Another position was established in Direxion 3x Financial Bull ETF today to increase the total position in the portfolio to 400 shares which is still less than the largest position I have held in the ETF at any particular time. This time however, instead of simply selling the covered call I decided to collar the purchase for added downside protection. Although I am starting to believe that the market is in a consolidation mode and is forming a new bottom around 870 in the S&P, I still think there may be a pull back. If so, I want to have the put in place not as much for the purpose of protecting my downside, but instead to add additional revenue by selling the put for a gain. If the ETF does in fact drop to around $8, I plan to buy back the call, and keep the put in case of a further drop. This should effectively lower my cost basis to around $8.40 which would only leave $40 on the table if FAS closed under $8 at June expiration. Just as a note these positions are being posted a bit late as I have been away on business for the last week. I will try to get all my recent positions up on the blog today or tomorrow. The purchase info is below:
5/21/2009 -- Bought 100 FAS @ 9.045
5/21/2009 -- Sold To Open 1 FAS June $10 Call @ 0.86
5/21/2009 -- Bought To Open 1 FAS June $8 Put @ 1
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $904.50
Downside Coverage: Downside Risk Limited to 12.9% due to Put
Possible Max Upside: 8.89%
Annualized Max Upside: 107.96%
No comments:
Post a Comment