Winner wrote:Winner wrote:Buy-Write Strategy: As the article I post indicated 13% annually return and here is the chance to get it within 4 weeks for 11.42% or 8 weeks for 18.23%.
Buy VNDA in 100 shares increment and sell one contract for every 100 shares DEC 2013 CALL $12 for for $1 (BID: $.90/ASK: $1.10) / JAN 2014 CALL $13 (Bid: $1/ASK: $1.2). VNDA closed at $11.63, so the cost is $10.63 or 8.6% below the closed price for a protection. If the stock close $12 or more on DEC 20, then lock in 11.42% for 4 wk by let it exercise or just convert to JAN 2014 CALL $13 for breakeven or some credit ($13=18.23%). I refer DEC with potential expire worthless (rather than $13 strike in JAN for higher chance stock will pull from me), then continue to SELL CALL to collect the monthly (INCOME) on time premium.
I bought 2,000 shares and sold 20 contracts the next day near the cost I mentioned above. Today, I bought 1,000 shares and sold 10 contract at $10 strike for $9.29, so my average cost is a little over $10 and if by 12/20 it trade above $10 (near $12), then I will be happy to let it pull 1,000 share from me for 7% profit (I may convert the last 10 contracts to JAN 2014 CALL $11 or $12 strike with credit and leave the 1st 20 contract to expire) since the main purpose for this trade is to bring my average cost down to $10.10. By the way there is one investor has an open JAN2014 CALL $12 strike and the transaction over $500K. This investor bet on very high potential FDA will approved in JAN and my target for this stock is between $17 to $22.
I converted all JAN2014 to FEB2014 $14 & $15 and get $.85 & $16 for $.80 (total collect $3,300/$40,000 for 4K shares = more than 8% return a month this not include the price increase more than 30%), so my average cost for VNDA is $9.24. So by FEB2014 close above $14 and I let excercise that = 51.51% and more for two + months. This strategy work very well so far to earn extra income. By the way my target price is above $17, so depend on where it close for FEB2014 then I will decide if I let it excercise or get additional credit by convert to MAR2014.
BY THE WAY MLNX is not great compare to VNDA since I bought additional. I posted MLNX that initial I bought 100 shares at $34.89 after several month that I took income between $1 to $2 per share, plus additional shares I bought later on, so with the current price it is still above 25% return for less than 3 months. I missed last Friday and not convert and less it expire worthless, now I will wait for it to go up around $45 before I sell to collect income for FEB2014 any where between $1 to $2. As I post on 12/3 without even sell any additional CALL contacts to get income with the current price is above 20%, but if took additional income like me between $1 to $2 for each month that is above 46% with the current price (-$1.60) , if close on Friday is perfect (but I play this for income so I let it ride to collect additional income as long as it continue up and will close if it back to $40 area).