Comments on: Greeks: Factors that Influence our Covered Call Premiums https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/ Learn how to invest by selling stock options. Sun, 15 Jul 2012 12:30:06 +0000 hourly 1 By: Steve Z https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6328 Sun, 15 Jul 2012 12:30:06 +0000 /?p=6649#comment-6328 In reply to David Swett.

David, I’m glad this worked out well for you.

I would emphasize Barry’s point about “virtual” or “paper” trading as a way to learn. While you were out of the market these months worrying about your $6.70 you could have placed dozen’s or even hundreds of paper trades to gain experience with the various exit and rolling strategies.

While trading with real money will make you sweat and so there is some learning from it, learning first with hundreds of trades using a paper money account is the better way to get started.

Good luck.

Steve

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By: Barry B https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6310 Fri, 13 Jul 2012 00:43:47 +0000 /?p=6649#comment-6310 In reply to owencpa.

Owen,

A follow-up to my earlier comments about ISRG…seems Cramer said just about the same thing tonight on “Mad Money” that I said in my earlier post. His comments from tonight:

“Never take your cue from the weakest player in the industry,” Cramer reminded viewers as he compared the fates of Mako Surgical (MAKO) and Intuitive Surgical (ISRG) in a battle of the surgical robot makers.

On Monday, Mako surprised investors by cutting its full-year forecasts, a move that sent shares plummeting 43%. In classic collateral damage fashion, shares of rival Intuitive Surgical also fell 20 points on the news despite the fact that Mako’s problems have absolutely nothing to do with Intuitive Surgical.

Cramer said it was easy to see Mako’s problems coming after the company reported terrible earnings on May 7, a 28 cent-a-share loss versus the 20-cent-a-share loss Wall Street was expecting. Those earrings gave Mako a 36% haircut at the time and prompted Cramer to put the stock in the penalty box on May 27.

Cramer said that growth stocks like Mako are just like sharks — they can’t stop moving or they’re dead in the water. Mako couldn’t afford to miss on earnings, he said, but it did. Despite this huge red flag, many analysts still took a chance on Mako and recommended the stock, only to get blown out of the water Thursday.

But what of Intuitive Surgical? Intuitive Surgical actually reported a strong quarter, noted Cramer, and the company has a proven track record and a huge base of installed customers from which to derive residual revenues. Trading at just 28 times earnings with a 21% growth rate, Cramer said the story at Intuitive Surgical remains intact.

Best,

Barry

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By: Alan Ellman https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6309 Thu, 12 Jul 2012 20:09:01 +0000 /?p=6649#comment-6309 Premium members:

This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site.

***As we enter another earnings season, many of our members find these ETF reports particularly useful since ER dates are NOT an issue with these securities.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

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Alan and the BCI team

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By: owencpa https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6308 Thu, 12 Jul 2012 19:26:42 +0000 /?p=6649#comment-6308 In reply to David Swett.

Hi, David.

I find that options traders are often overly optimistic. You are correct. I still had a $23 cushion, but the put traders were making believe that it was going to keep falling. The truth is I was only red by about $150 on 3 contracts. $50 each isn’t a horror, but, I DON”T LIKE RED POSITIONS.

Anyway, I felt that the the sympathetic reaction to MAKO was overdone, and they seemed to stop the fall at $530. Today it’s back to $535, and my condors are $152 green. I like green. I am going to hang in there a bit longer.

By the way, OptionseXpress new Idea Hub has a suggestion to buy MAKO and sell the AUG12 $15 call. It actually looks intriguing, simply because it took such an enormous beating the other day.

Regards,

Owen

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By: Alan Ellman https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6306 Thu, 12 Jul 2012 10:49:08 +0000 /?p=6649#comment-6306 Running list stocks in the news: DLR:

On April 26, DLR reported a strong 1st quarter earnings report with a 12.9% year-to-year growth in operating income and 14.6% growth in earnings. Earnings estimates have been trending higher as shown in the chart below (click on image to enlarge and use the back arrow to return to this blog). The year-to-date return on this equity is 15% compared to 6.6% for the S&P 500. Our premium running list shows an industry segment rank of “B”, a beta of 0.91 and a generous dividend yield of 3.80%

Alan

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By: David Swett https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6302 Wed, 11 Jul 2012 18:36:57 +0000 /?p=6649#comment-6302 In reply to owencpa.

Hello Owen,

I hope that you will share a bit more info about why your iron condor is in the “red”.

You said your short put was 510; today’s ISRG market is $533–still 22 points away from going ITM on the 510 short put and losing on your hedged spread. Why wouldn’t this still be green?

Your call side is so far OTM that you can BTC at a nickel cost and book the profit on that side of the Iron condor.

Regards,
DJ Swett

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By: Barry B https://www.thebluecollarinvestor.com/greeks-factors-that-influence-our-covered-call-premiums/#comment-6301 Wed, 11 Jul 2012 17:58:03 +0000 /?p=6649#comment-6301 In reply to David Swett.

David,

Great job!

It is great to see how what you learned from BCI was put to use in the real world and to see how it helped you gain control of your future and your wealth. Use this strong emotional reward as a spring board to going deeper into the details of the BCI methodology. Continue to use virtual trading to learn to implement the other tools in the BCI tool bag and broaden your exposure to other types of issues that will come up in your investing career.

Best,

Barry and the BCI Team

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