Analyzing Jim Cramer Picks – Bear Call Spreads – Sept. 2006

In a recent article, ” Jim Cramer – Bear or Just All Bull “, we analyzed Jim Cramer’s “short” track record, and it was slightly positive. Bear call credit spreads give stock trading investors the opportunity to take Jim Cramer’s slight shorting advantage and multiply it.

We used Jim Cramer’s bearish stock tips from June 21, 2006 to July 21, 2006. We used PowerOptions new SmartHistoryXL Back Testing tool. We examined a bear call credit spreads strategy making selections on July 24, 2006 with all stock options expiring on August 18, 2006 (August stock options expiration). The results of the bear call credit spreads back test search are shown below:

# Successful positions: 17 out of 20 (85%)
Avg. % Return: 12.3%
QQQQ % Return: 6.1% (7/24/2006 to 8/18/2006)
SPX % Return: 3.2% (7/24/2006 to 8/18/2006)

Analysis
The Jim Cramer bear call credit spreads strategy yielded an average return of +12.3% versus a return of +1.5% by simply shorting Jim Cramer’s stock market tips. In this case the bear call credit spreads strategy multiplies the investor’s return, but it should be noted the risk might also have increased.

On August 23, 2006, the same search parameters were used for Jim Cramer’s bearish recommendations from July 18, 2006 to August 18, 2006. A bear call credit spreads search was performed using PowerOptions SmartSearchXL for stock options expiring in September of 2006. The results of this search are shown below:

After stock options expiration on September 15, 2006 (in 24 days), we’ll analyze the results of using the bear call credit spreads strategy for Jim Cramer’s bearish stock market tips.

PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a bear call credit investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing bear call credit options positions.

[tags]stock options, bear call credit spreads, option income, investment strategy, stock trading, stock tips[/tags]