Hope you find these useful:
http://finviz.com/screener.ashx?v=111&ft=4&ta=1&p=d&r=1
http://www.zacks.com/screening/custom/index.php?sid=87639
Sunday, April 19, 2009
Beginners Covered Calls
This is a reprint from the justcoveredcalls blog. It offers a good "beginners" CC guide and information.
Kris,
Welcome to the group. Since you are new to covered calls, you are on the right track in terms of your approach of now learning as much as you can about this strategy. I would recommend that you spend the next few months learning as much as you can before investing your money -- investing in covered calls with a pretend account (called paper trading) and tracking your results and learning along the way is an excellent way to begin.
I'm including some initial thoughts for your consideration below in red:
Best wishes,
Jeff
--- In justcoveredcalls@yahoogroups.com, "KrisMJohnson" wrote:
>
> Hello Everyone
> I have done some reading on Options from Yahoo Finance and I understand
> the basics of a covered call. However, I am still missing some key
> information about how most of them are executed here on the boards.
> For example:
> Do you typically hold 100 shares of a stock in your account and then do
> the call or do you all buy a long-term put for the shares and then write
> calls? First, I think you meant to use the word 'sell' instead of 'buy' in your sentence.
Different investors will have differing approaches on this question, but my recommendation is definitely to limit yourself exclusively to covered calls (buy the stock and sell the calls).
What is rolling up?
When your stock has made a bullish move and is well above your current strike price, some covered calls investors adjust their covered calls position by buying back their current option before expiration and selling a new option at a higher strike price. This new option can either be for the same month (which is termed simply 'rolling-up') or for a subsequent month (which is termed 'rolling-up-and-forward'; or equivalently 'rolling-up-and-out').
How often do you end up having to sell the
> stock at strike price?
This is highly dependent on: (1) whether your initial position is in-the-money, at-the-money, or out-of-the-money; and (2) the amount of increase or decrease in the stock price between the time you establish the position and the expiration date. However, it is easy to avoid assignment (if you want to keep the stock) just prior to expiration by rolling-forward to a new expiration month.
Do you typically buy stocks you want to keep for
> longer term gains - meaning you are confident to ride the ups and downs
> - and write calls for extra income OR do you find stocks that you do not
> want to really hold and write calls to "gamble" that the stock will
> remain flat or increase only slightly?
Covered calls investing is similar to buy-and-hold investing in the sense that we always want to select stocks that we are bullish about. Also, covered calls investing is a somewhat more conservative strategy than buy-and-hold, so we consider CCs to be either 'investing' or 'trading', but definitely not 'gambling'. Some CC investors prefer to hold their underlying stocks longer-term (especially if you're not in a tax-advantaged (e.g. IRA) account) to avoid short-term capital gains taxes, while other investors prefer to switch stocks more frequently as they perceive a better stock opportunity compared with what they are currently holding. Both approaches have merit -- so in this regard, we each need to find the approach that we are most comfortable with.
> Do yo have any site you can recommend to me to learn more about this?
There are many but here are some to get you going:
(1) http://www.optionseducation.org/strategy/covered_call.jsp;
(2) http://www.cboe.com/LearnCenter/default.aspx
(3) The Covered Calls Processes articles posts on my blog site:
http://coveredcallsadvisor.blogspot.com/search/label/Covered%20Calls%20Processes
> Also what tools do you use (any of the SMF_addin sheets) that are
> helpful to determine best stocks and options to write?
>Choices here too numerous to mention.
Basically, you need to determine your own stock selection criteria first, then seek to find a good screener that matches your needs. People on this group site can help you further with this as you move further up the learning curve.
Kris,
Welcome to the group. Since you are new to covered calls, you are on the right track in terms of your approach of now learning as much as you can about this strategy. I would recommend that you spend the next few months learning as much as you can before investing your money -- investing in covered calls with a pretend account (called paper trading) and tracking your results and learning along the way is an excellent way to begin.
