Daily Stock Market Equity and Options Trading Commentary

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Monday, January 26, 2009

Today's Common is Tomorrow's Option

Today I picked up some FAS (Financial Bull 3X). for $8.35 a share and expect to write out a few covered calls on it tomorrow for the February $15 range. Looking at the last trade for this option (FASBC) it went for 55¢ a share. I will most likely try to get around 70¢ or so a share or $70 a contract. This is one I have been keeping my eye on and finally I pulled the trigger. Judging by the futures now I might be able to sell it within the first hour or so of trading for my desired premium.

I am also looking at selling some PUTS on one of my favorite stocks GLW (Corning Incorporated) tomorrow if earnings cause the stock to get beaten up. I am looking at the 7.50 leap 11 PUTS (VGCMU) which last traded at 1.70 a share, but I will try to get between $2 and $2.75 depending on how beat up (if it even gets beat up) it gets, I will also look at the leap 11 10 PUTS on GLW if I can get a better premium such as 40% down (meaning $4 a share) versus 36.67% (at $2.75) on the $7.50. I don't think GLW will be below this level come January 2011 therefore I am confident in this PUT strategy.

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