For those not using options, an example:

I did a 200 share buy/write when GDXJ was at 61.59.  I sold 2 $62 calls and my basis was $58.25. Had GDXJ been higher than 62 at expiration Friday one month later my return would have been $747 or 6%.  As it is, the price of GDXJ was 57.67 so the calls expire worthless and I am down .58 a share.  But had I not written the call, I would be down $3.92.

Now, the story is not over, but it is still better than just buying GDXJ. Granted, the options are fat on gold related items so the strategy works better than on most examples.

What the post doesn't show is that I was doing this as GDXJ moved up so I had similar positions expiring on Friday at $57, $58 and $60 which did even better. The $57 position will I will just let them take the stock and keep the premium from the option. Thus the entire strategy will create income, reduce risk and be great unless there is a dramatic downturn in the price of GDXJ.

Now I get to pick a good time to sell options again or do buy writes to replace some of the GDXJ taken away.