It may be just a fleeting good feeling, but two trades I wanted to get done last week went off easily on Thursday and again this morning, simply by leaving “good ’til canceled” orders.
One was the sale of covered calls on my Christmas special biotech, Synta Pharmaceuticals. I should point out that a kind reader showed me a very negative article on this stock, but I’ll just be happy for the time being that I’ve hedged by selling calls for a fat premium.
The other went off this AM before I got to my computer. I finally did buy those additional shares in ANH for a price under $7, commissions included.
As any kid knows who has stayed up to catch the Big Guy in the act, it’s not until you’re not looking that the magic of the season can work. I think maybe it’s that way with GTC orders, too. After several days of trying to get filled in thin volume, it’s as if I was a kid who went back to bed convinced the whole Santa thing was a scam. Then in the morning, the loot was there.
A cyber-friend from a decade ago was the biggest advocate of this strategy that I know. His mega-bear call on stocks (especially high tech) convinced him to convert much of the filthy lucre he got from hi-tech stock option compensation into very low priced, very long dated, very out-of-the-money puts.
His mantra was: “let the price determine your timing, and let the market come to you.”
He did succeed in leaving his sinecure in Silicon Valley and multiplying his net worth on his lottery-ticket put options.
Just a quick note, starting the New Year by getting the last of my year-end shopping done.
For those who are trying the biotech covered call strategy, here’s an article that utterly slams SNTA. I hope they’re wrong, but it won’t be the end of my world if they are right. The same should be true for you — don’t risk money you can’t afford to lose on these speculative drug developers.