Sell to open May 9 strike puts and May 13 strike calls. These are covered calls. I have a neutral bias over the next few months. Anticipating range-bound between 9 and 13.
CHS Daily/Weekly Chart
It is payday once again. I had the following options expire in January 2011. January was a good month indeed. I think you could have sold puts on about anything during this rally and you wouldn’t have had to worry about assignment.
I will be using weekly charts for this analysis. I find the weekly chart best suits my timeframe as it filters out the noise from a chart with daily bars. My indicators seem less ‘chatty’ on a weekly chart too.
American Superconductor Corporation (AMSC) Jan 2011 22.5 Puts expired out of the money. I wrote these back on 09/08/2010. You can see AMSC took a beating starting about the beginning of November but I had sold these so far OTM that assignment wasn’t really ever a concern for me. 4 month return of 5.2%*.
AMSC Weekly
Chico’s FAS Inc. (CHS) Jan 2011 12.5 Calls expired OTM. These were covered calls. I will probably turn around and sell more calls right away. CHS is currently on my watchlist for another short-put trade as well. I might sell some more puts next week if it holds that trendline. 4 week return of 2.8% *.
CHS Weekly
La-Z-Boy Inc. (LZB) Jan 2011 7.5 Puts expired OTM. I wrote these on 10/6. 3 month return of 9.5% *. LZB is on my watchlist as well but options are thin and bid/ask is wide. I will probably stay away.
LZB Weekly
McMoRan Exploration Co. (MMR) Jan 2011 11.0 Puts expired OTM. I wrote these on 10/28. 3 month return of 2.8% *.
MMR Weekly
Xerox Corp. (XRX) Jan 2011 7.5 Puts expired OTM. I wrote these on 9/9. XRX will immediatly go on my list for next week again.
XRX Weekly
* The return is calculated using the premium I received from the sale of the options (less commissions) and the capital required to pay for their possible assignment.
I’m having a bit of a tough time finding anything suitable to fill my February inventory. The silver miners are looking pretty good – notably PAAS, SLW, SSRI, SVM, MVG, HL. The silver miners would have been timed better if the puts were written last week, but it was a busy week for me and I missed it. I still think the trade could be done on a few of these. I like PAAS and I’ve done well with that one in the past.
I’m also watching apparel stores like ANF and CHS. I sold some puts on AEO about a week ago and that trade has been working out. Some other miscellaneous stocks include CIG and HEAT. The chart for CIG is almost perfect but the 17.50 strike is too close to the money. HEAT might be a good trade later this week or next week.
No trades today. I’m feeling rushed today and I feel like I need to write some puts – not the right mindset to be in when I’m logged into my brokerage account.