Hi Everyone!
| PORTFOLIO 'OVERWRITING' DEEPER DIVE |
Portfolio Overwriting means = using your Buy & Hold stocks, writing DEEP OTM 30 day covered calls to collect extra income while holding the stock long term. One would do this during a company's *non* event months to avoid volatility and hope for a smooth trade, hoping the CC expires worthless ... I call this my 'Doubling my Dividend' trades Using Merck (MRK) as my example ... MRK has retraced from its recent $72 to now trading @ $80 today ... MRK is now in range for topping in the near term and falling back as profit takers come in and reap the benefits of this +$8 pt move. Notice MRK is approaching Resistance (~$81.75) and should it *not* break thru and hold this close for about (3) trading days ... MRK will 'in all likelihood' fall back as Wall Street will now consider this as Resistance and will sell it off to Support (~$77.90ish)  RSI is 66.34 which if you believe that 70 or ABOVE is OVERBOUGHT then MRK at a 66 RSI is getting a little overbought here at @$80 so I suspect if were going to get 'green days' on Wall Street MRK will move to the RSI = 70 the possibly start its trace back to Support (should not company news affect the stock)  THIS IS THE TIME So this is the time I start to look at my BUY & HOLD stocks for a possible 'Double my Dividends' trade and SELL the OTM 30 Delta and try to collect what would equal MRK's quarterly dividend IN HOPES over the next 30 days MRK DOES peel back and my CC will expire worthless, collecting 'an extra' dividend. |
As always, do your due diligence and this is not a recommendation
| Until next time, I wish you the very Best In Trading! | |||||
| ----------------------------------- | |||||
| Regards, | |||||
| John | |||||
| email me corepositiontrading@gmail.com | |||||
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