Systematic Covered Writing

... more than just covered calls!

Option Assigned Examples

THE STOCK: Meritage Homes Corp.

POSITION ESTABLISHED DATE: September 17, 2007

ASSIGNMENT DATE: March 21, 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 position began in September of 2007.  For what it's worth, the stock closed at $18.04 on expiration Friday, which means the stock did appreciate.  This position was established with a strike price above the purchase price, so appreciation was needed in order for the Initial Call Option to 'work'.

From a different perspective, consider the fact that MTH traded as low as $7.04 per share on January 22, 2008!  Does that matter?  Only if the writer had panicked and closed the position at a significant loss! A covered writer can ride the down-trends if he or she keeps to concepts at heart and in mind.  (1) A covered writer is a long-term investor.  The fact that this stock lost 61.9% of its original value means nothing. (2) A covered writer should be sector and position diversified.  Even though this was a very good Initial Position, the writer began with only 100 shares.  Why?  Because nobody knows!

Please do remember when annualizing a return that there is the assumption that a similar trade or trades could be established over the course of one year. Needless to say . . . this was a 'nice' SysCW Initial Position!

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PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN MTH 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: 03/24/08