fullyinformed.com
Options & Stock Strategies For Income

BECOME FULLY INFORMED                             
 
I believe that people spend more time investigating what car to buy than taking care of their personal finances. Many people work hard, save and then turn to a financial planner, broker or other "experts" and hand over their life savings and hope they can turn their life savings into a retirement nest egg. Years ago I took the same approach and found how dismal returns can be. I decided it was better to learn how to manage, invest and grow my savings. I decided to become fully informed. That was back in 1975 and today more than 35 years later I have continued to invest in some of the best companies in the world. Some stocks I have picked, such as Coca Cola, or Royal Bank Of Canada I have traded for more than 10 years. Over that time period I have sold covered calls and naked puts to slowly reduce my cost basis in the stock to the point of zero. I thought it would be interesting to start this website and pick some stocks to see how they turn out during what appears to be the worst financial crisis since The Great Depression. 
My style may be different from others. I believe in following strong, large cap companies and working with options and stocks on those companies. I also take my capital and divide it into 3 segments. 30% in cash or like instruments, 30% in laddered bonds and 40% in stocks. I've laid out this website to document my strategy. Remember Trade At Your Own Risk. These are examples and are not financial advice or investing recommendations. I strongly urge every investor to paper trade to learn how to handle your portfolio, before committing actual capital. Read the disclaimer.

Click here to read about Commission rates being assumed in my trades.

STOCKS:
I live in Canada. I only invest in stocks listed on Canadian or U.S. Exchanges. I have listed my stocks below. Each time there is a change to the status it will be posted here. Click on the name of each stock to see all the trade details since commencement. Trades no longer in action are in the archive section.

CANADIAN STOCKS: C$ Non-retirement Account (Puts, Calls & Stocks)

BANK OF MONTREAL (BMO)
Income To Date: $12635.50
Position Started: Jul 27 2009
Most Recent Action: Aug 25 2010 Sold 10 Naked Puts Sep 56 @ 1.05

BANK OF NOVA SCOTIA (BNS)
Income To Date: $7753.00
Position Started: Jul 10 2009
Most Recent Action: Aug 16 2010 Sold 4 Naked Puts Sep 48 @ .77

CANADIAN IMPERIAL BANK OF COMMERCE (CM)
Income To Date: $5955.50
Position Started: Sep 24 2009
Most Recent Action: Aug 20 2010 Sold 2 Naked Puts Oct 62 @ .83

GREAT WEST LIFECO (GWO)
Income To Date: $8829.50
Position Started: Aug 5 2008
Most Recent Action: Aug 17 2010 Sold 5 Covered Calls Jan 27 @ .40

RESEARCH IN MOTION (RIM)
Income To Date: $19866.00
This is an option play using the 10-20-30 rule.
Position Started: Jun 2 2009
Most Recent Action: Aug 11 10 Sold 5 Naked Calls Sep 66 @ 1.01

ROYAL BANK OF CANADA (RY)
Income To Date: $18710.00
Position Started: Jan 2 2008
Most Recent Action: Aug 26 2010 Sold 10 Naked Puts Sep 50 @ 1.70

TALISMAN ENERGY (TLM)
Income To Date: $2443.00
Position Started: Jun 3 2009
Most Recent Action: Aug 20 2010 Sold 6 Naked Puts Dec 14 @ .23

TORONTO DOMINION BANK (TD)
Income To Date: $14440.00
Position Started: Jan 2 2008
Most Recent Action: Aug 4 2010 Sold 5 Naked Puts Sep 72 @ 1.10

TRANSCANADA CORP (TRP) * There are 4 different trades going on with this stock. Each one has a different strategy. This lists the results from chart two.
Income To Date: $3446.75
Position Started: Aug 11 2009
Most Recent Action: Jul 16 2010 Sold 1 Naked Put Oct 38 @ 2.38

CANADIAN STOCKS: C$ RRSP (Retirement Account) (No Puts allowed due to Canadian RRSP laws)

BANK OF MONTREAL (BMO) - The Leap Frog Strategy
Income To Date: $13292.73
Position Started: Jan 18 2010
Most Recent Action: Aug 23 2010 Sold 4 Covered Calls April 2011 64.00 @ 2.21

BANK OF NOVA SCOTIA (BNS)
Income To Date: $5827.00
Position Started: Jun 24 2009
Most Recent Action: Aug 23 2010 Sold 5 Covered Calls Sep 52.00 @ .79

