Hi. I am new to the board with a recent reply:
Re: Let's Get the Site Active Again !!
My covered call strategy is no doubt a lot simpler than most. many a "mantra" I
take from IBD like: "The safest place to be during a market downtrend is in
cash."
My stop methods got me cashed out before the big 21-day drop
(http://tinyurl.
G
I see the board hasn't been active much until recently. It has been an interesting couple of years for my covered call system - perhaps that played some part in this.
IMHO I think the current market rally has nearly run it's course and that when (not if) we get a market correction (>10% decline) a lot of the remaining excess (market volatility) will be removed - to once again make a prime environment for my CC strategy.
I can share a lot and will make an attempt to update regularly so let's start by saying in this forum I will speak mostly on what I know best regarding option strategies: covered calls.
I've been very focussed in this area of trading for over 10 years - and I've seen almost every kind of market environment. How does it apply to my long-term approach?
I sell covered calls against underlying market-leading growth stocks during flat-uptrending market periods. IBD helps me with indicating
"tops" and "bottoms". I cash out during market corrections and bear markets.
This system has worked quite well for over a decade. If any are interested I can share some of this with you. Key to my high-growth strategy are maximizing the effect of "compounding" monthly returns - while keeping tight rein on losses in the event of a downturn.
My stop methods have proven to be integral in the success of this strategy. My CAGR or compound annual growth rate is superb and max drawdown well-contained - all key to a true long-term winning strategy.
My stance right now is "Caution" and I have pared back to limited exposure - taking my cue from institutions on whether or not the stocks will move higher or fall off and correct.
I can be quite nimble and patient - but I do not hold onto losing positions. When the trend is our friend - vehement gains can be made in a fairly safe and conservative manner. . .but I cash out (stop=stock purchase price minus option premium) during uncertainty.
Fortunately, phasing in and out of market trends has been consistently profitable. Ramped up gains over the years have for the most part been retained using my stop methods.
I have had to be cautious these last few months - while the market run continued. Perhaps in the near future we'll see the next sudden decline and a subsequent move off the bottom making my strategy less risky to get fully invested again in covered call positions.
I would like to share this with those interested, since I've monitored most all cc strategies and find my result to be tops. Many may have been exposed along with the added risk this past half-year to gain more in 2009 (while I simply made sure past compounded returns are retained), but with my system you have to take in many or all market years.
Getting risky in one year for a temporary jump in gains may very well work against you bringing sudden severe drawdown and steep account loss, rendering years of system gains worthless. If one is patient, no gains for a while will bring much gains and/or outperformance as I've seen time and again.
Like I say with investing using covered calls or most anything -- a steady high-growth compounded average managed for YEARS is the surest way to long-term prosperity and great wealth.
G
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