Tuesday, November 30, 2010

Making my spare cash work for this month - ITM CC

I initiated an ITM covered call for ISRG today.

The shares has been falling for the last 3 months. It looks like it found support today. Looking at the weekly chart, it is a support level in 2007.

I am not optimistic about the market but I believe it will not fall like a stone before the end of the year.

So I initiated an ITM covered call

Buy shares at 253.55
STO Dec 250 SC at 9.5
Cost = 244.05

This will give me 2.35% return for the month. Not bad for a short term and relatively safe trade. I believe this is better than just leaving the cash idle. I have good safety net for 2.35% return or ROI annual 28.13%. Not too shabby.

Primary Exit : Let the shares be called out
SE: If shares fall below 249, add a protective put to collar the trade and manage it longer term.
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About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

Disclaimer

These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions, market or stock performance. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy of these external sources. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult your professional adviser.