FORTIS (FTS)
Income To Date: $7729.25
Position Started: Oct 2 2008
Most Recent Action: Aug 4 2010 Sold 2 Covered Calls Oct 54 @ 1.30

ROYAL BANK OF CANADA (RY)
Income To Date: $21399.00
Position Started: Jan 2 2008
Most Recent Action: Aug 23 2010 Sold 2 Covered Calls Aug 54 @ .94

SUN LIFE FINANCIAL (SLF)
Income To Date: $13426.25
Position Started: Aug 28 2008
Most Recent Action: Aug 23 2010 Sold 10 Covered Calls Jan 28 @ .89

XIU iShares Index (XIU)
Income To Date: $12281.94
Position Started: Aug 7 2008
Most Recent Action: Sep 3 2010 Sold 10 Covered Calls Dec 18 @ .51 / Sold 10 Covered Calls Mar 18 @ .83

YAMANA RESOURCES (YRI)
Income To Date: $3719.50
Position Started: Jun 26 2009
Most Recent Action: Aug 23 2010 - Sold 10 Covered Calls Dec 11 @ .66
 

U.S. STOCKS: US$ (Non-retirement account) (Puts, Calls & Stocks)

CLOROX (CLX) - Strategy "Walk That Profit Home To Mama" being employed
Income To Date: $11949.25
Position Started: March 23 2009
Most Recent Action: Aug 20 2010 Sold 3 Naked Puts Sep 65 @ 1.45

COCA COLA (KO) - reverse ladder in progress
Income To Date: $15979.50
Position Started: Aug 3 2009
Most Recent Action: Jul 20 2010 Sold 10 Naked Puts Sep 52.50 @ 1.52

INTEL CORPORATION (INTC) -
Income To Date: $4966.75
Position Started: Mar 10 2010
Most Recent Action: Aug 20 2010 Sold 6 Naked Puts Oct 20 @ 1.57

JOHNSON & JOHNSON (JNJ)
Income To Date: $7808.25
Position Started: Feb 26 2009
Most Recent Action: Aug 20 2010 Sold 5 Naked Puts Oct 55 @ .72

KRAFT FOODS INC (KFT) - no new capital required - This stock position is paid for by capital earned from selling naked puts. I have none of my own capital in this position.
Income To Date: $15142.00
Position Started: Oct 6 2008
Most Recent Action: Aug 17 2010 Sold 5 Naked Puts Sep 28.00 @ .35

McDONALD'S CORP  (MCD)
Income To Date: $9076.75
Position Started: Aug 25 2009
Most Recent Action: Aug 18 2010 Sold 2 Naked Puts Dec 65.00  @ 1.20

MICROSOFT (MSFT)
Income To Date: $8247.50
Position Started: Jul 10 2009
Most Recent Action: Aug 20 2010 Sold 4 Naked Puts Sep 23 @ .25

NUCOR CORPORATION (NUE)
Income To Date: $5360.25
Position Started: Dec 11 2009
Most Recent Action: Aug 20 2010 Sold 3 Naked Puts Oct 33 @ .55

PEPSICO (PEP)
Income To Date: $8002.50
Position Started: Feb 11 2009
Most Recent Action: Aug 20 2010 Sold 5 Naked Puts Oct 60 @ .77

SPDR TRUST ETF (SPY)
Income To Date: $64512.00
Position Started: Jan 22 2010
Most Recent Action: Sep 2010 Active - click name above to view trades.

VISA (V)
Income To Date: $11301.75
Position Started: Aug 3 2009
Most Recent Action: Aug 20 2010 - Sold 5 Naked Puts Dec 55 @ 1.30

EXXON MOBIL (XOM)
Income To Date: $2230.75
Position Started: March 5 2010
Most Recent Action: Jul 16 2010 Sold 2 Naked Puts Oct 52.50 @ 1.20

YUM! BRANDS INC (YUM)
Income To Date: $5849.25
Position Started: Aug 11 2009
Most Recent Action: Sep 2 2010 Sold 10 Naked Puts Oct 40.00 @ .65

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TIP JAR
I hope you find the information and ideas on my site of value. If you would like to assist me with the maintenance costs, and time spent keeping my site updated, I have set up a Paypal account for those who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice or recommendations. Investing is risky and losses can be large. Trade at your own risk. Read my disclaimer.

