Systematic Covered Writing

... more than just covered calls!

Option Assigned Examples

THE STOCK: ZEUS - Olympic Steel, Inc.

POSITION ESTABLISHED DATE: January 30, 2007

ASSIGNMENT DATE: July 20, 2007

COMMENTS: This example was listed on July 14, 2007, which happens to be a week before expiration of the July contracts.  ZEUS is trading over $30, which means the stock will be assigned on Friday.  The assumption here is that the price of ZEUS holds above $25.00 on expiration Friday. Given that this is an Initial Position, the back-to-cash will provide the predetermined annualized gain, which was known when the position was established.  The market has been good so far in 2007.  Any bullish strategy should be generating a reasonable return so far this year, including Systematic Covered Writing.

The difference is SysCW provides the return in a more conservative nature. Here is another case where the writer has had the 'profit' generated by this position since day one. As we all know, some stocks will  appreciate significantly, some just a little.  Others may stay at about the same price, while some stocks will lose varying degrees of value.  Those are the five things that 'can' happen to the price of the stock when looking at the difference in price from when purchased to when the option expires.

This was a diversification investment for this portfolio.  After all, we're looking at a steel stock! This should be another example of a position that 'worked' in that the stock is trading above the Initial Call Option strike price.  We take these is stride as this, again, is one of the plausible outcomes of an Systematic Covered Writing  Initial Position.

Note that the return when annualized is significantly above the 15% target. Keep in mind that an individual position is nothing more than an isolate tree in the forest.  Some grow as expected . . . others don't!

---

PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN ZEUS 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 © 2007. All rights reserved.
Revised: 07/15/07