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Terex Corporation Message Board

  • long_tex long_tex Dec 21, 2012 9:47 AM Flag

    My TEX Options Strategy

    Generally, I like to buy and hold. However, I do like to take advantage when the stock takes big swings for no fundamental reason (in either direction). I like to stay long with a core holding, and accumulate or sell shares when the swings occur. However, if the stock isn't moving, I generate more gains by selling options.

    So, normally if the stock makes a big run up, I sell covered calls a few dollars out of the money. So, if it runs up even more, I unload the shares at a profit and wait for the pullback to buy more. Most of the time, however, the calls expire worthless. If I decide I want to keep the shares, I roll the call out another month at a higher strike price and collect another premium.

    If the stock takes a big dive, I sell puts a few dollars out of the money. This way, if the stock goes down even further, I end up buying the shares at a bargain price, but I got paid to do it. If the share price doesn't go down, I let the puts expire and sell more the next month.

    I don't get rich using this method, but it helps generate a little extra cash while I'm waiting for the next move.

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