I use the 10-20-30 moving averages with the 50 day to try to figure out the overall market direction.
READ MY LATEST GUESS ON THE S&P 500
or READ MY LATEST GUESS ON THE TSX

SEP 2 2010: RETEST OF S&P 1040 SUCCESSFUL
The recent test of the 1040 level on the S&P has proven successful and I believe the market will move higher from here. Today I have put in place a straddle to prepare for Friday's jobs numbers. If the numbers are neutral to mildly better, the market can rally to the August highs. Here's my latest take and what my plans are from this level. Could we retest the April highs? read more...

AUGUST 24 2010: MARKET IN CRISIS
As the market continues to decline, it is obvious to most that should the S&P fall below 1030 and after that 1010, then the likelihood of a major move down to 8800 is probably greater than 70%. The odd thing about this market is that just about every talking head and analyst over the past few weeks has done nothing but discuss the declining Dow and possibility of a collapse. Most are looking for a major pullback. Can the majority actually be right? --read more..

AUGUST 20 2010: FRIDAY OPTIONS EXPIRATION:
With Friday's options expiring my overall income moved up a little over $10,000.00 A great number of changes are being made and I have reduced the amount of capital being used to prepare for possible lower stock prices in September.. read more

JULY 23 2010: BACK TO NAKED PUTS:
With the recent rally my charts give me faith that my use of short term out of the money naked puts are probably a good bet. Read more.

JULY 8 2010: SELLING NAKED CALLS:
Many investors believe selling naked calls is riskier than naked puts, but in a bear market, selling naked calls makes a lot of sense. Here are the steps I use to pick which stocks to sell naked calls against and what strike to choose and how I handle the naked call trade while waiting for expiration. Read more...

JULY 7 2010: WHAT A DIFFERENCE A WEEK CAN MAKE:
Today's significant rally could take the S&P to 1077 before trouble again could stall the rally. Click the link and scroll to July 7 to view my best guess on the market direction. Read more...

BALTIC DRY INDEX DOWN 39% TO DATE - DEFLATION??
- OPTION TRADERS DREAM COME TRUE (Jun 23 2010)
 

The above one year chart of the Baltic Dry Index shows a plummet of 39% in a short few weeks. This index is important as it reflects the amount of world wide shipping or a good indication of how the economies of the world are faring. The chart below shows the index for the past 5 years. You can see the collapse of trade throughout the fall of 2008 and the concern of investors as the economies or the world slowed.

Since then, we have had a modest upswing in shipping of goods but you can see from the index that this upswing has been in a see-saw struggle which is indicative of what is actually happening in the world's economies. While there has been modest growth in most economies, unemployment remains high and debt is overwhelming. So what is the Baltic Dry Index telling us? I think it is warning that these two problems - unemployment and debt will curtail any return to higher growth levels. I believe it is telling us that deflation, not inflation is the real concern and that the economies of the world will be in rough shape for quite some time. While many analysts look to the index and point out that a double dip recession or even a depression are real possibilities, I watch the index to keep reminding myself that stock markets in general are dangerous places to be for buy and hold (on) investors. It is telling me that high volatility, large price swings and strong pullbacks are here to stay for more than just 2010. It tells me that this is a market prime for options, both for selling and to be bought for protection. I believe there is no chance this market can recover the highs of 2007 for possibly years to come. I plan to trade every rally through naked calls and puts and hold SPY puts on every downturn. This is the kind of market that option traders like myself dream about.

JUNE 22 2010 - 2 DOWN DAYS
- DOES IT MAKE A TREND?
June 22nd marks the second down day on the market. Today had strong down volume. So is the rally over already? Looking at the technicals I would have to guess, no. The market is reflecting investor nervousness and the worry is shifting to the chance of a double dip recession. Is the ghost of 1977 returning? The worry then was how bad the recession was going to be. In September 1975 the market bottomed and rallied through 1976 and then starting in December, the market declined as investors returned to worrying. In March 1978 the market bottomed ABOVE the low of September 1975 and a second rally commenced. Will this market repeat that time period? We have had a great rally from March 2009. The February and May 2010 pullbacks have been worrisome.
Many financial gurus are calling for a summer rally and then a major pullback in the fall of this year revisiting the lows of March 2009. I guess anything is possible, but I believe in order for that scenario to occur we need a major decline in the recovery and possibly a default from a European country. Just my opinion, but I think any major decline could see a 50% retracement or possibly around the 800 level on the S&P. Right now though I don't think we are in for a major pullback. But timing the market has never been my strong point. Should the market sell on increased volume, then I will purchase puts. Meanwhile check out the chart below from the 1970's.
 

