“The Gambler”

“The Gambler” by Kenny Rogers pretty much says it all when it comes to investing in the market. “You’ve got to know when to hold ’em, Know when to fold ’em” . . . ”  I’m pretty conservative when it comes to the market. I like Blue Chip stocks, that pay dividends, if I can get them. I like the stocks to be in good sectors and moving up in value. I also like to sell covered calls on these Blue Chip stocks. And I’m pretty good at selling these calls – to make extra income.

I’m so good, in fact, that at my last get together with JJ (Jeremiah John), I asked him if I could introduce a course to his readers on Covered Calls. He got back with me the next day and said “Yes.” That was in late February, 2015.

I like covered calls best when the market is flat or moving up. I don’t like to trade when the market is up for a month and down for a month and up for a month and . . .   Well you get the idea. Let me show you what I mean.

Market Performance 2015 - 2016

As you can see, some of the market swings this past year did not last a month. It was a little too choppy for me and I was sitting on the market sidelines and in cash from March 10, 2015 until March 1, 2016. Since I was a little skittish, I stayed out of the market this year until April. Then I purchased IMAX. Here is a snapshot from my account from last week. You’ll have to click the image to see the detail.

On the extreme right hand side of the image is the purchase price of the stock back when I bought it on April 8th. In the middle of the screen you can see I am up $311 when I took the picture. And on the left of the image, you can see the stock was up $.09 at the time I took the picture. Underneath the line for the stock, you can see a listing for an option I have on IMAX. Also on the right you can see what the price was, and the next column over is a number that is -1. This shows that I sold an option and collected $44 on the sale.

Let me decipher the code for the option so you can tell what I sold. The code is IMAX160520C35. The first part is the stock that the option is matched to – in this case IMAX. The next six numbers are the date the option expires or 16-05-20. Next is C for Call and the 35 is the price of the option. So, if IMAX is selling for $35 on May 20, 2016, I have contracted to sell to the option holder my stock at $35. If the stock is not selling at $35 on May 20, 2016, I get to keep the $44 that I sold the option for.

You can see I have already made 10% on the stock. If the stock goes to $35 on May 20th, I stand to make a heck of a profit – 17.5%. In six weeks. I think the stock will go to $39, but time will tell.

I’d like to tell you a little bit more about my course in my next post.

For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!

Jim Fortune

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