I'm including some initial thoughts for your consideration below in red:
Best wishes,
Jeff
--- In justcoveredcalls@yahoogroups.com, "KrisMJohnson"
>
> Hello Everyone
> I have done some reading on Options from Yahoo Finance and I understand
> the basics of a covered call. However, I am still missing some key
> information about how most of them are executed here on the boards.
> For example:
> Do you typically hold 100 shares of a stock in your account and then do
> the call or do you all buy a long-term put for the shares and then write
> calls? First, I think you meant to use the word 'sell' instead of 'buy' in your sentence.
Different investors will have differing approaches on this question, but my recommendation is definitely to limit yourself exclusively to covered calls (buy the stock and sell the calls).
What is rolling up?
When your stock has made a bullish move and is well above your current strike price, some covered calls investors adjust their covered calls position by buying back their current option before expiration and selling a new option at a higher strike price. This new option can either be for the same month (which is termed simply 'rolling-up') or for a subsequent month (which is termed 'rolling-up-and-forward'; or equivalently 'rolling-up-and-out').
How often do you end up having to sell the
> stock at strike price?
This is highly dependent on: (1) whether your initial position is in-the-money, at-the-money, or out-of-the-money; and (2) the amount of increase or decrease in the stock price between the time you establish the position and the expiration date. However, it is easy to avoid assignment (if you want to keep the stock) just prior to expiration by rolling-forward to a new expiration month.
Do you typically buy stocks you want to keep for
> longer term gains - meaning you are confident to ride the ups and downs
> - and write calls for extra income OR do you find stocks that you do not
> want to really hold and write calls to "gamble" that the stock will
> remain flat or increase only slightly?
Covered calls investing is similar to buy-and-hold investing in the sense that we always want to select stocks that we are bullish about. Also, covered calls investing is a somewhat more conservative strategy than buy-and-hold, so we consider CCs to be either 'investing' or 'trading', but definitely not 'gambling'. Some CC investors prefer to hold their underlying stocks longer-term (especially if you're not in a tax-advantaged (e.g. IRA) account) to avoid short-term capital gains taxes, while other investors prefer to switch stocks more frequently as they perceive a better stock opportunity compared with what they are currently holding. Both approaches have merit -- so in this regard, we each need to find the approach that we are most comfortable with.
> Do yo have any site you can recommend to me to learn more about this?
There are many but here are some to get you going:
(1) http://www.optionseducation.org/strategy/covered_call.jsp;
(2) http://www.cboe.com/LearnCenter/default.aspx
(3) The Covered Calls Processes articles posts on my blog site:
http://coveredcallsadvisor.blogspot.com/search/label/Covered%20Calls%20Processes
> Also what tools do you use (any of the SMF_addin sheets) that are
> helpful to determine best stocks and options to write?
>Choices here too numerous to mention.
Basically, you need to determine your own stock selection criteria first, then seek to find a good screener that matches your needs. People on this group site can help you further with this as you move further up the learning curve.
