covered call ideas for GOLD needed
I need a sounding board!

I'm long GOLD (Barrick Gold) expecting the return of inflation, gold prices to go higher, and interest rates to go up. I will continue to hold my value stocks through the market funk that you would expect to follow.

should I sell PUTs below the market three months out?
should I sell covered calls and risk missing a bigger run in the stock?
or should I do both in a tidy Bull Spread?

I'm willing to own more stock so selling puts to own could be in play.

CTL - Long at 13.06
Just sold March $13 calls for .80. Expires March 20th.

If taken out at $13.00
- .06 PPS reduction
+ .80 option premium
+ .25 est dividend
= .99. 8% return for 66 day hold.

GEO - Long at 15.65.
Just sold 10 Feb $16 calls at .70 expiring Feb 21st (45 days)

If taken out at $16.00,
.35 PPS appreciation
.70 Option premium
.48 est dividend
=1.53, or 10.2% return for 45 days on funds at risk.

Funds at risk = $15.65 purchase price less .70 option premium credit = 14.95 not counting dividend.

171% annualized rate of return

OT - Today is Veteran's Day.
Here is a Time magazine Article about Ben Het fire base in Vietnam while I was there.

Friday, Jul. 11, 1969
World: The Lesson of Ben Het

WHAT will happen when the U.S. withdraws its ground forces from Viet Nam? The first trial run came at Ben Het, the embattled South Vietnamese outpost near Cambodia that was the well-publicized object of enemy pressure for 55 successive days. For the first time since the massive U.S. military buildup in 1965, South Vietnamese forces (ARVN) bore the brunt of a major ground action in the difficult border terrain. Though the siege last week was lifted and Ben Het remained in allied hands, the results were far from reassuring. "You can see it happening all the way to the beaches," said one U.S. general. "As we move back, they will inch right in behind us and smack hell out of whatever ARVN unit we leave in the way."

That may prove a premature and overly pessimistic prognosis, uttered in the midst of an engagement that left a sour taste in many an American's mouth. But there was no denying that Ben Het raised serious doubts about the military feasibility of American plans for orderly early withdrawal and disengagement in Viet Nam.

Like Khe Sanh and Con Thien to the north, Ben Het, which was completed in 1968, is an isolated fortification of bunkers and barbed wire that sits astride an important infiltration route. Inside its perimeters were 500 Montagnard irregulars led by a South Vietnamese Special Forces team of twelve and twelve U.S. Green Beret advisers. Initially, Ben Het could rely for added protection on the U.S. 4th Infantry Division, which was operating in the surrounding highlands. As part of a redeployment, U.S. infantry forces withdrew from the Ben Het area in April. The responsibility for the base passed to a South Vietnamese commander, Marine Colonel Nguyen Ba Lien of the 24th Special Tactical Zone. In accord with the U.S. policy of continuing to provide fire support for South Vietnamese ground forces, 500 American artillerymen remained dug in at key points in and around Ben Het. The biggest U.S. concentration was at Dak To, ten miles to the east, where 500 American combat engineers were also stationed.

Ominously, the North Vietnamese in early May began to mass two regiments in the area and occasionally to shell Dak To and Ben Het. In the past, the U.S. would have rushed American infantrymen to the aid of the South Vietnamese. This time they did not. In an effort to head off an attack, Lien sent South Vietnamese battalions into craggy mountains around the two bases. At first the South Vietnamese fought well and aggressively. But after a month in the field, they wearied. Unfortunately, the South Vietnamese still seemed incapable of fighting a prolonged and bloody engagement with the more determined and seasoned North Vietnamese regulars. In action reminiscent of the ARVN's performance in the mid-1960s, the South Vietnamese retired to their forts, leaving the initiative and the countryside to the enemy.

The ensuing siege strained relations between the South Vietnamese and the American battalion at Dak To. As support troops, the U.S. engineers and artillerymen were counting on the South Vietnamese to provide the security force for their base. But Lien refused. As a result, the Americans had to do double duty guarding their own perimeter, leaving the gun crews and work teams overworked and exhausted.

