Economy is showing signs of recovering

There are several subtle signs that the recovery is here .....commute is taking longer, malls are busier, people are a little more content .... flip side is full time career jobs are not being created, businesses are starting to make money but hesistant to spend.

My prediction is a rocky but gradual economic recovery. to play this slow and gradual recovery, I am going to write uncovered puts on companies that have fallen out of favour but would participate in a recovery, and write calls on my holdings to make some money from premiums. I continue to hold my gold, oil, copper, metals and bank stocks through to Christmas. Hopefully Santa comes this year.... I think it will, there is optimism growing amidst all this negativity of double dip, high unemployment, foreclosures etc.

Here's a sample trade that I made recently to illustrate put writing. MFC (Manulife) put 20Nov10 $12. Received a small $0.33 premium. that's about 2.5% return for 1 month. if it drops below $12, I will be obligated to pick it up at $12, but I think MFC is one of those slow recovery stocks that has bottomed but will take a while to recover.... in the meantime, I am picking away at the premiums. Even if I end up picking it up, it's something I would have bought.

Same idea with Rim P 20Nov10 $48 or ABX P 20Nov10 $44 ..... basically picking exercise price close to target buy price and collect premium at the same time.

I figure by doing so, I could potentially make between 2%-4% per month in premiums while I let the volatility of the market play itself out .... almost like being a banker and letting the buyers of those puts and calls play the riskier side of the equation. I don't count on doing this every single month as I will not execute if I don't see a good trade; but say 8 months per year x 3%- that's pretty good in my opinion.

Let's see if I am right in the next 3 months .... small Santa rally.