Buys Stocks, Sell Options. Beat FD by a factor of 2

[jamit_05]

I have tried this for RIL. I bought 250 shares @ 930 and kept on writing calls every month. Rs 2.35 lacs were locked. The idea ( I think they call it covered call) worked well for several months. But since RIL started sliding, the worth of my shares started reducing. Eventually, I sold my entire holding @ 850. I did not keep separate account of these trades. But it was more or less no profit /no loss.
Moral of the story is, you have to buy the stock at support. Also, the stock has to be in bullish mode.
I understand there are people who do it on a month to month basis. They buy stock, write calls and sell stock at the end of series.
I have tried several strategies of futures and options and come to the conclusion that one should concentrate on one or two strategies and try to excel in using them.
I liked a couple of threads which emphasised this point.
This may be cliche : The strategy is as good as the trader using it.
Good trading,
gmt

In this particular case of RIL, I think the root of the problem is that the purchase should've been made at a better price and the CEs to be sold at the level at which you wanted out.

Lets take RIL in Early 2011. Then the support was 840; However, to the investors dismay, the price further fell to make a low of 715. At which, point he'd want to get out at breakeven and hence would be comfortable selling Calls of 850 level. Hence, collecting less than Rs.5 each month. Soon, in Oct '11 the break-even price came.

Now the entry price for RIL is 670; This price will come in the next down leg on the monthly chart.

Point is, the buying should be sharp then everything else falls into place. And yes, one must have free cash lying around to invest.

 

[jamit_05]

Currently, I am holding SBIN of Rs.1800; Had sold 1800 CE at Rs.9 last month.

Now, I wish to exit at 2100 hence making it an apt level to sell CEs. But, BNF and SBIN are both in a clear uptrend. If this daily pivot break then more upside is on the cards, which will give me a much better rate to sell CEs.

 

[jamit_05]

Currently, I am holding SBIN of Rs.1800; Had sold 1800 CE at Rs.9 last month.

Now, I wish to exit at 2100 hence making it an apt level to sell CEs. But, BNF and SBIN are both in a clear uptrend. If this daily pivot break then more upside is on the cards, which will give me a much better rate to sell CEs.

Looks like SBIN is in a breakout mode

Hence, it is early to sell Calls. A strong candidate for top-side for this year for SBIN is 2400.... if price comes near it, then i will sell Calls of far month and get atleast Rs.200 for it.... lets see if that happens.