Far more serious was the situation on the road between the two bases. While working to keep the road open and in good repair, the American engineers could not depend upon the South Vietnamese for protection. On several occasions, the South Vietnamese refused to respond to pleas by ambushed engineers. Four weeks ago, a 20-man ARVN guard detail deserted a U.S. working party when North Vietnamese ambushers opened fire. Cursing their allies, the surviving Americans finally managed to drag their dead and wounded to safety. Over an eight-week period, the U.S. engineers lost 19 men killed and 120 wounded, in part because they received inadequate protection from their allies.

In mid-June, the North Vietnamese completely surrounded Ben Het and cut off virtually all ground access to it. Though ammunition remained plentiful, Ben Het's defenders suffered from a lack of fresh water and hot food. They also suffered from the lack of an on-the-spot commander. Directing the battle from his headquarters at Kontum, 30 miles southeast of Ben Het, Lien rarely flew into the besieged outpost. As a result, he was unable to make the most effective use of the massive U.S. air power and artillery that were put at his disposal. Communications between the various defending units were also poor. Meanwhile, communications to the outside world about Ben Het set cable and telex wires humming. Hard-pressed to find stories in an increasingly quiet war, the press corps in Viet Nam seized eagerly on Ben Het. Some stories even warned that the outpost might be overrun, a threat the North Vietnamese encouraged by code-naming the base Dienbienphu.

Perhaps in an attempt to counter such bad publicity, Colonel Lien explained his strategy to newsmen in Kontum. In excellent English, the cocky colonel confided that he deliberately used Ben Het as "bait" to lure the North Vietnamese into a position where allied firepower could destroy them. At Ben Het and Dak To, U.S. officers laughed openly at Lien's suggestion. U.S. headquarters in Saigon pointed out that General Creighton Abrams has specifically forbidden ever using allied men as bait.

Two days after Lien's press conference, the siege of Ben Het abruptly ceased, and the enemy faded away into Cambodia. A relief force of 1,500 South Vietnamese troopers last week encountered no resistance on their way to Ben Het. Why did the enemy withdraw? During the height of the attacks, North Vietnamese propagandists boasted that Ben Het represented "a humiliating failure for the U.S. in its plot to de-Americanize the war and use Vietnamese to kill Vietnamese." Having already lost 1,800 men in the battle, the North Vietnamese may have felt that they needed to waste no more lives to make their point.

Click to Print

Find this article at:
http://content.time.com/time/magazine/article/0,9171,900982,00.html

Hey Joe, been away from the lehnq board awhile. Just caught up on the postings, lol. I see they are still at it. Hey what happened to that magical Oct 3/4 day? They are funny. I really do enjoy your postings. Its like the U.S military vs the Boy Scouts. I see some of them keep stating that these CTs will be reaffirmed, or a new company will a merge from bankruptcy. Since I don't have interest in arguing with people who see and read only what they want to see and read. I have a couple of questions if you want to ask them. Why would Lehman reaffirm these Cts? Wasn't the purpose of issuing Trusts to raise capital for the company? So what kind of value does these trusts have for Lehman? If Lehman does become a new entity how does the new entity have any responsibility to old Lehman debt? Isn't that the purpose of bankruptcy, to release debtors from debt? Oh by the way here is a part of the prospectus on Lehn trust and they are the same through all trusts that some say about the guarantee is unconditional , page s4:

How are the preferred securities guaranteed?

Holdings will fully and unconditionally guarantee, to the extent set forth in the accompanying prospectus on page 21:
•amounts due on preferred securities to the extent the trust has funds available for payment of such distributions (the "guarantee"); and

•its obligations under the declaration of trust and the subordinated indenture (the document governing the subordinated debentures).

The guarantee does not cover payments when the trust does not have sufficient funds to make payments on the preferred securities. In other words, if Holdings does not make a payment on the subordinated debentures, the trust will not have sufficient funds to make payments on the preferred securities, and the guarantee will not obligate Holdings to make those payments on the trust's behalf. In addition, Holdings' obligations under the guarantee are subordinate to its obligations under all of its other liabilities

But I 'm sure you knew this already. Thumbs up to you Joe, wish you the best. I check in time to time.

