- Stocks on our watch list
- Stocks selected and purchased for our portfolio that month
- Options sold in a given contract cycle
- Spreadsheet of options sold showing profits (losses)
Having these organized lists will allow us to do the following in a time efficient and accurate manner:
- Select the most appropriate covered call candidates
- Prepare for potential exit strategy executions
- Monitor our stock and option positions
Watchlist of the greatest performing stocks and stocks selected and purchased:
The figure below demonstrates an organized list of stocks and their current prices, both highlighted in yellow. You can also enter the original transaction price if these were also the actual list of stocks purchased for a particular contract cycle.
Watchlist of the options sold in a particular contract cycle:
The option symbols and current market values are highlighted in yellow. Transaction prices can also be included. When option values drop, we may want to initiate an exit strategy to generate additional income or reduce losses.
Spreadsheet of options sold with profits (losses):
The spreadsheet of options sold with profits (losses) show the following:
A- Stock ticker
B- Purchase price of stock (includes intrinsic value of option)
C- Option ticker (original or previous format shown in this example))
D- # contracts sold
E- Premium per contract minus intrinsic value of option
F- Strike price of option sold
G- Breakeven (stop loss price to some)
H- Profit generated by original option sale
I- B-T-C cost for exit strategies
The Premium Report:
Premium members of the Blue Collar Investor Corp receive a report each week where my team screens stocks looking for the best 1-month covered call write candidates. Stocks are screened both fundamentally and technically and a watch list, called the running list, is generated. This will reduce the time and effort required although all final decisions and management of positions is still essential. The figure below will show you the first page of the screening process. The “Weekly Stock Screen” portion of the report faithfully follows the Blue Collar Investor stock selection process. Note the thick blue area towards the top categorizes the screens discussed in my books and DVDs:
The end of the report generates your watch list of the greatest performing stocks in the greatest performing industries. We call it the running list because it is constantly being re-screened and updated to provide the most recent information. The figure below is one such running list:
You will note that additional information such as earnings report dates, industry segment analysis and beta are also included on this list.
Having organized lists of stocks, options and a spreadsheet of options sold, will allow us to become both time efficient and increase our opportunities of achieving the very highest of returns. We are setting ourselves up for success. These lists will facilitate stock selection, prepare us for potential exit strategy opportunities and help us track our returns.
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Over the past several months the general pattern of the weekly economic reports has been more bullish than bearish. This week was no exception:
- The US economy added 243,000 jobs in January mainly due to hiring in the private sector
- The unemployment rate dropped to 8.3%, the lowest stat since February, 2009.
- The Conference Board’s Consumer Confidence Index fell to 61.1 in January, lower than anticipated but not pessimistic
- Construction spending rose by 1.5% in December, more than double the rate expected by analysts
- Nonfarm productivity increased by an annualized 0.7% in the 4th quarter, 2011, but below expectations
- The ISM Manufacturing Index jumped to 54.1 in January, the 3rd consecutive increase
- The ISM Nonmanufacturing Index rose to 56.8, the highest level since February, 2011
- Personal income rose by 0.5% in December but consumer spending remained unchanged
- New orders for manufactured goods increased in December for the 2nd straight month by 1.1%
For the week, the S&P 500 rose by 2.2% for a year-to-date return of 7.1%
A 6-month chart of the VIX and S&P 500 paints a bullish picture. A declining VIX (from 50 in August to under 18 right now) and an accelerating S&P 500 along with the positive economic reports are guiding this site to a more bullish position:
IBD: Confirmed uptrend
BCI: Moderately bullish selling an equal amount of OTM and ITM strikes. If economic reports continue to impress, a more bullish position will be taken.
Wishing you well on your journey to financial independence,
Alan ([email protected])