For long time readers, some of you may know that I’m still carrying about 800 shares of leveraged Dow shares (DDM) in a variety of accounts. Many of these ETFs were bought near the peak at $70+ while DDM is currently trading in the $40′s. In an effort to unwind and/or profit from these ETFs, I am now selling calls 6 months into the future at a few dollars above the money strike. Today I sold 4 contracts on HXDGV (July ’10 $48 strike) at $3.20 to rake in about $1270 in cash. If I get called, I’ll earn an additional $800 or so and be out of DDM. In this scenario I will liquidate at an $8000 loss and try to tax harvest at the end of year or offset some gains. I am becoming more BEARISH with this market, if you look at any graph, you’ll see the Dow moving in a near straight line at a 30 degree angle with little down movements and that can’t hold forever. If DDM suddenly takes a dive, I *may* buy my calls back on the cheap and repeat if the market recovers.
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