Hey Luddy don't know what to say with the Nq board. I agree some are really hoping for a big payoff, and some are really delusional. just my opinion. I don't now why Joe keeps posting there, but it is very entertaining I say. Joe keeps posting and backing it up with links and facts, and they say its not true, he lies, and my favorite saying trying to shake "weak hands". I had Cts also but sold them off about a year ago. Full Face Value on Cts while creditors and bond holder got pennies on the dollar, yeah OK. I have shares tied up in the OBS J's and P's. unfortunately the OBS to me is like a convict on death row awaiting execution, and there will be no stay from the governor. Good Luck Luddy hope everything works out for you.

Joe, Vincent, most everybody on the nq board is insane. Well, that's not true, just that the loudest people are insane, lots of sheeple are unsure, but hopeful. I've been slowly selling off my position there. I haven't lost any $, but I've been holding for years waiting for the price to increase so that I didn't lose anything. You can try to educate people, but some people won't listen. Joe, you're basically casting your pearls before swine. They don't appreciate it. I got burned on wamu, and am not letting that happen again. I appreciate your dilligence over there, but even beyond that, it just doesn't add up that they are gonna somehow get face value or dividends. I'm sure the prices will crash after Oct 3rd rolls around. Some people STILL think the POR will be paid off then. It's just another payment on the schedule. Thanks for your DD!

Thanks Penny. Those folks are clueless over there. I may repost this if tat is okay. Amazing that they listen to Wayne and others, but won't believe anything in the official docs. I often wonder what DD they are talking about that they rely on so much.

Hey Joe, in case there is any doubt in the minds of the who thinks their a millionaire board of what will happen to the obs and recovery for cts (but we knew this)

Page 6



Estimated
Recovery:


10A Subordinated Class 10A Claims 0% Impaired, Not Entitled to Vote, Deemed to Reject
10B Subordinated Class 10B Claims 0% Impaired, Not Entitled to Vote, Deemed to Reject
10C Subordinated Class 10C Claims 0% Impaired, Not Entitled to Vote, Deemed to Reject
11 Section 510(b) Claims 0% Impaired, Not Entitled to Vote, Deemed to Reject
12 Equity Interests in LBHI N/A Impaired, Not Entitled to Vote, Deemed to Reject


on page 84

10.10 Dissolution.

(a) A Liquidating Trustee and Liquidating Trust shall be discharged or dissolved, as the case may be, at such time as (i) all of the Liquidating Trust Assets have been distributed pursuant to the Plan and a Liquidating Trust Agreement, (ii) a Liquidating Trustee determines, in its sole discretion, that the administration of any remaining Liquidating Trust Assets is not likely to yield sufficient additional Liquidating Trust proceeds to justify further pursuit, or (iii) all Distributions required to be made by a Liquidating Trustee under the Plan and a Liquidating Trust Agreement have been made; provided, however, that in no event shall a Liquidating Trust be dissolved later than three (3) years from the creation of such Liquidating Trust pursuant to Section 10.1 of the Plan unless the Bankruptcy Court, upon motion within the six-month period prior to the third (3rd) anniversary (or within the six-month period prior to the end of an extension period), determines that a fixed period extension (not to exceed three (3) years, together with any prior extensions, without a favorable private letter ruling from the IRS or an opinion of counsel satisfactory to the Liquidating Trustee that any further extension would not adversely affect the status of the trust as a liquidating trust for United States federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the Liquidating Trust Assets.

