I made that call recently when it was much lower. I’m proud.
My friend sells covered calls for a living. He makes about 15% on his money each year. About 95% of the calls he sells make him money. He tells me buyers of calls lose their entire investment about 85% of the time.
He regards the revenue he gets from selling of his covered calls like rent on real estate he owns. In addition to the ”rent”, he also gets “bonuses.” They’re called dividends.
The key is to not to be greedy. If your stock falls, you can sell it and buy back your option at a lower price than what you sold it for. The value of an option typically declines the closer it gets to its expiration.
Covered calls can be annoying if your stock rises – since your customer will call your stock away. This is what happened to him as the car maker Ford rose. But each time it got called away, he made the money on the sale of the call option. And he kept buying Ford and writing calls on Ford.
Many stocks go nowhere. Writing calls against them is like printing money, since the calls never get called. They expire worthless. Exxon is an example of a stock that has gone nowhere for months.
He uses the VectorVest to time his sales and purchases. Right now VectorVest says the stockmarket is close to its present peak. Hence be wary of buying.
He also believes that the best indicator of buying and selling stock is a 28-day moving average. When the price line drops below the 28-day moving average line, sell. When the price line rises above it, buy.
More on covered calls tomorrow.
VectorVest offers a free ($9.95) trial and a free analysis of one stock. Click here.
Last night I asked for an analysis of Google. Here are key excerpts from VectorVest’s impressive report:
How hard is it to buy tech stocks? You can’t “Buy and Hold” because things change so quickly. But you can stay up with the technology and buy when the company’s products are hot, and sell when the stock turns down. The two hottest technology stocks today are Google and Apple. Once STEC was hot.
Business Insider did a piece on the 21 Things That Became Obsolete This (past) Decade. They include:
1. The once awesome Palm Pilot.
2. AOL and email accounts you had to pay for. Think Gmail.
3. Dial-up Internet.
4. Getting film developed.
5. Movie rental stores.
6. Paper maps.
7. Newspaper classifieds.
8. The landline.
9. Long distance charges.
10. Public pay phones.
11. VCRs.
12. Fax machines.
13. Phone books, dictionaries (except mine) and encyclopedias.
14. Calling 411.
15. CDs.
16. Backing up your data on floppies or CDs.
17. Getting bills in the mail.
18. Buttons. The iPhone is hurtling us into a touch-screen world.
19. Losing touch. Social networks have practically erased the possibility of ever losing touch with anyone.
20. Boundaries went out the window with the huge popularity of Facebook and Twitter.
21. Paper. Probably the biggest casualty of the decade. Magazines, newspapers, etc.
Bonus: Record stores. Now replaced by the Internet and iTunes.
You can get the entire list (along with handsome photos) here.
The car rental nightmare. Everyone has a theory about the cheapest way to rent a car. I don’t have a theory. I hate renting a car. The car companies lie about the car you’ve reserved. They lie about their rates. They lie about their added charges.
My friend recommends AARP. They use Expedia. That place gives confusion a whole new meaning. Hertz and Avis with AARP “discounts” is more pricey than going directly to their web site and not using AARP. I found the Hertz’ “Pay Now” deal to be pretty good — about one-third cheaper than anything else. I suspect that renting away from airports is substantially cheaper. But what a pain.
Jon Stewart of The Daily Show discuss Wall Street fraud. His guest is Harry Markopolos. Harry was the hedge fund manager who brought the Madoff fraud to the attention of the SEC. But they didn’t listen. Marlopolos says the SEC is overlawyered. “Lawyers know nothing about finance.” The Daily Show is one of growing number of TV shows which can be watched at any time for free on the Internet. To see this episode, click fraud.
Recent David Letterman cracks.
+ “Iranian President Mahmoud Ahmadinejad now says that 9/11, the attacks on the United States on 9/11, were fabricated. Like his re-election. He says the whole thing was an elaborate hoax. I’m skeptical. I think I’ll wait to see what Kim Jong-il says.”
+ “But the guy seriously is nuts. He also denies that Conan O’Brien ever hosted ‘The Tonight Show.’”
+ “President Obama yesterday had his annual physical. Annual checkup. Apparently everything is all right. Earlier today, former Vice President Dick Cheney went in for his annual autopsy.”
+ “But Obama’s physical turned out great. The doctor said a couple of things. He said: ‘Cut out the cigarettes. Also, try to stay out of Toyotas.’”
Good news. My son Michael has done good on making sure everyone can see my charts and images.
Harry Newton, who has done well with his Google and is intriqued by covered calls and VectorVest. I’m signing up for the free ($9.95) trial of VectorVest today.
The fastest, cheapest and simplest way to speed up your PC -- laptop or desktop, PC or Apple -- is to replace your present, spinning, hard drive with a solid state one, like this Corsair. Kensington also makes a Notebook Upgrade Kit which includes an SSD and cloning software which works, even for Windows 7. I have a Kensington. It works, like the Corsair, flawlessly.
Ultra-tiny. Ultra-light. Best device for go-anywhere WiFi Internet access. Use in cars, buses, other peoples' offices, coffee shops, restaurants, hotels, or in your home if you can't get FiOS, DSL or a cable modem. 
Best family vehicle ever. All-wheel drive goes anywhere. Ultra-reliable. Our family has had Outbacks for 15 years. We presently have three. The 4 cylinder does 27 MPG, or so. Not shabby. You don't need the 6 cylinder. Buy the automatic. Easier to drive.
When your WiFi router is at one end of the house/office and you're at the other, plug this thing in near where you are. Bingo. Your wireless signal will be stronger and faster. You can carry it wherever you go and simply plug it in. Once programmed (which is easy), you never need to reprogram it. It remembers even when unplugged (and hence unpowered). Some places sell it for as little as $25.
My most useful travel gadget -- ever since I discovered (1) I don't need to suction it to the windshield or plug it in. It will run happily for four hours on battery sitting in my lap. (2) I can walk or bicycle with it and it still gets me to where I want to go. (3) It takes a $150 SD card which means I can use it all over Europe, though some parts of the east (like Poland) are a little sketchy. The Garmin nuvi 350 is now obsolete. From what read of the specs, the new Garmin nuvi 205 for $120 is a perfect replacement. It actually has some features that mine doesn't have, including being smaller. When choosing a GPS gadget, software is key. Ease and logic of use, etc. I like Garmin GPS software. It's much easier to use than other GPSes I've used (e.g. the horrible ones in Hertz rent-a-cars).
For 25 years-plus, I've used this remarkable text editor to write thousands of magazine articles and my 1200-page dictionary. If you need to get words "on paper" fast, this is for you. The Semware Editor (TSE) has about four million features Microsoft's Word doesn't have -- but should. Best, you can program TSE to be anything you want -- from a dictionary producer, to a list of things to do, to an HTML editor, to a super-fast search engine. To test it (free) and /or buy it (cost $99), Click 
Firefox is the best Internet browser because it's open source and hence has zillions of plug-ins and add-ons to make it do what you want it to do -- not what Microsoft, Apple or Google want.
My favorite Firefox plug-ins are Showcase, MeasureIt and ScreenGrab.