May Picks
| UTX | $47.32 | ITM | 2.5% | 2.5% | 7.4% | UTXEI.X | UTX May 2009 45.0 | $3.50 |
| AMGN | $47.07 | OTM | 4.2% | 5.1% | 4.2% | AMQEW.X | AMGN May 2009 47. | $1.98 |
| KO | $45.02 | ITM | 2.8% | 2.8% | 2.9% | KOEI.X | KO May 2009 45.00 | $1.30 |
| CNI | $41.76 | ITM | 3.7% | 3.7% | 7.9% | CNIEH.X | CNI May 2009 40.0 | $3.30 |
| TGT | $40.54 | ITM | 4.6% | 4.6% | 5.9% | TGTEH.X | TGT May 2009 40.0 | $2.40 |
| HPQ | $36.30 | ITM | 3.7% | 3.7% | 4.5% | HPQEP.X | HPQ May 2009 36.0 | $1.65 |
| ADP | $36.11 | ITM | 3.6% | 3.6% | 3.9% | ADPEM.X | ADP May 2009 36.0 | $1.40 |
| LLY | $33.75 | ITM | 2.5% | 2.5% | 6.2% | LLYEZ.X | LLY May 2009 32.5 | $2.10 |
| EMR | $33.04 | ITM | 4.6% | 4.6% | 4.7% | EMREQ.X | EMR May 2009 33.0 | $1.55 |
| DOV | $32.16 | ITM | 2.6% | 2.6% | 9.3% | DOVEF.X | DOV May 2009 30.0 | $3.00 |
| DOV | $32.16 | ITM | 2.6% | 2.6% | 9.3% | DOVEF.X | DOV May 2009 30.0 | $3.00 |
| MHP | $29.47 | OTM | 5.8% | 7.6% | 5.8% | MHPEF.X | MHP May 2009 30.0 | $1.70 |
| MCO | $28.65 | ITM | 6.5% | 6.5% | 8.7% | MCOEO.X | MCO May 2009 28.0 | $2.50 |
| PFCB | $28.27 | OTM | 4.4% | 10.5% | 4.4% | HUOEF.X | PFCB May 2009 30. | $1.25 |
| EXP | $27.40 | ITM | 2.9% | 2.9% | 11.7% | EXPEE.X | EXP May 2009 25.0 | $3.20 |
| CCL | $27.25 | OTM | 5.7% | 6.6% | 5.7% | CCLEY.X | CCL May 2009 27.5 | $1.55 |
| UNH | $24.14 | ITM | 7.1% | 7.1% | 7.7% | UHBEO.X | UNH May 2009 24.0 | $1.85 |
| BBT | $23.42 | ITM | 8.7% | 8.7% | 12.6% | BBTEB.X | BBT May 2009 22.5 | $2.95 |
| jwn | $22.26 | OTM | 7.9% | 8.9% | 7.9% | JWNEX.X | JWN May 2009 22.5 | $1.75 |
| AXP | $21.81 | OTM | 7.6% | 10.7% | 7.6% | AXPER.X | AXP May 2009 22.5 | $1.65 |
| CRI | $21.62 | OTM | 3.7% | 7.8% | 3.7% | CRIEX.X | CRI May 2009 22.5 | $0.80 |
| LM | $20.20 | ITM | 8.2% | 8.2% | 9.2% | LMEA.X | LM May 2009 20.00 | $1.85 |
| msft | $19.20 | ITM | 4.2% | 4.2% | 5.2% | MQFES.X | MSFT May 2009 19. | $1.00 |
Monday, April 13, 2009
12 Great Places to Get Business News
Here is a great article that lists the biggies. Article I watch my Fox news and Bloomberg at www.freetube.com.
Kind regards
David Weller
Kind regards
David Weller
Thursday, April 9, 2009
Wednesday, April 8, 2009
Covered calls Early Exercise Issue
From the Justovered calls blog. This is a very nice clear explanation of the exercise issue. This happen to me once on a dividend issue as described below. justcoveredcalls@yahoogroups.com
Hi Folks,
I don't read finance/investing books every day, but I always have an investing-related book that I am in the process of reading at any given time. Right now, my in-process book is "The Volatility Edge in Options Trading" by Jeff Augen.
I've observed that many covered calls investors have what seems to me to be an unnecessary, excessive fear of early exercise of their stock. In Augen's book he makes a simple statement that helps clarify our understanding regarding why early exercise is so unusual. Augen states: "because early exercise of an in-the-money option involves discarding the remaining time premium, it rarely occurs."
From my experience with covered calls, virtually the only time that I have been exercised early is when there is an ex-dividend date before the expiration date and the dividend amount is greater than the time-value premium remaining in the call option. Otherwise, it is in the call owner's economic best interest to simply sell the option they own rather than exercise it early -- that is, he/she will make more profit by simply selling the option rather than exercising it.
Consequently, it is important for us covered calls investors to be aware of the ex-div dates and ex-div amounts for all stocks in our covered calls portfolios. Also remember in this regard: the owner of the stock at the market close on the day prior to the ex-div date is the owner that will receive the dividend payment.
Hope this explanation is helpful in calming any unnecessary fear of early exercise that you might have had.
Jeff
Subscribe to:
Posts (Atom)