(b) If at any time a Liquidating Trustee determines, in reliance upon such professionals as a Liquidating Trustee may retain, that the expense of administering a Liquidating Trust so as to make a final Distribution to Liquidating Trust Beneficiaries is likely to exceed the value of the assets remaining in such Liquidating Trust, such Liquidating Trustee may apply to the Bankruptcy Court for authority to (i) reserve any amount necessary to dissolve such Liquidating Trust, (ii) donate any balance to a charitable organization (A) described in section 501(c)(3) of the IRC, (B) exempt from United States federal income tax under section 501(a) of the IRC, (C) not a “private foundation”, as defined in section 509(a) of the IRC, and (D) that is unrelated to the Debtors, such Liquidating Trust, and any insider of such Liquidating Trustee, and (iii) dissolve such Liquidating Trust.


http://www.sec.gov/Archives/edgar/data/806085/000119312511239866/dex991.htm#rom224677_4

Hey Joe. I have been reading the Lehnq who thinks their a millionaire board, it is very entertaining I must say. I won't post there anymore. cause well we discussed it before. I really hope some of them wake up and realize that some of these posters are pumping these stocks and are as long as a blade of grass. Anyway I wanted to let you know I received a call from the SEC today. They explained the whole LB cts. Everything we discussed and outcome is exactly what will happen. After final payment the OBS will be liquidated and poof the cts will be gone also. They also confirmed that MM's up-listed the cts not Lehman or any Trustee. Well nothing new that we haven't discussed, or already didn't know. Anyway have fun with that HES-A-SAP guy. Keep backing him in corner so I can watch him change the subject and runaway like usual. .

I agree with your thoughts on the subject sometimes I get cross eyed looking at information. I'm a simply guy and ask simple questions. Like why would a company would want old debt like cts and why, what value does it have? It was the MM who did the listing. Email said so. Why? To make money, right? These trusp combined are worth less than the coupons you get in a Sunday paper. Anyway enough with who thinks their a millionaire board. I'll see at your website soon, keep fighting the good fight. Have a great day

Hey Joe just received this email what's your take, I guess Lehman or the trustee do control these shares. I may post over at nq board. I don't know looks like you and the others maybe both right, but still just don't see a recover.Imo
Thanks I will be at your website soon, thanks for the invitation.


Vincent


Please see my answers below:



How a stock can move from greysheet to pinksheets? – A market maker would either need to file a form 211 with FINRA and be cleared for quotation or file an unsolicited form with us and be cleared for quotation. For information on unsolicited quotes please visit http://www.otcmarkets.com/services/trading/faq#traderfaq12

I ask in regards to Lehman Brother's securities symbols Lhhmq, Lehlq, Lehkq. Does Lehman Brother's have to authorize such a move? – No, market makers do not need company approval to quote a security


And a more direct question Does Lehman Brother's control these securities anymore if not who does? – Yes, these all appear to be preferred shares and would be the responsiblitly of Lehman Brothers or their trustee



Best regards,



Ed McCann

Issuer and Information Services



Description: Description: Description: Description: cid:image001.jpg@01CBB1A7.1048C390

304 Hudson Street 2nd Floor
New York, NY 10013-1015

T +1 (212) 896-4471

edward@otcmarkets.com

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Hey Joe, not sure you'll get this. I'm not a paying member so I'm writing here. I received your PM and totally agree, some I think are delusional and others are clearly trying to manipulate people into buying worthless securities. Their as long as a blade of grass. I'm pretty sure you know at least of one I'm talking about. Anyway its their money. Besides I think your to much of a classy guy to be posting on that Board. Hey I know this may be a bit of strange request, but would you be interested in giving pointers in trading? I do pretty good but you clearly are light years advanced in knowledge than I am. Anyway off to play golf. Enjoy your day.

UNCOVERED CALL

Sold RIMM November 60 Call Options (RFYKL) at $3.20, lost 33 cents.

I thought that the market would be up today and it was, I thought RIMM would go up with the market, it didn't. Bet the wrong horse!

Jim

UNCOVERED CALL

Bought RIMM November 60 Call Options (RFYKL) at $3.53...eom

Jim

Nice trade there JIM.

Option Excercise on HUN at $5 gave 2.65 per share profit (74%)...EOM

Jim

No, When you sell a call against your stock that is called covered call writing.

It is difficult to understand abstract question, write in detail.
Go to site and put some time before doing any thing.

We buy a stereo we spend few days in research this is many times more worth so please spend as much more time in learning.

