Monday, September 19, 2011

9/19 Covered Calls

This category of posting, more than the others appearing on Private Trader, are all about me -- my trades and my need to track ongoing positions. Blogger -- the engine that underlies Private Trader -- allows me to do a fairly decent at-a-glance display, using the same table as I use for the daily Indicators posting.

Among all of the myriad options strategies that I know, the most consistently profitable has been covered calls, the strategy that's considered appropriate for novice adult traders and 12-year-old children.

At this stage of the game, I'm setting up by positions by selling in-the-money calls, to give myself some downside protection. I am, at this point, mid-term bearish the markets as a whole.

I select the strike price by going out from the current price by about four times the 10-day average true range, a method that gives me some adjustment for volatility.

It is also my practice to make directional options trades in the same stocks as insurance against loss of value. Those trades won't be covered here, although I may do a Watch posting in some cases.

Here are stocks that covered the call options that I've sold for October expiry:

sym phase trend adx   200/50 40/10


  • phase: 20-day price channel phase, with green for bull trend, red for bear trend and yellow for neutral trend.
  • trend: Price direction, green for higher highs and higher lows, red for lower highs and lower lows, yellow for neither.
  • adx: Average directional index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 25 and up but below 40, magenta (light purple) for 20 and up but below 25, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, magenta for sunset on the horizon and brown for the earth.)
  • 200/50: The moving average cross, green for the 50-day ma above the 200, red for below and yellow for closely aligned.
  • 40/10: The moving average cross, green for the 10-day ma above the 40, red for below and yellow for closely aligned.

About my trading methods

Read a detailed explanation of my analysis method, including trading rules. These don't, at present, discuss my covered call strategy, which is under revision.


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

The trader’s greatest sin is inaction. Sleeper, awake! Seize the Nietzchean moment. Roll out of bed and trade.

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