Singing Pig

Loving month two of the strategy - now I'm managing positions.  I've made over 7% on two stocks (Lehman Brothers and Citigroup) in five calendar days (more really, as I'm using a reasonable amount of margin this month).  Sold the calls, stock dropped, bought the calls back at less than I paid for them for 7%+ profit and then both cycled back up.  Now going to sell more calls against the same stocks.

WOW great result Stuart, I for one am following your progress with much interest as I am looking into doing the course, please keep us updated

 BTW  how much capital are you investing with?

Sel  

Thanks Sel.  Good to hear from you.  Hope you're well.  I've invested £20k so far and more is on its way.

By the way, there is a new "taster session" for the course coming up, so anybody with an interest or with outstanding questions () can find out more.  The date will be 11th May and full details will be at http://www.findingfinancialfreedom.info - the cost will be £20.  If you go to the page today it will allow you to register for details as soon as the full information is released.

Hi Stuart,hows it going this month?Any chance of explaining your results on the shares that have fallen from purchase price?as this is one of the main areas of risk with covered calls.

Thanks Zulu

Hi Zulu,

Sorry for the delay in replying - I don't come on SP as often as I used to.

So far I have averaged 5% per month.  I made some mistakes in month one which were easy to get away with then, but required more management in months two and three and lowered my overall returns.  I've since had another mentoring session and understand where I went wrong constructing my trades, so I expect my returns to pick up again now.  I have to say, I was disappointed when my third month performance was down to just over 3% for the month, but then I realised I've been spoiled.  That still compounds to 42% for the year, which is pretty damn good.

I would definitely say managing positions is the most involved part of the process.  Pretty much anybody can pick a stock and sell a call against it for 5% in month one.  But when the stock drops you then have to use more advanced strategies to generate the income.  I am generally finding that side of things is working well for me.  The more difficult side of things is what to do when stocks move up when you want them to move down, etc.  But I'm learning there are strategies for pretty much every eventuality.

Thanks for the reply stuart,its the repair strategies I feel will lower your returns,especialy in a bear market.I find selling options give consistancy of cashflow along with dividends but using ITM calls to recoup losses will not always be possible.

Averaging down selling puts whilst not going to overweight in any single stock can lock in an attractive purchase price which will regain ground as the market turns and can be used for the covered calls again

I'm interested in your experience with this

Also what I do differantly is sell calls at the upper end of the trading channel (rather than the lower end) and purchase the stock with a put sale at the lower end (or keep the cash against another stock)

Good luck with it anyway and please post your experiences

Regards Zulu

Steve, I'm wondering how you have done over the last 3 months. You mentioned writing calls on Lehman stock then buying them back later for less.

Have you managed to protect your equity? I have been buying a few speculative option contracts on financial stock this week, about 20 pounds a contract seems a good stake size, then selling them back for a little more. There is a lot to be said for simple basic speculation when markets are volatile. Max 20 pounds to loose on a small trade, and possibly +15% back the same day, no equity other than 20 pounds needed.

Simple BTL property investment, in a rising market, with a good mortgage did in fact offer very good leverage at low risk. Perhaps an easy 3% a month on equity, provided you sold on/refinanced & renovated a bit to keep leverage high. BTL over the last 10 years is a tough act to follow.