High Yield ETF Covered Calls as of August 17th 2007

So if you panicked and lost money this week by selling or feel you lost out on the rally, I’m going to tell you that the ups and downs are irrelevant if you have a plan in place to profit on the upswings and downswings.   Now that the market is closed, my UNG calls definitely will be called and I pocketed $400 on that deal.

On the “down” side, EEB closed at $35, shy of the $38 strike so those calls expire worthless and I hang on to the 300 shares of EEB.  But that’s not where it ends because as I write this, I can see that EEB September $38 strikes are trading for $0.50 and the December $38 strikes are trading for $1.95.   So if I sell September calls on 300 shares I’m looking at $150 (1.3% return in 33 days) or if I sell December $38 calls, I’m looking at $595 in cash (5% return in 120 days).

What am I doing with EEB?  I’ll hang on until EEB recovers back to $37 or $38 and see how the September options are doing.  I suspect it’ll bump up to $36 next week.  I’ll settle for 2% return over the next 30 days so we’ll see what happens.

In the meantime, I will sit on cash in the rest of my accounts.  Absolutely nothing has changed with regards to the subprime mess.  All the Fed did was pour gasoline on a hot fire and the danger is that much more threatening now.   For the year, I’m up 15% and I plan on keeping that money.   Keep in mind that there is 100+ billion in ARMS adjusting in October and that’s when the real fireworks begin!

If you insist on checking out Septembers ETF Covered Call action, do so along with the ETF Naked Puts.  The Puts will give you an idea on where all the negative sentiment is right now.

2007_0817.png 2007_0817puts.png
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