In T3 news letter yesterday, they highlighted MGM as a possible canidate for a covered call strategy. I will be looking to enter around 9 and selling the $9 strike between Nov 09- Jan 10.
Based on yesterday's closing price if I sell the $9 strike @ Jan 10 expiration I can get about 12% and that would put me at an avg price of about $7.90 if I am not exercised, right into heave support on the daily chart. Next level of support would be $6.
I will keep you updated.
So I bought MGM at $9.2 and sold the Dec $9 calls for $1.24 about a 11% gain if called away for a 7 week holding period. Avg price if not exercised is $7.96.
ReplyDeleteThis is exactly the type of plays I did for the first five years of dealing with options. It works great during flat to higher times. I've started to put on some similar plays as I get comfortable that the world isn't going to end anymore. I've got a small size CC position on MO and I've sold naked puts on some others with the intent to take possession and sell CC.
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