Happy trading.

Farooq

Actually, its not worth my money or time to go with 57.50 so I have decided to go with 55.

faroog, ive been gone 4 days thus no posting. question: i think wmt may go back to 47.50, would calls still be the best position?

ok, I understand now. If you own the stock, and then buy a call then it is a covered call.

I do not know what you are trying to ask.

Here is a link you will learn basics.

http://www.cboe.com/LearnCenter/Tutorials.aspx

Farooq

Also, if I had bot the call, 57.50 strike, it is down today 6 cents, if i closed it out today what would be my cost?? thanks.

why calls and not covered calls?

No you have all the risk minus premium you received.
Yes if price stay remain under your strike price all time during the period then buyer of option can not take away your shares.
Your risk is more that is why you are making such a higher rate of return.
Options have three component,
1- Intrinsic Value suppose stock is 52.50 and you selling 50 $ strike then there is 2.50 intrinsic value, If you are selling 57.50 then option have no intrinsic value.
2- Time premium how long your capital is tied up and how much interest it cost to hold so many shares.
3- Volatility if it is high premium is high if it is low then premium is low.

I hope it help.

ok, so I am protected here on my downside risk to 42.50 assuming price if $50. is this correct?

Stupid is one who don't know and do not ask, do not assume but ask.

You are correct 57.50 would be the strike.

For your earlier question how much option will increase I can not answer that question, again time, price, and volatility will come in equation. Options are priced on those elements.
You will still get significant amount for time decay. You are lending money at high rate that is the simplest concept about options, why high rate because buyer is leveraging and you are taking down side risk, so he is ready to pay premium for eliminating down side risk.

Farooq

ok, so if the price presently is $50, the 15% -out of money-would be a strike price of 57.50 right? sorry to be so stupid about this issue.

ok, if I see price moving up to my strike price, can I close the option and how much of the premium would I have to give back?

You can write 15 % out of money calls on them every month.
Walmart usually does not move that much, you still need to watch stock chart if trend is up then wait.
Remember there is still a little chance price can move that much and shares would be taken away and exercise price will be given to you.
In option writing exercise always have a chance so if you do not want to lose share then do not write options.


Farooq

ok, I want income while it is moving up and I do not want the shares taken away. Any time frame. These are shares of a stock that were given to me by my parents and I want to give them to my children but would like to earn income off of them while I have them.

First you need to give some info,
You wants to hedge your position? or you want some income while it is moving up, third you want all the income you could and does not care if shares are taken away?
What is the time frame you are looking at?

Three things are important in option trading, price, time and direction of stock.


Farooq

ok, I don't know if this is the right board or not, but I would like to do some covered calls on WMT. I don't know how to do this. Can anyone give me some assistance? TIA

Hi, Jim. I was gonna PM you today during Happy Hour, but got busy and couldn't get to the computer. Leaving for Canada tomorrow or Sunday so won't be able to post much. Have a good weekend.

Newly

UNCOVERED CALLS

Sold QQQQ May 35 (strike) Call Options for $46 each, +$18 (64%) each...eom

Jim

UNCOVERED CALLS

Bought QQQQ May 35 (strike) Call Options for $28 each...eom

Jim

Bought HUN at $3.55. Sold August $5 (strike) Call Options for $1.20 for a 74% return, if called and a 33% return if not called.

HUN also pays a dividend that is not included in the above percentages.

Jim

There's not a lot of action on this one. Will this draw a few out? Any opinions on what I think are called synthetic longs? Short puts and long calls?

For instance a stock trades at $30. Short the puts at $25 and long the calls at $35. You end up in a net positive cash position, you are put the stock at a price appealing to you, and you are long the stock if it takes off on you, at say a market bottom.

Thanks in advance.

An ulcer trade. LOL. Good one.

Thanks for your thoughts.

gtober...., Oooooops! That's an important part of the trade.

The longer I have to hold the further OTM I go. And make sure earnings are not sheduled prior to OPEX.

