Down day for the DOW

The market traded lower today after staying in positive territory almost all day. Didn't make any moves today but I am watching my covered call on MS to see if it will come down enough for me to buy back my position and close it out. The idea here is to close out for a slight profit and hopefully have MS run back up and sell a call that is further OTM for another premium. As I stated in earlier posts, I would like to do this for MS all year long and collect the nice $.27 dividend per share per quarter.

MSCY dropped $.25 or -19% for a paper gain today of $50. As of right now, I am down -65% on this trade. Again, I'm not worried too much about the intraday swings as this is a covered call. I entered the call at $.65 so I would need the call to go down $.55 at least to make this trade worthwhile giving all the commissions. On second thought, I might just let it run if it gets down that low and take my chances on having it assigned and called away.

So what has been on my mind? I am a level 3 option trader on my account which means I have the following tools at my disposal:

• Sell covered call
• sell covered puts against stocks held short
• buy calls, puts, straddles, or combinations
• trade equity and index spreads and finally
• write naked equity puts.

I think its time to get naked, naked equity puts that is. I'm thinking the market may trade lower tomorrow around the close. If this happens I would like to short (sell ) a put on Jp Morgan (JPM) for a price to be determined. This is going to work just like BAC trade (BYOND) except I do not have any JPM in my account. So my broker would not be able to liquidate previous JPM stocks if my margin equity should fall below the threshold. Price is to be determined, but if I can sell a put on JPM @ say $18 for $1.25 in premium, I might do it.

If this trade would hit I would theoretically be in JPM for $16.75 which would not be bad. I don't foresee it getting that low so that $1.25 would go directly into my pocket.

We shall see.

ps. portfolio down today $405.25
IRA up $13.00