PREFACE - What to do when a stock has lost significant value using the SysCW philosophy is different than what the bulk of current 'modern strategies' have to say. Where they would say to take the loss and move on, the covered writer's opinion is contrarian to their philosophy, and the reason why is because Systematic Covered Writing provides a plan for handling losing positions. In fact, this is exactly why you learn how to use strategies before you need to use them. Here is a detailed, current example of this philosophy.
THE POSITION - For this example, the covered writer is also going all the way back to 2002. Please note that as you read the historical comments, the covered writer does not 'know' how this position will end . . . what the writer does know, thanks to the Position Tracker, is what has taken place to date. Many strategies have been shown, and you will see them put to use in this real example. This time the stock is ISIS and the portfolio is an IRA.
THE STOCK: Isis Pharmaceuticals (ISIS), this biopharmaceutical company exploits proprietary RNA-based drug discovery technologies to identify and commercialize novel drugs.
THE INITIAL POSITION - In August 2002, 100 shares of ISIS were purchased and an April $10 call was sold for $5.10! Before illustrating the strategies that allow a covered writer to 'hang in there', the Initial Position Math exercise will be revisited by clicking
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LEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN ISIS STOCK OR ANY OTHER EQUITY. THE INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY. THERE IS NO GUARANTEE THAT SIMILAR TRANSACTIONS CAN BE EXECUTED IN THE FUTURE. INVESTING IN THE STOCK MARKET INVOLVES RISKS, DO SO ONLY WITH A KNOWLEDGE AND UNDERSTANDING OF THE RISKS INVOLVED!
The information provided above is for informational purposes only, and no mention of a particular security constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction, investment strategy is suitable for any specific person. You further understand that the Covered Writer will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information available on this website may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Always remember that past results are not necessarily indicative of future performance.
These are the terms of use. Why are they here? Because the examples provided are real. The transactions actually took place. The dates are real, the positions are real. Some transactions will have been executed on the day you receive the email. What you are agreeing to, is the fact that in no way is it being suggesting that you can, or should, enter a similar position. Why? Because that would be providing investment advice and the Covered Writer is not authorized to do that. There is also no guarantee that similar transactions could be executed at any time in the future. Only licensed brokers are allowed to provide investment advice. Therefore, you are agreeing that the preceding example was provide for 'educational purposes' for the sole purpose of illustrating the Systematic Covered Writing strategies.
Thank you!
SYSTEMATIC COVERED WRITING
Copyright © 2006. All rights reserved.
Revised:
01/24/07