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Wednesday, April 25, 2012

Trading Strategy going forward

After my recent experience with having to hold DNDN while it had gone down a lot in value, I thought more about my trading strategy, and looked at various stocks online to see if a new heuristic might pan out.

Strategy 1: Write options on stocks that pay 3%+ dividend.
This was a good idea in principle, but I couldn't really find any where I could write a decent option on and that still satisfied the dividend criteria.

Strategy 2: Write Deep-In-The-Money call options to ensure I get assigned and returned to cash.
This might work out, but it seems that the best money on call options were At-The-Money or Near-The-Money.

Strategy 3: Buy high-dividend-yield stocks and make options secondary.
There are stocks paying 16%+ yields, so this could work out. But if I can make that much in a matter of months, the risk vs. reward perspective is against this strategy.
I am considering this for a TFSA (Tax Free Savings Account), however.

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