After starting out the year with a realized loss of about $1,300, I decided to step up my frequency in trading of covered calls. I usually only sell to open calls on rallies, as I will reap a higher premium, but the difference this time was buying back the calls. For this month though, I attempted to play "catch-up," something that isn't recommended usually- but in my case I was trying a different strategy. Instead of holding onto the covered calls for larger price movement in calls, I would try and swing trade the calls with an average turn-around of 2-3 days, usually with smaller profits as well. Previously I had been holding onto my covered calls for 5-7 business days.
The result? I am back to the + side in realized gains for this year, locking in $1300 in profits on almost all covered call trades. All this was done in about 15 trading days.
I have yet to decide whether to continue being "impatient," in a sense, with these covered calls and turning them over for smaller but quicker profits, rather than holding onto them or letting them expire.
One thing that I like about solar stocks and writing calls against them is that the solar sector has been very volatile since the start of 2008. As a result, the implied volatiliy on them are rather high, meaning a higher premium for calls. As a writer of calls, I would reap that premium. :)
