Covered Calls – Where to from here?

Well, the end of a seriously negative week and I want to take stock of how my account is doing:

My four positions: SLW, MED, TFSM, and GIGM  are down between 5% and 20% for the week. Three of four started the week in the money and all finished well out of the money.

I took a serious look at each company and still like what I see. All are profitable and growing nicely. They are diversified: Silver, weight loss, Internet advertising, and Chinese on line gaming.

The only serious mistake was holding TFSM through an earnings release. It met forecasts, so immediately dropped an additional 8%. Still looks like a company with great prospects.

I had been wondering what my strategy would do in a down market, but I was thinking of something a little more gradual. My thoughts now are to stay with the stocks I currently have and write 1 to 2 month calls until they get back up to the strike prices. Because of the volatility of these stocks (kills me on the way down), I should be able to write 2-3% per month option premium until the losses of this week are regained in the actual stock prices. So I will supercharge the gains on the way back up. Assuming they go up! So if it takes 6 months or longer to regain the losses of this week, I will do very OK.


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