If I want the stock for covered calls then I'll sell ITM prior to OPEX so it will be put to me. Other than that It's safer to sell waaaaaaaay OTM on good companies as it's safer. (you still have to worry about a gap down on OPEX so this is an Ulcer trade.)

You keep your timeframes fairly short. Do you sell ATM or OTM.

I have often thought of bear spreads instead of naked puts, but have only done a couple of them. It seems to me the only worthwhile bear/bull spreads are on the really high Beta stocks.

I only sell puts on stocks that I would like to own so if it is put to me I can immediately sell an ITM covered call but I'd rather not own the stock (I've lost too much cash holding stocks).

If my assessment of the stock changes then I'll buy the put back for a loss, this usually happens if I sell longer dated puts and is why I'm changing to selling naked puts no further out than 1 week. (I think I might be pushing my luck selling naked puts butttttttttttttttttttttttttt..)

[edit] loses on naked puts can be substantial so be careful.....

Good strategy. I write a few here and there, but the bulk of my plays are calls. With everyone - seemingly - selling calls these days, maybe we'll have to start BUYING them again.

Eh, maybe not.

Do you take possession of the stock, or roll out another month when it goes against you.

I guess that when everyone is writing calls it's time to sell puts.

I've been writing naked puts for the past six months and making more than the covered calls. I've found that the best time to write them is a few days before OPEX, any longer and you could get skinned really bad.

"is attracting enormous interest from investors"

Shoot!!

Nice article on covered calls in Barrons.........................


SATURDAY, DECEMBER 6, 2008
THE STRIKING PRICE

"Buy-Writes" Soar in Favor
By STEVEN M. SEARS

Using "buy-writes" to profit from battered stocks.
LIKE ALCHEMISTS TRYING TO TURN LEAD INTO GOLD, options traders are trying to convert volatility into money.

"Buy-writing," a classic strategy that refers to buying a stock and selling ("writing") an out-of-the-money call on it, is attracting enormous interest from investors seeking to harness volatility. The "buy-write" lowers the cost of buying the stock by the amount received for selling the call, and also serves as a modest hedge. Option premiums are exceptionally high at the moment because of the record levels of volatility, so sellers are getting princely sums.

The strategy's benchmark is the Chicago Board Options Exchange's S&P 500 BuyWrite Index, or BXM. In October, it had its largest monthly gain in 20 years -- 8.1% -- well above its two-decade average of 1.7%.

Many investors are using buy-writes to lower the cost of already battered stocks that they want to cherry-pick. But doing this successfully requires discipline. That's why we spoke with Michael Schwartz, Oppenheimer & Co.'s chief options strategist, who has guided investors through the markets since 1965. Here are his buy-write rules:

• Stock selection is primary, getting a premium is secondary. Pick stocks that you want to own, not calls that you want to sell.

• Never invest more than 10% of your capital in a buy-write. Leverage cuts two ways.

• Sell slightly out-of-the-money calls to leave room for upside profit potential. (Institutional investors often pick calls that are 10% or more out-of-the-money and carry premiums of $1 or more, though many are now taking less than $1 because stock prices are so low.)

• Let time work for you. You can sell three- to six-month calls for higher premiums.

• Don't annualize returns. Focus on the potential return for the trade's actual duration; annualized returns are rarely earned.

• Ignore theoretical values. Expensive options stay expensive longer than expected, and vice versa. The current correction has shown that volatility, which always reverts to its mean, may not do so when expected.

• Don't sell the call and try to buy the stock at a better price. This leaves you with a "naked call" and unlimited market risk. Enter buy-writes simultaneously. A net debit order is entered for any combination of prices to buy a stock and sell a call that equals your desired debit ($30 stock price less $3 option price equals $27 net debit).

• If stock fundamentals change, sell the stock and buy back the call.

• If you can earn a high percentage of the maximum profit before expiration, do it. Waiting for the last 10% to 15% of premium often means risking everything for no more than an incremental gain.

Perhaps the biggest benefit of buy-writes is that they give investors a way to handle panic. Says Schwartz: "You don't have to be afraid of volatility. The buy-write strategy lets you use the stock market's fear to your advantage."