My Stop-Loss Target=Stock Purchase Price - Call Option Sell Price.
--- In ConservativeOptionS
>
> Gilbert,
>
> I'm interested to hear more about your established sell methods mentioned
> below and what they're based on.
>
> Thanks,
>
> Dave
>
> On Fri, Apr 2, 2010 at 2:05 PM, Gilbert Arevalo <
> gilbert_arevalo@
>
> >
> >
> > Alan, I am glad to answer your question. When I invest in high-yielding
> > covered call positions - as a 10+ year strategy - I am attempting to
> > strictly do so during "optimal" market periods (flat-to-up trends). Most
> > every growth stocks I tightly screen for - will abide nicely with the trend.
> > If they go down it's most always because SOMETHING is very wrong.
> >
> > Either this is company specific or market-related, that (usually) spells
> > trouble - really fast! MOMO stocks lead to the upside AND to the downside.
> > If it's determined that a triggered STOP is company-specific (often this is
> > only known after the fact), I will then allocate the cash into another
> > selection. When my stops are consecutively triggered it's a good indication
> > that a market shift is pending or already underway (meaning I need to get
> > into or stay in cash). My STOPs naturally do this for me, time-and-again.
> >
> > In the above example, I say USUALLY, because the recent (unhealthy) market
> > has been anything but that.
> >
> > Historical: After practically no gains for all of 2007 and just minor gains
> > from 2-month rally off a correction bottom in '08 - - something certainly
> > seemed amiss. Perhaps this market is your only experience, but as recent as
> > the unprecedented late '08 *crash*, these "stop-loss methods" once again
> > proved (amazingly) prudent, as I fully moved to cash in Sep-2008. By the end
> > of the massive 6-month drop, it became very apparent to all what was really
> > happening in the market!
> >
> > Current: After averting a huge loss, we entered nicely off the '09 "bottom"
> > , but barely kept pace with the market until Q3. Then our methods - for the
> > first time in 12 years - suddenly began to significantly UNDER-perform. Time
> > and again the caution flag was raised - that we consistently heeded...only
> > to find the market vault to new highs in scant trade.
> >
> > I don't know what your experience has been, but (sticking to my stop
> > methods) this has been very frustrating indeed! I do believe that soon
> > enough, a healthier backdrop will (once again) emerge as it has for the
> > better part (~80%*) of the life of the market. Could this all mean that a
> > severe adjustment will soon be underway? Many think so, but I can't predict.
> > I only follow closely what the daily market does. Meanwhile, I'll stick to
> > my established sell methods and patiently wait for a market reset to once
> > again allow for a nice multi-month move with my long-term CC system.
> >
> > When I update my performance charts I will try and post them. A pictorial
> > should help bring into perspective the short-term versus my long-term system
> > behavior.
> >
> > G
> >
> > * based on IBD research over the life of the market
> > ------------
> > *From:* Dale Johnson <outahere3982@
> > *To:* ConservativeOptionS
> > *Sent:* Thu, April 1, 2010 1:28:14 PM
> > *Subject:* Re: [ConservativeOption
> > (FXI)
> >
> >
> >
> > Gilbert,
> >
> > I'm fairly new to covered calls and usually on read, and read, and read
> > some more. But can I ask why you set the stop loss so tight?
> >
> > Alan
> >
> > ------------
> > *From:* Gilbert Arevalo <gilbert_arevalo@ rocketmail. com>
> > *To:* CoveredCallFund- Mentoring@ yahoogroups. com
> > *Cc:* ConservativeOptionS trategies@ yahoogroups. com
> > *Sent:* Thu, April 1, 2010 8:59:56 AM
> > *Subject:* [ConservativeOption Strategies] My APR-2010 CC Trades - (FXI)
> >
> >
> >
> > Week of April 3, 2010
> >
> > Thursday, April 1, 2010
> > 9:30 am EST
> >
> > Bought 100 shares of FXI (iShares FTSE/Xinhua China 25 Index) at $42.91
> > (ask).
> >
> > Sold (1) FXI Apr 43 (FXI1017D43) call option contract at $0.79 (bid).
> >
> > Stop Loss: $42.12
> >
> > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> >
> > My JAN-2010 to MAR-2010 CC Trades -
> >
> > http://finance. groups.yahoo. com/group/ ConservativeOpti onStrategies/
> > message/5726<http://finance.
> >
> > Also see "KCM 2010 Trading History.doc" in the CoveredCallFund- Mentoring
> > Group files section.
> > Join my new Y! Group to get these alerts in "real-time" and all CC Fund
> > management training material w/ mentoring & auto-trade, available now.
> >
> > G
> >
> >
> >
> >
> >
>
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