Comments for FullyInformed.com http://www.fullyinformed.com Income and Profit With Stocks and Options Thu, 23 Feb 2012 05:24:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 Comment on AGQ ProShares Ultra Silver Investing Strategies Part 1 by Teddi Knight http://www.fullyinformed.com/agq-proshares-part1/#comment-439 Teddi Knight Thu, 23 Feb 2012 05:24:00 +0000 http://www.fullyinformed.com/?p=5704#comment-439 Hi Lenpetry It comes down to your strategy. The strategy being discussed is for AGQ ProShares which Dan (the investor) does not want to lose control of his shares. Therefore writing covered calls to be exercised does not factor into the strategy. So you want to write those calls when AGQ is screaming that it is overbought. When the stock falls you buy to close with then are oversold. In Dan's case the shorter expiry makes sense depending on the strategy he wants to use. The Gambler strategy uses a number of different approaches to selling covered calls including going out much longer than a couple of months. It is important to understand your goal. First set the goal. What are aiming to achieve. Dan has a clear goal. He believes AGQ is going to reach lofty heights and he wants to sell there, not before. With the goal set then set the strategy. With the strategy set then set the rescue or escape if the trade does not work out. Then finally set the trade in motion. Once you have all of this set up you cannot go wrong because you have already everything in place for the trade before you even start the trade. There is no emotion involved. You know what you are going to do if the trade works and if it doesn't work. So again it depends on your goal. Dan's goal is clear. If you goal is to ALWAYS get called away then there are other strategies for that. There are some very good ones. My recent BCE stock trade is a good example. I bought shares when it fell below $39, then it ran back up to above $40. I want the dividend which is to come out shortly but I also want out of the shares. So I sold the $39 strike AFTER the stock ran up to $40 using a modified version of The Shark strategy. I got great premium, nice protection and I went out far enough that unless the stock climbs a lot from here I should earn the dividend. If I don't then I have still made a great premium. It comes down to a clear goal. Set the goal, set the strategy, set the rescue and don't second guess yourself. Follow through on the trade to be consistent. Hope this helps and sorry I certainly did not mean to give you the impression of chastising you. I thought your question was excellent and I get asked it a lot which is why I wrote the article which readers can view here: http://www.fullyinformed.com/agq-proshares-covered-calls-questions/ Teddi Hi Lenpetry
It comes down to your strategy. The strategy being discussed is for AGQ ProShares which Dan (the investor) does not want to lose control of his shares. Therefore writing covered calls to be exercised does not factor into the strategy. So you want to write those calls when AGQ is screaming that it is overbought. When the stock falls you buy to close with then are oversold.
In Dan’s case the shorter expiry makes sense depending on the strategy he wants to use. The Gambler strategy uses a number of different approaches to selling covered calls including going out much longer than a couple of months.

It is important to understand your goal. First set the goal. What are aiming to achieve. Dan has a clear goal. He believes AGQ is going to reach lofty heights and he wants to sell there, not before. With the goal set then set the strategy. With the strategy set then set the rescue or escape if the trade does not work out. Then finally set the trade in motion.
Once you have all of this set up you cannot go wrong because you have already everything in place for the trade before you even start the trade. There is no emotion involved. You know what you are going to do if the trade works and if it doesn’t work.

So again it depends on your goal. Dan’s goal is clear. If you goal is to ALWAYS get called away then there are other strategies for that. There are some very good ones. My recent BCE stock trade is a good example. I bought shares when it fell below $39, then it ran back up to above $40. I want the dividend which is to come out shortly but I also want out of the shares. So I sold the $39 strike AFTER the stock ran up to $40 using a modified version of The Shark strategy. I got great premium, nice protection and I went out far enough that unless the stock climbs a lot from here I should earn the dividend. If I don’t then I have still made a great premium.
It comes down to a clear goal. Set the goal, set the strategy, set the rescue and don’t second guess yourself. Follow through on the trade to be consistent.
Hope this helps and sorry I certainly did not mean to give you the impression of chastising you. I thought your question was excellent and I get asked it a lot which is why I wrote the article which readers can view here: http://www.fullyinformed.com/agq-proshares-covered-calls-questions/
Teddi

]]> Comment on AGQ ProShares Ultra Silver Investing Strategies Part 1 by Lenpetry http://www.fullyinformed.com/agq-proshares-part1/#comment-438 Lenpetry Thu, 23 Feb 2012 00:57:00 +0000 http://www.fullyinformed.com/?p=5704#comment-438 OK, chastened as I am, I will re-read articles 1 & 2, in preparation for the 52-page magnum opus (aka part 3). But initially did you find it counter-intuitive to write calls as the stock price was rising toward your strike price? True, you can roll the call forward (if you want to avoid being exercised), but the stock price is now higher, it will cost you more to buy-to-close than you received in initial premium. The usual way to compensate for this loss is to choose a longer expiry period than the initial one, and I thought you advise against long expiry periods. If the strategy IS to get called away, then writing calls in a rising trend makes better intuitive sense to me. OK, chastened as I am, I will re-read articles 1 & 2, in preparation for the 52-page magnum opus (aka part 3).

But initially did you find it counter-intuitive to write calls as the stock price was rising toward your strike price? True, you can roll the call forward (if you want to avoid being exercised), but the stock price is now higher, it will cost you more to buy-to-close than you received in initial premium. The usual way to compensate for this loss is to choose a longer expiry period than the initial one, and I thought you advise against long expiry periods.

If the strategy IS to get called away, then writing calls in a rising trend makes better intuitive sense to me.

]]> Comment on AGQ ProShares Ultra Silver Investing Strategies Part 1 by Teddi Knight http://www.fullyinformed.com/agq-proshares-part1/#comment-431 Teddi Knight Wed, 22 Feb 2012 18:00:00 +0000 http://www.fullyinformed.com/?p=5704#comment-431 Hi Len Perhaps you didn't follow the thinking behind the article. You want to sell covered calls for the highest premium as this is the best covered calls strategy. Selling covered calls in a decline does not give the investor the highest covered calls premium. I have written an article about this which you can read here: http://www.fullyinformed.com/agq-proshares-covered-calls-questions/ Hi Len
Perhaps you didn’t follow the thinking behind the article. You want to sell covered calls for the highest premium as this is the best covered calls strategy. Selling covered calls in a decline does not give the investor the highest covered calls premium. I have written an article about this which you can read here: http://www.fullyinformed.com/agq-proshares-covered-calls-questions/

]]> Comment on AGQ ProShares Ultra Silver Investing Strategies Part 1 by Lenpetry http://www.fullyinformed.com/agq-proshares-part1/#comment-429 Lenpetry Wed, 22 Feb 2012 10:45:00 +0000 http://www.fullyinformed.com/?p=5704#comment-429 9) It is important to NEVER sell covered calls when AGQ ProShares ETF or price of silver is in a pronounced decline. This I don't understand. If you sell a call with the strike slightly above stock price, you make a large premium. If the stock price then declines, the covered call is worth less and you can buy to close with a profit, no? 9) It is important to NEVER sell covered calls when AGQ ProShares ETF or price of silver is in a pronounced decline.

This I don’t understand. If you sell a call with the strike slightly above stock price, you make a large premium. If the stock price then declines, the covered call is worth less and you can buy to close with a profit, no?

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