ETF Covered Calls 11-18-2009

Ran the ETF-Cashinator tonight to see what is happening with the world.   Here is the google link.    Things are looking choppy and I’m holding to my thesis of a big sell off between now and end of the year…might roll into January….I hoping OIH will hold above $120 thru Friday to cash out via assignment.  Still long on call options $24 strike March 2010 on UUP.

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4 Responses to ETF Covered Calls 11-18-2009

  1. Fletch says:

    But what happened to the crash in September?, or the one in October?, or the one in…

    Just kidding, the market needs bears to keep moving higher, if everyone was bullish then I’d be really scared. I’m curious what you’d define as a crash/big selloff? Because even a 20% drop would only take us down to 900 on the S&P 500 which would still leave us well off the bottom. Everyone has there own level of acceptable risk to take on, but being uninvested has been, and could continue to be the bigger risk, especially as those dollars continue to lose value and inflation kicks in.

    My strategy is to continue to scale back as we reach the end of the year, as I do see a correction coming early next year. But based on history, I’d be shocked if there would be a major sell off before the new year. Historically there has rarely been a major plunge in November or December.

    Then my strategy going into 2010 is to build an inflation/rising interest rate proof portfolio – TIPS, ultra short-term bonds, commodities, energy/basic material stocks, and foreign securities.

    Happy trading.

  2. Rich says:

    Interesting question Fletch. Crash, like beauty, is in the eye of the beholder I guess. I guess I consider anything breaching a 3% move to the downside as a “crash” although not a traditional crash like the one you are speaking of in terms of 20% or 40% or more to the downside.

    I wouldn’t say that I’m not invested. I currently own 400 shares of OIH @ $118, still own DDM, SSO, XHB to the tune of about $40k. I recently bought 50 calls on UUP for March as a hedge.

    Keep in mind that I have multiple accounts with multiple purposes and time horizons so I probably should clarify what time frame/reference I’m talking about with respect to each trade and account to help clarify.

    My Power account is a very LONG term (20+ years) bucket of money to play with.

    My Mini Account is intermediate (10+ years) of money.

    My Arbitrage account is extremely short term (less than 24 months).

    When I write in terms of “crash” it is mostly irrelevant for the Power Account and only slightly with the Mini Account. The arbitrage account (when active) is short term borrowing at low interest rates (credit cards usually) that needs to be paid back.

    My arbitrage account has been inactive for over a year now as we get through this mess.

    I hope this clarifies my “definitions” on this blog. Crash doesn’t mean a 30%+ drop for me, that would be a Collapse.

  3. Fletch says:

    To think, I thought you’ve been all gloom and doom the past 8 months and all you’re worried about a measily 30 point drop in the S&P? Considering what’s happened in the last year and a half, a 3% drop seems more like a tiny bump.

  4. Rich says:

    Context is everything…this website is geared toward ETF covered calls and the optimum returns happen in a flat but volatile market. When an ETF moves up/down more than 3% repeatedly it entices people to bet on calls or puts.

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