SYSTEMATIC COVERED WRITING

 More than just covered calls . . .

"Systematic Covered Writing is a series of strategies for long-term investors (covered writers) that 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."

Additional information is always available in the frequently asked questions section and the Glossary on the SysCW website.  Here are the links to  FAQS  and the SysCW Glossary.  Please note: the information presented below is for educational purposes only!  This is an example of one of the strategies contained within the Systematic Covered Writing system.  Be advised of the TERMS OF USE, located at the bottom of this page.

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     TELK   Telik, Inc.

 

  Initial Position         The Math Exercise
                     
                       
  Position: 200 TELK with '07 Jan $20 LEAPS
                       
  Stock Symbol   TELK   Call Symbol     OJZAD  
                       
  Current Stock Price   $20.350   Current Option Bid $7.10  
                       
  Number of Shares   200   Strike Price     $20.00  
                       
  Trade Entry Date   15-Feb-06   Expiration M & Y   1 2007  
                       
  Cash Generated   $1,410.50   Stock Investment   $4,077.00  
                       
  Return if Called   $1,316.50   Annualized  if Called (1) 34.87%   (A)
                       
    Cash Required for Trade $2,666.50          
                       
    34.60%   (B)        
                       
  Days Until Expiration   338          
                       
  * The net cash generated divided by the net cash invested.  This is the 'downside protection'.
  This is not a profit percentage.  It could be called the 'Stock Ownership Risk Reduction Percentage'.
                       
     (1)  The Annualized percentage rate is calculated by dividing the 'Return if Called', by the duration of the  
        position in days, and then multiply the result by 365.              
                       
        It is important to realized that an assumption is being made that the same (or similar) transactions could be  
        executed over the course of a year.  There is no guarantee that this could be accomplished.  Also note that  
        the shorter the duration of the position, the more significant this caution becomes.        

 

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PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN TELK 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 suggested 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 provided for 'educational purposes' for the sole purpose of illustrating the Systematic Covered Writing strategies.

Thank you!

SYSTEMATIC COVERED WRITING
Copyright © 2006. All rights reserved.
Revised: 02/05/07