Monday, December 26, 2011

Wait and See

For the last week of 2011, I plan to hold our current long and short positions.  At this point, I expect the market to positively biased, as fund managers do their end of quarter window dressing purchases.  However, I continue to believe there are significant economic and monetary issues in the EU in addition to the continued fiscal issues here in the U.S.

Right now, put and call options appear to be the most attractive investment option.  The premiums seem very high due to economic uncertainty, even though the implied market volatility is low.  If  the market continues to rise, I will consider selling way out of the money naked calls against my company stock options.  That way if the market falls, I will be able keep the premium as profit and if the market rises, the gain in the stock options will more than offset any losses incurred by the call.

For now, I won't be selling any naked puts.  Also, I will continue to update my list of dividend paying stocks to buy should the market decline significantly again.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

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