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« Larry Summers Withdrawal: What are the Implications? | Main | Weighing the Week Ahead: Will Washington Gridlock Scuttle Stocks? »

September 18, 2013



Rich -- In my program I stick to the front month or two -- seven weeks at most. This captures the most rapid part of the time decay curve. I start with stocks I am willing to own anyway (crucial) and sell calls that are a little out of the money and with a premium that would lead to an annualized return of 10% or so. If the stock rallies and is called away, I have made 4% or so in less than two months.

I hope this helps :)




I appreciate your recommendation with regard to selling near-term calls when buying value stocks that offer decent dividends. Could you be more specific about the time-frame you have in mind?

Thank you.


Pacioli - There are a number of stocks that fit the economic thesis, and some have done better than CAT. It is just an example. You could choose CMI or FDX, for example.

And yes, it is fair to assume that I follow all of the news on stocks that I own. Chanos gets a lot of buzz and I watched him yet again in his CNBC interview last night.

I respect your question, but I don't want to do a detailed defense of CAT in the comments. Let's just say that I do not put much emphasis on things like grand supercycles, and I think there are better authorities on China. The company has also done a good job of managing costs.



CAT seems to be frequent recommendation on the site.

I assume you have seen the short thesis from Chanos and other re: CAT. What is your take?

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