.

Feb 08 3.4%
March 08 3.8%
April 08 7.1%
May 08 13%+

April and May reflect options and stock sales. All previous months did not include covered calls.

Stocks:

STX: Seagate Technology

NM: Navios Maritime

EP: El Passo Corp

VGR: Vector Group Ltd

Largest holding:STX

The Playground-Post number one

2008-05-05T14:31:00.000-07:00

Welcome!

This blog is for all you covered call writers out there. I call it the playground because I view the stock market as a fun and interactive experience.

This blog will chart my monthly income from covered calls, as well as trades. I hope this blog is interesting and informational. I will go in more depth in my following posts.

Quick disclaimer:
I am not responsible for anyone's actions. The stocks and options mentioned in this blog are most likely owned by myself. Make sure to do your due diligence and research the fundamentals of all companies. Good Luck :)