Really Bored and Uninspired by the Market

**KTP** · 11-12-2010, 04:04 PM

Pick a stock like MO, buy a bunch of shares and sell covered call options for 6 months out. People will pay decent money to hold options on a company like MO, and you can get their cash and get the 7% dividend also. In the worst case the stock goes up and the options are exercised, but you have the actual stock in hand to cover this. In a so-so market you will make out pretty well getting the 7% dividend plus 5% or so of the stock price if you set your option price close to current in-the-money. 12% return for very little risk seems better than keeping your cash in the bank.

**gambler2075** · 11-14-2010, 05:13 AM

Totally agree with you here. I definitely feel the market is at a level where I think the chances of a nice fat selloff are much greater than the chances that it goes up some more. But then again, I suck at forecasting the overall markets, so take that with a grain of salt.

I still plan on focusing on what I believe are my undervalued bios which don't really care about the broader markets...

Here's a nice article about the EMH (or absence thereof)

This Stock Is Absolutely Worthless (CF, ILMN, LVS, SIRI, SLW, TRW)

g

p.s. HGSI... ahh the good old days of March 2009... HGSI was ridiculously oversold at 50c... the pipeline of the company was massively undervalued, and the retail investor was clueless about the stock. Of course they believed that the drug was dead but it was due to the media convincing them that the drug did not work as well when it was really a non-inferiority trial, and HGSI had succeeded in showing the drug was non-inferior.

Of course the markets were hugely oversold then. I ended up taking a large (for my portfolio at the time) position in HGSI, about 50,000 shares at 0.50. I ended up selling and trading HGSI once more for ~25K$ profits but, we all know what happened since then. Had I held on, my HGSI position would be worth 1.2M$. Of course now I think the stock is ridiculously overpriced, since I owned it at 50c... Shoulda woulda coulda...

**snafu** · 11-14-2010, 04:15 PM

You may benefit looking at Singapore SGX. Australia has been getting healthier as well.

**Slug** · 11-15-2010, 06:21 AM

Originally posted by KTP View Post

Pick a stock like MO, buy a bunch of shares and sell covered call options for 6 months out. People will pay decent money to hold options on a company like MO, and you can get their cash and get the 7% dividend also. In the worst case the stock goes up and the options are exercised, but you have the actual stock in hand to cover this. In a so-so market you will make out pretty well getting the 7% dividend plus 5% or so of the stock price if you set your option price close to current in-the-money. 12% return for very little risk seems better than keeping your cash in the bank.

I like this thought. Mo is on a bit of a short term downtrend. I've put a buy in for today at 24.48. I'm not sure where the bottom is, but with a 7 month horizon I'm not too worred.

Also placed an order for some DUK 18 Apr 2011 calls.

**Slug** · 11-02-2011, 12:49 PM

Originally posted by Slug View Post

I've exited a bunch of positions over the last couple of months and am sitting on a large amount of cash. I usually have no problem finding places to put excess capital, but right now I'm just seeing nothing of interest. I'm considering just taking a huge position in MO because the dividend is so strong and the company so stable. However, I'm eschewing that for the moment. So far in the last couple of months my only buy has been a small position in the Jan 2012 call options on EWJ (Japan market ETF). I'm up about 25% but plan to wait and watch for now. Nothing else really stands out for me.

Shorting OPEN is one idea on the table.

Shorting HGSI is another.

Shorting SPY is another.

Buying any commodities carries zero interest from me. Anybody thinking about a stock out there???

Those "should've" shorts on OPEN and HGSI....dang....And those effin' EWJ call options I'm still sitting on 50% underwater....grumble grumble

**Nobulladvisor** · 11-02-2011, 02:02 PM

I like the covered call strategy

**Slug** · 11-03-2011, 06:32 AM

Originally posted by Nobulladvisor View Post

I like the covered call strategy

Yeah, you don't get much of any kind of premium on MO 6 months out unless you are already at the money. And, I kind of like owning MO. It been so stable in this market and keeps throwing off excellent dividends.

Really Bored and Uninspired by the Market