|I was off the threads when I had active nasd 7 & 63 licenses. Those terminated in July. I still do warrants. My best holding right now are orb's and ntai's ( a little short term but should double at least once before Nov.) I did well on the chgow, but got caught with 500 that were tucked in a educational Ira that I didn't check until to late to convert. I had about 25,000 so missing them didn't hurt much.|
My training in getting my 7 shifted me to using covered calls and buying them as well.
Did you know that you can get a 93.5% return for any holding period where you can sell a covered call for 50% of what you paid for the stock. I'm getting well over this with amt and cvc isn't far behind.
Take amt (american tower corp) Its low today was 2 / share and the covered call was paying $1.2/share for Jan 05 5's. a return of 60% for the 29 month holding period. If starting with 1000 shares you paid $2000 dollars for, you sell 10 contracts for $120/100 for 1,200 dollars. You then buy 600 shares and sell covered calls (6 contracts) for $720 you then buy 300 shares and sell 3 contracts for 360 + the remainder from the last trade ($120) and you have 480. You by 200 shares and sell two contracts for $280 + the remainder from the last trade = 360. You buy 100 shares and sell 1 contract and take the remainder from the last transaction of 160 + 120 and buy 100 shares The 120 from this sale and 80 from the last get you one last contract 120 left over.
Simple put if you do this you end up with 10 + 6 + 3 +2 + 1+1+1 or 24 contracts at
$120/contract gives you a return of $2880 + 120 = $3000 in income (taxed if you do this in a sheltered account) this is a return of $150% due to a 60% premium on the calls. You get this if you sell all of the shares at 2 in Jan of 05. What I like in this situation is the strike is at$5 so if the stock sells for $5 or more your return is $3 x 2400 or $7200 or a return of 360% or over 100% annualized. Little risk and you don't even have to check the account until Jan of 05.
I use this for my clients educational Ira as well as in their roth's
What do you think?