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September’s Dozen Update (Members Only)

Posted on the 24 October 2011 by Phil's Stock World @philstockworld

The Dow hasn’t made much progress (600 points) since we ran our second annual "September’s Dozen" Buy List but it’s a testimony to our guiding principle of "being the house" and selling the premiums that has made this year’s set a rousing success.  At the time (Aug 27th), we were dubious of the rally gaining traction so our trade ideas were a little more conservative than last year’s QE2-fueled group

They say you can’t make an omelet without breaking a few eggs, so let’s see how our trades are performing – some of them are already done, some still have some time to go and some make fantastic new entry opportunities as well!

It is very useful to go back to the original post, where I laid out my logic for each trade as these kinds of reviews are how we put in our 10,000 hours and work to become experts at catching opportunities like these as they arise in the future.  Note these were very much hand’s off trades – this is the first time we’ve reviewed them since initiating the trades, mainly at better prices, as we tested the bottom of our range in September.  For simplicity in this review, I’m just going by our target entries from 8/27:

BRCM (was $33.91, now $37.22):

  • Sept $33/35 bull call spread at $1.11 offset with short Oct $30 puts at $1 for net .11.  Bull call spread expired net $2, short puts expired worthless for a $1.89 gain (up 1,718%)
  • Jan $31/35 bull call spread at $2.15, offset with short $20 puts at $1.70 for net .45.  Bull call spread now $2.90, 2013 $20 puts now $1.35 for net $2.75 (up 244%).

September’s Dozen Update (Members Only)
Notice in the January combo, the gains on the bull call spread are not that exciting, even with the big move up in BRCM but the combo with the short puts gives you a lot more bang for your buck.  Our formula here is simple, stick with stocks you REALLY want to own for the net "put-to" price and follow our normal entry rules for scaling in and stopping out on a position.  Using this system, even longer-term spreads can give you a nice, early payoff although this trade is right on track to make the full 788% potential.  

HCBK (was $5.86, now $6.18)

  • April $4/6 bull call spread at $1.30

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