BuyBack & Lower Strategy

Systematic Covered Writing

. . . more than just covered calls . . .

"Systematic Covered Writing is a series of strategies for long-term investors (covered writers) who believe nobody really consistently knows which stock is going to appreciate at any particular point in time. They also believe there are a limited number of possible overall changes in any individual stock's value during a specified period of time and that someday the value of a stock will be higher than when it was originally purchased. Lastly, they understand that their wealth is not emotionally connected to any individual stock held within the portfolio."

BUY BACK & LOWER (continued)
As with most strategies used in the Systematic Covered Writing process, examples help clarify the thought process. This particular strategy should be used with caution because if the stock moves back above the lowered strike, the writer will need to use a defensive strategy like the BuyBack&RollOut &Up. The writer will still generate cash, just not as much as if the Initial Position had been left in place.

It seems prudent to illustrate this strategy with positions where it worked, as well as positions where it did not. Again, the covered writer cautions you to understand the downside of lowering the strike price. Know from 'the get go' what you are going to do if the stock moves against you! Click any entry in a row below to view that example.

Example	Date Lowered	Outcome

AMZN	August 2004	Stock appreciated, BB&RO&Up used to protect stock.
CYBX	October 2005	BB&RO&Up was used in April 2006 to generate over $1000
CYBX	October 2005	Same stock as above . . . different out come.