FFIV share prices recently dived from ~118 to ~100 after earnings report. I am no saint and couldn’t predict this, but I was hedged. FFIV fall in prices benefits me greatly. I am net short of FFIV (I am net short of FFIV call options by 50%). My call strikes are 100 and 105.
You may think I am lucky. But I have done this over and over with other stocks. This shows the power of covered calls: hedging. FFIV seems to visit $100 level often. Every time FFIV falls, it falls to ~$100 level. So I will continue to set up FFIV calls with strikes around $100. When will I increase the strike? When FFIV breaks out of this 100-120 range and becomes stably higher, then I’ll consider to roll up FFIV’s strike price to a higher level.
About admin
Richard Cheng, M.D., Ph.D., is an avid Wall Street investor with 20+ years of investing experience. He is specially adept at observing the world to find the patterns and then design strategies to win his battle. Most, if not all, happenings in the world, follow certain patterns. These patterns may be complex, multi-factorial, not so intuitive at the first glance, or even may appear chaotic. However, even chaos has its own patterns. If you pay attention and be patient, you'll find them and then you will gain an upper hand in your battle. Using this blog space, he documents his trades and his thoughts as they happen. He uses this blog as a a notebook to help him better refine his strategies. Hopefully this will help you as well. Good luck in your trading.
