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In my last post, I covered my two positions of CHT and EWH. In EWH, I made a profit of $109 in 2 months, and the position closed from both side of a put spreads expired worthless.
I was able to replace it with a calendar put spread as follows:
Long 5 June 2010 $16 put
Short 5 Dec $16 put

The net cost of the position is a debit of $1.13. This cost must be earned back by selling puts or call options before profit can be made. However downside risk is limited to $1.13 per share.

The ideal scenario is for EWH to drop below $16 briefly and then trend sideway for as long as possible. Let’s wait and see what will happen!

I was also looking for a follow on position to replace the expired CHT November put position. Unfortunately, the premium level available for CHT December put is very poor due to its share price level right now. Hopefully CHT share price will retreat temporarily!

After waiting for a day, noticing CHT has hardly moved far from its current level, I wanted to experiment with some sort of Condor Strategy. What I did was to enter a calendar put spread on the bottom end and a calendar call spread on the higher end. My current positions are now as follow:

Long June 2010 $17.5 put – protecting the downside
Short December $17.5 put – for collecting premium
Short December $17.5 call – for collecting premium
Long June 2010 $20 call – protecting the upside

The idea is to expect CHT shares to stay trending side way, therefore will produce several month’s of income from premiums of both the short call and short put options. If disaster strikes then the loss will be limited to the maximum governed by the long put or long call options. I am curious to see what will happen!

I shall now cover my two other positions AUY and EWC.

My AUY position has been my most profitable so far. The main reason for the profit was a steady increase in its share price. The second reason being no money was spent on the premium of a long put insurance. I am fool hardy enough to take the risk that continual demand of gold will support the share price of AUY. Higher risk for higher profit!

Rightly or wrongly, I let the November 13 call option assigned instead of rolling it to the December call. The total profit after the assignment was $1660 in about two months.
What a Return On Investment!

A very interest point, I sold AUY for $13 but if I wanted to replace with the December $13 covered call, I could have entered the position for less than $13. For that reason, I believed I had made a very good decision to let the option be assigned.

I did not replace the AUY position with the December $13 covered call. I replaced it with the December $14 covered call instead for a total net cost of around $13.14. It has a better chance for the December call option expiry out of money. Hope this position will be equally profitable as its foregoing.

With my EWC position, since the November call expired, I could open another short call and I did. I sold the December $17 call for a premium of $0.5. The total cost of my EWC shares is now only $17.03. It means that I can only lose at the most about $30 in total if EWC goes utterly against my positions. This wonderful situation will continue until my protective put option expires in June. Nice position in be in! If EWC trends side way, I shall collect some premium every month until June 2010 in a no loss situation.