Remember the new Conservative Account? I had sold Naked Puts on AT&T (T) back on 11/19. Since then the stock has steadily risen and the Puts had dropped significantly – enough that it was advantageous to buy them back for a sure profit, or to roll them to another strike. Normally I wouldn’t roll to a higher strike because this raises my cost basis if I am assigned the stock. But, I really want to own this stock and I have decided that a higher price to get in is worth it.
So in doing this ‘roll’, my cost basis went from 24.93 to 26.23 and the stock is currently at 27.88 (when I sold the Call). If you look at a weekly chart the 26.23 cost basis is almost exactly at former resistance from July through September. Assuming that is has solidly broken through and will stay above that level or at least use it as support, I was OK with this trade. So on January 15th if the price is below the new strike of 28, I will have bought the stock for 26.23. The details are below:
My November results are posted on my “Closed 2009” tab and you are welcome to scrutinize them. It was another OK month, but still not at the level that I had hoped for with the Credit Spreads and Iron Condors. First, I got spanked by the S&P – the index nearly doubled my gain. Then I really lost my shorts on WYNN, not because I wasn’t watching, but because it gapped up way into my danger zone. The bright spot is the Credit Spread average is slightly better than the Covered Calls, and it’s not dependent on a Bull market to make that happen.
The market has closed for today and what a surprise it was! First we opened with the optimistic jobs report. Then the speculation that the Fed would raise rates because the economy is recovering pulled the gains back to almost flat. Gold took an unbelievable digger today! So much for the Bull Call I had on GLD 
The bright spot is I still have two weeks for it to get back above 117.50. If you have been wanting do buy some of the yellow metal, this might be a good time to do it – because even though the economy is recovering, the tax increases to cover Cap and Trade and Health Care should increase it’s value.
- Jeff