HEDGING MY BETS ON THE TSX?
It is tough to hedge my portfolio on the TSX. I have posted a few ideas and I will implement one of them but none of them can compare to the liquidity and professionalism of the S&P 500. Read more...

MARRIED PUTS - CAN THEY SAVE YOUR STOCK?
The married put strategy is an interesting one. Referred to by many different names, the strategy is always the same - buy protective puts to guard against a decline in stock value. Does it work? I compare a married put strategy against just selling naked puts, on Microsoft from 2003 to 2009 in 4 examples. Does it work? Read more...

NAKED PUTS VERSUS COVERED CALLS
You've heard the argument before; they are the same. Well, maybe not. While theoretically they are the same, I believe selling Naked Puts is a superior strategy to Covered Call writing. Read my take on why I love selling Naked Puts.

BULL CALL SPREAD: WHEN TO ROLL AND WHEN TO FOLD
Every option investor will at one time or another ponder whether to close a profitable trade or whether to roll into another month. It can be a tough decision, but years ago I learned 3 steps that solve that problem for me, every time. Recently my VISA spread show a 10% profit for one month and I had to decide whether to continue the spread or take the profit. Read more...

BUYING THE DIPS: MARKET DIRECTION
Ever wonder why day traders love buying the small dips in the market? After all it seems like they make only .10 or .20 cents.  Read more...

TRADING THE SPY PUTS IN A MARKET DOWNTURN
When the market turns south here is how I trade SPY puts. Read more...

MARKET TIMING HISTORY
I have been using the 10-20-30-50 strategy for many years. Here I have laid out the years from July 2006 to June 2008. I hope other investors find it helpful. Read more here...


UP OR DOWN?
WHAT IS THE MARKET TREND?
Excellent timing is available free at mtrig.com. I have found their timing calls to be better than those of VectorVest. It's free to join and the site has a lot to offer....check it out.

GETTING INTO STOCKS
Naked Puts or a Spread?
Recently I had a friend ask me about owning shares in XOM (Exxon Mobil).I put together 4 different strategies to use other people's money to get into stocks. These strategies could be applied to most stock positions...read more

DOUBLE DIAGONAL UPDATE
Is the Double Diagonal a good strategy? Hard to say as I have just paper traded for the past few months, but KRAFT is up 18% if closed out on Jan 13. Read more here....

Bear Market Strategies
Looking for some ideas on protecting your stocks during bear markets? read more

More On 10-20-30 Moving Averages
A reader had some questions about applying the 10-20-30 moving averages to his stock...read more

Want To See If The 10-20-30 Rule Works?
We have often talked about the 10-20-30 rule for option trading. Here I am applying it to my trade on RIM...read more

Don't Know About The 10-20-30 Rule?
Here is a pdf file that explains the 10-20-30 rule..read more

MAKING MONEY FROM SLOW MOVING STOCK
Few investors are interested in options on a slow moving stock. You can tell by the low option volume and small premiums. Let's see if there is a way to make money from this type of stock ...read more

WONDERING WHERE THE MARKET IS HEADING? 
No one truly knows where stocks are heading. This rally had been strong, but will it continue? There are lots of opinions but I like this author's analysis...read more

COVERED CALL POWER
In April 2009 I was contacted by a reader who had lost 32% of his trade in Manulife. He was in despair. Here's what happened in 5 months to turn the trade into a profit position...read more

A TALE OF 2 INVESTORS
Two investors approached the collapse of Bank Of America in 2 different styles. One had a profit of more than $9000.00 by the end of August and the other is still holding a loss..read more

WHERE IS GOLD HEADED?
Are you a bull or a bear when it comes to Gold? The bulls will say that Gold is building for a breakout. They will also tell you that September...read more

AVERAGING DOWN
There is a general belief among most traders that the worst mistake any investor can make is averaging down....read more

COVERED CALL PROBLEMS
There are many problems that covered call writers run into....read more

TROY'S MONEYTREE
Owned and maintained by my good friend Troy. His site offers excellent advice and information. Troy is a follower of Ron Groenke and Troy uses Ron's Visions software for his covered calls and naked puts. Check out the site.