New Stuff

The CBOE (Chicago Board Options Exchange, henceforth to be known as the CBOE) has initiated weekly options contracts on a very small, select group of stocks. GOOG, AMZN, AAPL, BIDU are a few of the names. These contracts are issued on a Thursday and expire the following Saturday. They are issued every week EXCEPT for the week of normal options expiration the third Friday of the month. Covered call writing as a way to generate additional income from a core position that is being held will be one of the uses. Selling puts at a strike for a position that you want to own is another idea that will work with these. The shorter time to expiration makes the ability to generate income over shorter time frames attractive. They have had these contracts for index options since 2005 but the individual stocks are new. The CBOE extended the expiration by a day on contracts beginning July 1st. Anyway, another arrow in the quiver. Not sure how much trading of these I will do, depends on the premium for the strikes but if I was a fund manager with traditional core buy and hold positions I would be looking to these contracts to increase my return via covered writing and by selling puts to reduce my basis for acquisitions. There are only 14 stocks that these contracts are available for currently but as time goes on and interest takes hold I think they will expand with additional stocks.

Long AAPL, SIVB, IBM calls, AMZN calls, CME calls, covered call write on AAPL.