Sample Trading Plan
Here is a sample trading plan for your consideration that may fit your trading expectations and temperment: Vivian has been educating herself on options trading. She has decided that she will put the power of compunding to work in her IRA by using conservative options trading techniques. She loves the idea of holding quarterly dividend-paying stocks and reasons that selling option premium will substantially augment this income. Her ideal outcome is to make profits by three-fold combination of capital appreciation, dividend income, and options premium. She has evaluated a number of stocks and has settled on a few blue chips in the oil and gas, drug, electic utility, and gas transmission sectors, all of which pay dividends greater than 3.5%. She will acquire her holdings only by selling cash-secured puts. This way, she'll start receiving options income right away and will only purchase her desired stocks at prices lower than presently available. She doesn't care if she is assigned on her puts or not, either way she gets to keep the premium. If she is assigned the stock she researches the date the dividend is payed. She then sells covered calls on the stock one strike price above the current price at the first expiration date after the dividend is payed. This puts her into a position to make a capital gain, receive dividend income, and bring in call premium. If she is called out, even if by early assignment, she is happy because she is profitable. If not, she collects her dividend and assesses the potential of writing another covered call for the expiration date after the next divident payout. Will this sample plan be good for you? It depends on your trading objectives and your temperment. It is not a recommendation but an example for consideration.
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