Skip to main content

Buying Low, Selling High

In the previous post I alluded to a major benefit of covered calls that sometimes forces you to get rid of a stock for a capital gain.

"Investors are always trying to time the market. They want to get in at the lows and get out at the highs. While this simplistic goal sounds easy, it is almost impossible to achieve."

It definitely has been very difficult for me to achieve. The major problem in achieving this goal is we don't know and can't decide "how low" and "how high."

With my covered calls strategy, I don't much worry about how low when buying a stock. I only consider the quality, dividend yield, and potential to grow. Then immediately I sell a weekly call on it with a higher strike price (at least 1% higher). I earn a premium. If the call is assigned then I have sold the stock at a gain, may be the stock will move even further up in the days following assignment, it does not matter. I have sold the stock at a gain. Buy low, sell high accomplished.

It gives me an opportunity to further study the volatility, trading volume and based on my learning I may buy the same stock again (at a price lower than I previously sold at) and sell a call on it. 

Stocks go up and down; if you are patient, you can buy a stock at a price lower than previous call strike.

Comments

Popular posts from this blog

Biography of Sri Hiriannaiah

I read the following biography of Sri Hiriannaiah at http://rajchat.info/vasudeva_kutumbukam/7_two_exemplary_officerst.html. Sri Hiriannaiah also belonged to Bobburkamme sect and most probably our family is related to his family, exactly how I don't know but may learn in the future. What was interesting is the propensity of descendants of Sri Kalappa to pursue law and serve in justice profession. The entire biography is copied from the above source. " Sakleshpur Hirianniah (S. Hirianniah for short) was born on 24th of June 1877 in Sakleshpura which is a taluq headquarters town in Hassan district. The taluq is situated in the high mountainous area of the Western Ghats, The mountains are covered by tropical forests where grow teakwood, rosewood, sandalwood and other tropical trees, and there is very heavy rain during the monsoon months. The ground under the trees are covered by all sorts of plants and creepers an

My MOOC Progress

I finished my first MOOC course "Introduction to Mathematical Thinking" taught by Keith Devlin of Stanford, an outstanding professor. It was a tough course! I am almost half done with "Introduction to Genetics and Evolution" taught Mohammed Noor, another outstanding professor from Duke. I have already learned a great deal from this course. This is a tough course too. Believe it or not, I have signed up another 16 MOOCs! Within a month, three courses will be starting; Think Again: How to Reason and Argue , Introduction to Astronomy , Drugs and the Brain .  The New York Times called 2012, the year of the MOOCs, see http://www.nytimes.com/2012/11/04/education/edlife/massive-open-online-courses-are-multiplying-at-a-rapid-pace.html?pagewanted=all&_r=1&.

401K, 403B Rollover into an IRA

I am trying to gather info on the IRA rollover. I am piecing together info I found on the web. 1. Can I Use an IRA Rollover to Move Funds Out of My Company Retirement Plan While I Still Work There? Probably not. Most company retirement plans do not allow you to roll funds out of the plan while you are still employed. To find out if they do, you can call your plan sponsor, and ask if they allow what is called an "in-service distribution". Does AT&T allow? Does TIAA/CREF allow? An in-service distribution is a different type of transaction than a loan or hardship withdrawal. An in-service distribution is a transaction where you can rollover a portion of funds in your plan into a self-directed IRA account while you are still employed. Only some plans allow this. No Longer Employed Once you are no longer employed, it may make sense to roll funds from your plan into an IRA account. At that time, to avoid tax withholding, you'll want to choo