Back in June I opened up my first real stock trading account with Scottrade Online Brokerage. At first I wasn't sure what trading strategy I wanted to use. I have always been a fan of Warren Buffet and value investing. I am also a fan of "The Little Book That Beats the Market" and it's magic formula investing. I have had a mock portfolio made up of securities using the magic formula and it is done incredibly well. When I opened my account I bought a couple securities trying my hand at both of these methods. I lost money. My first purchase was Aspreva Pharmaceuticals. I lost 16% of my investment. Next I owned IVAC and FLIR. I gained around 2% on FLIR and lost about 14% on IVAC.
After my experience in these securities, and reading a little more on the internet and in books such as Market Wizards, I have decided once again to change my strategy. My current strategy that I am using and used in a position for a month now is covered call writing. Covered call writing involves the purchase of 100 shares of a company and selling (writing) a call on the same security. I believe this is a great strategy to make slow but consistent gains throughout a year. A 2% gain every month will put you up 24% on the year. I am getting ready to read the book "Options as a Strategic Investment" to make sure I know everything I can about this strategy. There are also a couple blogs I like to read about other people using this same strategy. Unfortunately with my low capital in this account, I am limited on the positions I can take. Securities have to trade in the under $10 range in order for me to be able to purchase a hundred shares.
Currently my account looks like this. I currently own a hundred shares of Syntax Brillian (BRLC) and as of Saturday my option I had sold expired. Last week I sold out my positions in IVAC and FLIR and now have funds of just over $800 to invest. I am considering two covered call option positions to get into. My next post will discuss my research on these two positions and my decision. As for my account. I have put in a total of $1,730 into the account. The current balance is $1,419.48. This amounts to a $310.52 loss or 17.95% since the beginning. This is terrible and I hope to reel in these losses by the end of the year to hopefully even or positive. I will update each month to see how much I am up/down for the month and overall. Since I am trying out a covered call strategy, these updates will come after the expiration date for options each month.