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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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Stock Market Cook Book
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Stock Market Cook Book
  • *Blue Plate Specials* - Dec. 28 6 comments
    Dec 28, 2010 3:30 PM
    Daily picks, pans, and market notes from StockMarketCookBook.com:


    Breaking Out to New Highs: ACHN, ALY, AVX, AXTI, BRD, CBR, CGR, CHE, DEPO, EPAY, FIG, GMO, IT, LUX, MGH, MIG, MMLP, MPET, MVO, NVO, PARL, PZG, RSO, SGMO, SHZ, SSL, VIV, VMI, VVTV, WEBM, ZINC
    Breaking Out to New Highs on Lower Volume: AH, ASYS, BPT, CATY, COP, COST, DPM, EGI, ERF, FPO, LBY, LGCY, NGLS, ONNN, PBNY, RGNC, SIGM, TCK VR
    Breaking Out: ALY, ANPI, CXZ, EDMC, KBR
    Breaking Down: DSX, PSUN, PVH
    Low-priced leaders: BRNC, CCOI, CPWM, CRDC, FEIC, MHR, NAL, NEWP, PMTI, SCS, TISI, ZLC
    Speculative leaders: FNGN, GRZ, KOOL, OTIV, REXI, SFE
    Darlings of the Day (long pix>$30): ASMI, BTE, GTY, PANL, PPG, TCLP
    Hot!: Precious metals & miners, Zinc, Moly, MLPs
    On the move: Biotech
    Slipping: Apparel makers, Internet software, Auto components, China funds
    Commodity & Sector Highs: Sugar (SGG), Ag (JJA, DBA), Rare earth mtls (REMX), Lithium (LIT), Copper (JJC); Comodities (DBC)
    currency & Country Highs: Swiss Franc (FXF); S. Africa (EZA), S. Korea (EWY), Japan (EWJ)
    Market Notes: The major averages still hanging in a narrow range with internals lacking any sort of conviction--a situation that most likely will continue for the rest of the week
    *Special Note*: A steadily rising market is the perfect environment for covered call writing, a great way to generate income esp. in retirement accounts. Ask your broker for info.
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Comments (6)
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  • You say that a "steadily rising market is a perfect environment" for covered call writing. I would suggest that it is a perfect environment for leaving your long equity positions uncovered. A range-bound market is the perfect environment for covered calls. But I'm sure that's what you meant.
    28 Dec 2010, 04:36 PM Reply Like
  • Ken you-re chatting with someone who has zer0 positions zip nada zilch no money where her mouth is this is the crazy lady who said XOMA was no good well they sure showed her eat your heart out XOMA has a big corporate partnership no one should listen to her or post on any of her bs posts lol ken she says you don't know what you-re talking about with the calls shes the one trick pony with bad advice and columns eom
    5 Jan 2011, 10:55 AM Reply Like
  • Author’s reply » No, I did mean what I said. A rangebound stock, not the market, is great for writing covered calls. During a rangebound market, some stocks go up and some go down.

     

    During a steadily rising bull market, most stocks go up (approx. 70%). The object for many investors in writing covered calls is to actually *want* to be called out, and the returns on investment (ROI) that I give reflect that. On the other hand, if you think your stock will significantly outperform the market, then of course writing a call would not be aligned with your thesis.

     

    The upside to covered calls is that you gain some downside protection thereby reducing position risk as well as generating immediate cash but, as you mentioned, your upside potential is limited. With options, there's always a price!

     

    But I'm sure that's what you meant.

     

    Dr. K
    28 Dec 2010, 08:25 PM Reply Like
  • Nasdaqczar: Instead of "re-commenting", I wrote an article that I hope will be of some use - on covered call strategies and what they have done historically (Dec 30th):

     

    seekingalpha.com/artic...
    6 Jan 2011, 07:24 AM Reply Like
  • Keep up the good work Dr.Ken! useful info
    6 Jan 2011, 01:53 PM Reply Like
  • Author’s reply » Nasdaqczar,

     

    I have no idea why you keep slamming me for using XOMA as a cautionary example of what a one-trick biotech can do to a person's portfolio. I clearly stated in my article (seekingalpha.com/artic...) that this was a real-life example of how putting all of your eggs into one basket can be physically as well as financially detrimental. It not only financially ruined a friend of mine, he was forced to quit his job as a broker because he recommended it to all of his clients.and subsequently ended up in the hospital with a nervous breakdown.

     

    This happened in the early 1990's and the company has come a long way since then. If you had taken the time to at least read the article, you would have discovered that.

     

    Why don't you post your own articles and stop slamming the honest work of others? Oh, that's right--you don't because you can't. Clearly, it's impossible for you to put together a coherent sentence.

     

    Dr. Kris
    6 Jan 2011, 05:13 PM Reply Like
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