GMI: 3; GMI-R:7; New QQQQ up-trend; QLD and covered calls

The GMI is now at 3 and the GMI-R is at 7.  February 27 was the last time the GMI was as high as 3.  More important, Tuesday was the first day of a new short term up-trend in the QQQQ.  The down-trend that just ended lasted 55 days.  No one can accurately predict how long this new up-trend will last, but I have to trade with the trend.  If this up-trend  ends abruptly, I will just go back to cash.  I trade in my IRA where there are no tax consequences from getting in and out of a position.  And by using a deep discount broker, commissions are not a factor.  I have therefore been buying the QLD, an ultra ETF that aims to move up (or fall) twice as much as the underlying QQQQ ETF (Nasdaq 100 index) moves.  I have also started to buy some strong growth stocks and to write April calls on them.  I am very happy to sell calls for a 3-6% premium for a one month period.  Yes, I give up any  appreciation in the stock above the strike price.  But I will be very happy to make 3-5% each month on my portfolio. When one sells covered calls to speculators, one profits similar to the way that casinos do.  I am taking money from  persons who are gambling on a rise in the options I sell them.  I use technical analysis and an option scanning service to identify stocks on which to write call options. I also only write calls that will expire within one month and take limited positions in any one stock.  As always, however, the key to success is to trade consistent with the general market’s trend.  I only write calls during a market up-trend. In future posts I will provide examples of some of these trades.


2 thoughts on “GMI: 3; GMI-R:7; New QQQQ up-trend; QLD and covered calls”

  1. Eric…long time reader; we exchanged a few emails well over a year ago. Curious what option scanning service you use if you don’t mind sharing. I do some call writing also but start from the stocks I like and manually scan now.

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