A few weeks ago I decided to tweak the papermoney portfolio again. Rather than going for a bunch of option plays on index products, I wanted to simulate some “money management” via positional plays on individual equities and managing risk via index option plays as needed. The goal with the portfolio is to earn roughly 2-4 percent a month and compound the gains throughout the year.
E-House Holdings
It looks like I was stopped out of E-House holdings today (EJ – chart on right). This is a Chinese real estate firm that was (and remains) very interesting. I purchased the shares a little too high, so I’ve paid for that mistake. I am currently short 5 Calls @ 22.5 and I’m going to keep the calls as I’m a buyer if we can break out to above the 21/22 level and will cover those short calls very quickly with stock.
If you take a look at the chart, you can see that on a longer term basis, EJ is in no-mans land. There is no good reason to buy here, however I am also a buyer again if we can break the 200 day EMA so I’m putting in an order to sell puts at @15 for a reasonable credit to possibly get put into the position.
Buy selling covered calls and shorting puts to buy stock I am constantly generating income in the portfolio.
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