Trade - 3/30/09 - BBT

STO BBT April 2009 @ $15 for $1.05 each (Naked Put).

Trade - 3/30/09 - BP

I usually don't like going this far out but May Puts seem to have some attractive premiums right now:

STO BP May 2009 @ $35 for $1.10 (Naked Put)

Trade - 3/30/09 - UNP

STO UNP May 2009 @ $35 for $1.45 each. (Naked Put)

Opening Philosophy

I believe that options trading is all about finding companies that have strong fundamentals. I am not looking for 1 day investments nor am I looking to hold for a lifetime. Instead, I am looking for strong companies and I am not afraid to sell them if their fundamentals change. Mark Twain said it best when he said "I am more concerned about the return OF MY CAPITAL than the return ON MY CAPITAL. I am looking to maintain 5 - 15 positions at all time. The CCs and NPs that I write are almost always less than 45 days out but I will occasionally do some longer 3 month versions.

I look for the following characteristics when investing in stocks: 1) Strong Balance Sheet (not alot of leverage and not depending on debt to stay alive), 2) Strong Dividend - 3% minimum with minimal chance of cuts, 3) solid cash flow and earnings - I like to see EPS at 2X the dividend BUT cash flow is more important to me than EPS, 4) Honest Management - simply put do they have the reputation of telling the truth. I feel like this element is missing in most companies. Too many managers come out and say "Yes our dividend is safe", and then cut it 1 week later.

Opening Positions

Right now I am a believer that we are possibly in a bear market rally so I have converted 50% of my options trading account to Cash awaiting a pull back. I will post trades live to this site as I make them. Right now my positions are as follows:

NP ABT (Abbot Labs) April 2009 Strike @ $45
NP BBT (BB&T) June 2009 Strike @ $10
CC CAT (Caterpillar) April 2009 Strike @ $33
NP COP (Connoco Phillips) April 2009 Strike @ $35
NP GE (General Electric) June 2009 Strike @ $7.5
NP GE (General Electric) June 2009 Strike @ $9
NP GE (General Electric) April 2009 Strike @ $10
NP VZ (Verizon) July 2009 Strike @ $25

Note: many of these positions were enetered into over the past months so they may not be good investments right now. The remainder of my posts will be very close to real time (I will post as I buy and sell).