After a discussion on my JustCoveredCalls Yahoo group last week, I established 4 new positions on ANF, BTU, CNX, & SCHN (see Trades below). The criteria used is a minimum of 15% downside protection and 15% annualized return. I added additional criteria to further qualify the positions.
The following is the selection criteria:
- All dividend paying companies.
- Covered by Morningstar and Value Line Daily Options Survey.
- Current price below M* Fair Value.
- CSP strike below or within $5 above the M* Consider Buy Price.
- CSP downside protection of 15% or greater.
- CSP annualized return of 15% or greater.
If these positions work out well, I'll probably continue to establish a limited number of these positions in my portfolio, but the bulk of my portfolio will continue to follow the criteria documented in my trading plan.
