Systematic Covered Writing

... more than just covered calls!

Option Assigned Examples

THE STOCK: OmniVision Technologies Inc.

POSITION ESTABLISHED DATE: April 19, 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 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: Each year the January expiration will bring with it a significant number of assignments due to the number of positions established with longer term LEAP options. There are those that would argue that there is an increased risk of exposure to price fluctuations.  Please note that I am not saying 'they' are wrong, I'm just saying that if one correctly sets up the position, then one is going to be paid for being 'exposed'.

As luck (?) would have it, OVTI closed on January 18, 2008 at $12.61 or SIX CENTS lower than when it was purchased!  During the holding period, the stock did trade above $24 a share for the first half of October.  The stock has been on the decline since the high was established.

The longer the duration, the more reliable the return when annualized. Note . . . one could call it luck . . . that even though the price at the end of the term was almost exactly the same as the original purchase price, the position still generated a $694.19 profit in 274 days.  The focus of SysCW is being paid for owning stock, and not on being 'right' as far as appreciation.

The folks that suggest OTM calls would have made out with this position as long as they coupled it with the short-term option philosophy, which would be the normal approach.  I think the point here is to note that either strategy would have worked up until October.

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PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN OVTI 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: 01/23/08