Eyes on the ASX.

Just thought I’d post a quick update on what I’m interested in at the moment:

I like the look of Telstra (TLS) in the low $5.00 range. Currently $5.05. I think we’ll see a surge back to the $5.20 level quite quickly. I was thinking about buying the stock and selling $5.20 call over it. With $10,000 for example we can purchase 1980 shares that will be in line for the 14 cent dividend in February so I think we will see a run up in price before this time. You will be able to sell 198 calls over the top of this generating $792. If the price goes through $5.20 and we get assigned in the month we will keep the $792 premium and make $297.00 on the stock holding totalling $1089 return or 10.8% in the month. Not bad if we can keep generating this. To learn about this strategy, please click the link read my post on ‘Covered Call Writing’

For greater returns we could employ the ‘High Yield Covered Call Strategy’ but would miss out on the dividend.

If worst case scenario comes into play and the stock falls, we will keep the premium written each month, get the 14 cent dividend in February and monitor the position from there. I see the stock reaching $6.00 in the longer term though.

I also like Rio Tinto (RIO), breaking this $65.00 level, currently at $65.48, pulling off with the market today. With strong iron ore prices and the company expanding their business operations, I don’t think $70.00 is far off.

G8 Education (GEM) is coming along. Seems to be topping out at $3.30 level but is still making higher lows. I think it will take off shortly. $4.30 is the price target we have on it.

Please contact me to discuss or look into managing or creating a portfolio for you.

Happy Trading.

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