I’ve been pretty inactive with the market lately. I put on some long-term call spreads back in December and the January sell off really killed them. They are spread out to April so I still have time but they’ve got a long hill to climb and I may get out of them soon while they’re still worth something.

The market in general is pretty tough for my “take profits when you’re +100%, cut losses when you’re -50%” criteria as volatility is very high, making options pricy, and the market is not trading in any real long-term trend as it is trading in a large range with massive intraday swings, so it’s hard to make directional picks unless you can pick a top or bottom and are actively trading these things, looking for smaller but more nimble gains.

My day job has kept me pretty busy and I don’t have time to day-trade the market now so I’m on the sidelines so far. I’m looking at perhaps just selling some covered calls for some small income plays to sell volatility, or look at buying stock in some beaten down names and just keeping them protected with collars. I’ll let you know what I decide.

The implied volatility on Research in Motion (RIMM) is through the roof! What a great time to sell some options. However, I don’t want to go naked so I’m considering some OTM covered calls that expire this week after buying some stock and just hoping they expire worthless. Or, if they get exercised then so be it, I still get to pocket my credit from selling these crazy-expensive options here. Earnings come out Thursday, options expire on Friday.

The question I should ask, as any good trader would, is “how much can I lose?” Well, my Optionetics pals don’t look on covered calls too well because they have unlimited risk (the stock has no downside protection). I can remove the unlimited risk by using a collar instead but then I have to put up extra money to buy the put to protect the downside.

I guess I’m not too worried about RIMM going to $0 anytime soon or to anything close to that and feel OK just placing a nice stop loss in case it goes south.