PRACTICE SAFE TRADING:

It appears that the Talking Heads and Scribes of the media(those sage advisors such as Poppy, Trish, AJ, BK, Jimmie, "Judge" Wapner and the other Mad Men ) have successfully got all the sheep into the pen via Bullish optimism of Europe and the U.S. Economy - time to get the shears out now. Hedge funds as a whole lost 8% in October and about 1% for the 3 months thereafter - meaning they have a huge hole to dig out from before they can even make money for their remaining clients and themselves.
Although the DITM strategy was not the optimal one for the past quarter, it did extend the cushion on existing positions - well needed the past five days and counting. Although there may be some at least temporary Resistance around these levels, there is no rush to get into new Buy/Write positions; rather the farther down they go, the better it is for DITM for the 3 reasons it likes: lower stock prices, higher dividend %, and higher IV (Implied Volatility, or Call price).
In my small IRA - the purist of DITM testing, fully invested with no minimum withdrawals or contributions- it continues to climb to new all time highs - up 2.78% for Q1, or 11.12% annualized. Called away recently were BMY -Bristol Myers- at $30 for a 9.09% annualized return (9 months holding); and DOW - 22.47% annualized for 3 months (seems like the shorter the holding the better the return, despite more micromanaging and commissions).
Those holding COP -Conoco Philips ( I don't) be aware of the spinoff of Philips Pete soon. Calls can get sloppy with adjustments.
Several positions in the family portfolios are slightly "under water", but much less than if purchased sans DITM:
SCCO - So. Copper- was bought at $35+, but the Call was sold at $32 - it is now $30. I can continue to hold, receiving the dividends and milking the Call . To repeat, I've only had 5 losses in 3 years (remember BP!!).
Finally, VALE is a tossup. Several people, along with myself, sold puts to take on the stock, which goes ex-D April 16, so it must be bought (in a buy /Write) by Friday the 13th. Depending on the price that day, one can close out the put and B/W or not .


As some readers know, I've recently been accepted to write a column for the Examiner.com: http://www.examiner.com/stock-market-in-san-francisco/brent-leonard
They have a new program called "The Week Ahead" where I intend to note upcoming local investment meetings - options, TSAA, Commonwealth Club (where I saw Robert Shiller last week), et.al. You can subscribe to the column if you like, as I won't be emailing alerts each time.

WE HAVE A WINNER:

Per usual, the day before ex-dividend date NUE (Nucor Steel) was called away at 40. Including the 40 put I sold in December, profits after commissions were 17.72% annualized (based on a 4 months holding period). NUE rose with the market from October, then went into a Trading Range after topping near 46 in March - it was 42 when called. Definitely a winner!

FLASH BULLETIN:

If anyone did the TLT trade that I outlined recently, it has dropped dramatically to just below the call strike of 111. Last Friday, fearing some kind of wild breakdown in Treasuries, I bought a hedge: 200 TBT for each 100 TLT. This will mostly offest the decline, while still getting 100% of the return - monthly dividends and call premium. Probably not a great trade, for single-digit returns. Beware: although this freezes the TLT price (down on the TLT and up on the TBT, highly correlated), you must put a stop on the TBT, because the freeze melts above the call strike (remember - no appreciation on the TLT under DITM).

Under capitalism man exploits man; under socialism the reverse is true. ~Polish Proverb

I just closed out the Siemens trade today (unfortunately it was in my family's account, not mine!). The ANNUAL dividend of just under $400 was captured in mid-January ( $100 went to foreign income tax which can be deducted from IRS). Even without this amount: Cost was $9620 f0r 100 shares, I closed it out early from an April call leaving a few $$ on the table. Profit was $423, including $809 for the sold call. Net was 4.4% for 2 months, or 26.4% annualized. Not bad considering a 6 point safety net.
Other B/Ws (buy/writes) were done in March on PEG and WMB; and the put sold on VALE, which is a semi-annual dividend in April.
Although I violated my 3% rule, I sold a put on NEM after the gold selloff (2.6%) because I really wanted the stock. I may overwrite the call if put, not DITM.
I've been accepted to write a financial column for the Examiner.com online:
http://www.examiner.com/stock-market-in-san-francisco/brent-leonard
Upcoming columns will feature GGUniv., TSAA, and the SF Bay Area Options group, as well as other Bay Area groups. Examiner prefers local interest and photos!

Do It To Me: The Hummingbird Stragety

I don't feel old. I don't feel anything until noon. Then it's time for my nap.
-- Bob Hope

The thing I like about DITM is that it is neither Day Trading (which is very difficult to do consistently with profits), and BYE and Hold (See First Solar, which went from $320 to $20 in four years).
The Hummingbird chooses the prime flower, drains it, and moves on. So was it with TAL, which I only held for a little more than 3 months, since the April call was assigned just before ex-Dividend today. Two reasons for early assignment: imminent ex-D, and a stock run up - both of which happened to TAL. Bought at the end of November for $5163 (200 sh. incl. commission), I got one 8% dividend ($104) call sold, ($798) and early callaway of stock for $4491. Total for just over 3 months: $230, or 13.36% annualized.
Some of us have discussed VALE, which has a semi-annual dividend going ex on April 16. Rather than buying it, thanks to a market/stock selloff today I was able to sell an April ATM put, then hopefully do a buy/write next month!