trade plan 5-28-2010, INTC @ $21.42

long jan (2012) 15 call @ $7.40/7.55 ($1.13 time value)
short jul 23 call @ $.40/.43, (5+%)


strategy outlook:
market agnostic, collect monthly income by selling short term calls against longer term, deep itm call
as replacement for long stock

time frame:
longer term trade, up to 18 mo.

risk:
if INTC drops to $15 (30%), could lose 100% of long call cost

reward:
approx 4%/mo.

monitor/management:
sold call strike needs to be above $ amount that does not lose long call value,
if short call goes itm, need to buy back, to keep from losing long call
if short call decays to 10% of its cost, buy back and sell more premium
monitor value of long call for possible action to capture any increased value, or avoid other loss
as get closer to long call expiry, will need to decide what to do, close, roll, exercise, or?

other considerations:
stock under $25, premium % usually better than higher priced, INTC tracks Qs,

watch out for:
div and earnings, and other single stock surprises

what i dont like:
single stock dangers, monitor/manage covered call strategy AND manage the long call

what i do like:
allows for a longer time trade with known risk and a hedged, levered position thru the long call @ $7.50
vs the stock @ $21.42

Sell in May and go away!

Worse May market  results since 1940!