Wednesday, November 30, 2011

11/30 Covered Calls

This daily posting tracks my covered call plays and other base positions.

Everything flipped from sort of bearish to bullish -- at least for the day -- with the Federal Reserve’s decision to help out the Europe repair the Euro by injecting liquidity into capital markets. Bloomberg’s write-up.

This was great for my covered calls, and awful for my bear plays.

Problem child DDS (see Tuesday’s Covered Calls) stopped falling but also didn’t rise. I’ve opened a countervailing bear position on DDS to insure my covered calls.

Also, I opened some bear positions on Tuesday, and that clearly was an action that stands on the wrong side of history, at least for the near term (see the Other Base Positions section).

The key question, I think, is one of magnitude. No prices broke beyond their weekly-chart price channels. The daily-chart relelative strength index has popped into overbought territory (above 70) on any holding. That goes both for the covered calls and the straight bear positions.

So my tactic at this point is wait and see. We’ve got the employment report coming out on Friday -- that’s an opportunity for the market to again turn negative. And I have several months before my long puts come close to expiration, so there’s time to see what transpires.

Covered Calls

sym phase trend adx   200/50 40/10

Channels (weekly chart):

BIDU is trading within an uptrending channel that began Oct. 3. It lies within a longer-term downtrending channel that began July 25.

DDS is trading within an uptrending channel that began Aug. 15. It lies within a longer-term sideways range that began March 26.

GDX is trading within a sideways range, with a very slight downward cast, that began Dec. 6, 2010.

LVS is trading within a sideways rangethat began March 7.

RIMM is trading above a downtrending channel that began Feb. 21, but is still producing lower highs.

Monthly Positions

expiration Dec. 17

DDS 49.68 50 2.18
GDX 56.88 56 2.70
LVS 43.61 44 2.02
RIMM 16.86 17.50 1.24

Weekly Positions
expiration Dec 1

BIDU 125.96 125 3.60

Other Base Positions

  • Long shares: CBM, PCCC, PKOH, TAST.
  • Long puts: DDS, K, LEG, SPY, URBN.


  • 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 sideways, and grey for neutral or ambiguous.
  • 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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