As an option trading investor you may know there is a phenomenon that stocks tend to rise on the first day of each month. The theory is that mutual fund managers find themselves with new inflows of cash on that day, from people’s automatic 401k contributions and such, creating new buying demand. In the last 16 months the S&P 500 has risen by an average of 1% on the first day of the month. You may not win every first of the month, as happened on March 1, but on average over many months the historical statistics say you should do okay.

Writers of covered call options can use this to their advantage by “legging” into new positions over two trading sessions.

“Legging in” means you buy the stock first and then later sell the call  — as opposed to doing a buy-write transaction where both legs are executed at the same time. You can buy stock near the close on the last day of the month, and then sell covered calls against that stock near the close of the first day of the month. In theory, the stock will have nudged up 1% or so during that first day and you can get more premium for the call option.

To read more option analysis and trading ideas visit Trading Strategies.

Top 4 Covered Calls for March 19 Expiration

With less than two weeks to go until the March options expire, the top covered calls Born To Sell members have written are (in order of popularity):

Top 8 Covered Call Watch List Stocks and ETFs

Currently, the top eight stocks Born To Sell members are using for their watch list are (in order of popularity):

1. Apple (Nasdaq; AAPL)

2. Ford (NYSE: F)

3. Microsoft (Nasdaq: MSFT)

4. Cisco Systems (Nasdaq: CSCO)

5. Intel (Nasdaq; INTC)

6. GE (NYSE: GE)

7. Netflix (Nasdaq: NFLX)

8. Bank of America (NYSE: BAC)

Mike Scanlin operates Born To Sell, a web site dedicated to helping people earn monthly income from selling call options.