New RULES!

Another year, and a new set of rules. Hopefully it will not be another set of rules that I do not follow but should have (but if I don't, at least Ill be consistent).

1. I am not good at buying and trading stocks. I have been lucky to find some winners, but I always end up taking much too large losses on the losers and always give back my winnings. This does not mean I will stop trading. This just leads to point 2
2. Do what works for me. I have been successful in trading options. Specifically Covered Calls. I truly believe it is possible for me to make 7-11% in a month. This is the strategy I am going to follow. This strategy will provide returns greater then I have ever produced, even in my best year.
3. I need to have an exit strategy when the underlying stock drops. This is something I have not yet mastered. I have trouble selling at a loss and still end up doing so only after the loss is much greater. I need to find the loss price point at which to buy back the call and sell the stock.
4. Do not get greedy (this should be number 1). This is the rule that I always break, and always kills me. With this new strategy, if my funds are used up, I cannot dip into margin no matter what. I have done so before, and I will do so again, but I must do my best to stop.
5. Hold NO stocks. In an ideal situation, after option expiration, I want all my calls exercised. Those that are not, I must consider selling immediately or sell another set of covered calls, provided the returns still provide the results I am looking for. Taking a loss against that months gains is acceptable, and likely to happen. I must accept this fact and deal with it.

My plan is a very realistic plan. When I say I want to make 10% returns a month, I am really saying that I want to sell enough covered calls, that I have produced a 10% return for that month. That does not mean, at the end of the month, I must have 10% profits. I just means that if all the calls are called, then the most I will make is 10%. I can still have calls that expire worthless and thus own the security at a loss. This will deduct from my gains and I need to sell the security at a loss or another covered call. But the goal is to have a 10% potential setup per month.

Good trading in 2009 to anyone reading this!!!!

If there is any interest, then I will also post a link to all the trades I make in this year for anyone to follow. Just post a message.