Systematic Covered Writing

... more than just covered calls!

Option Assigned Examples

THE STOCK: CIT Group Ord Shs

POSITION ESTABLISHED DATE: November 27, 2007

ASSIGNMENT DATE: January 18, 2008

THE RESULTS: The complete history of all Closed Positions is maintained indefinitely in the Position Tracker for each portfolio.  The Tracker data becomes the SysCW evidence manual over time. The results are the results, which means subscribers can gleam the historical merits of the process as the results include all positions . . .  not just the 'pretty' ones.  

COMMENTS: This is another SysCW short-term position that worked just fine. The $491.74 generated initially represents over 20% of the cost to purchase the stock.  This position was established in an effort to generate a little additional cash, while the writer waited for the January expiration to arrive.

It seemed relatively 'safe' as the strike price was $3.59 below the $23.59 purchase price.  As I pen those words . . . I have the thought of what is 'safe' these days? Given that the stock ran up to $30 and then steadily declined, maybe the writer should have used the word 'lucky' instead.  On the other hand, with over 20% back-in-hand for a position established to last less than two months, it's not like the writer would have been in a bad position if the $20 call had expired.

Please note the usual caution concerning a return being annualized when the duration is short!  If similar transactions could be executed over the course of twelve months . . . the return of 32.31% would be 'realized'.  As long as we stay on top of the significance of the data, looking at it is just fine.

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PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN CIT 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! Bq

SYSTEMATIC COVERED WRITING
Copyright © 2005. All rights reserved.
Revised: 01/21/08