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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: TsioKawe who wrote (282)	4/26/2001 12:37:06 PM
From: Dr. Id	Read Replies (2) of 5205

<<To me, the "worst" possible outcome is when a CC gets called for a huge profit to the buyer. That's a real, permanent loss of capital. >> If you had time could you explain the process of this process?? IE, are you saying if I sell calls in the money, and the buyer exercises his option to purchase my shares at that price, I dont get to keep the money that was given to the account for the writing of the calls....and If the calls go up in price, do I have to dish out any cash to the buyer?? No, he's just talking about the loss of potential gain that's given up when writing a call. You keep the premium plus the sale price of the stock, but if the stock runs way up you've lost the profit that you WOULD have had if you'd never sold the call. That's the major downside of selling covered calls...you cap your profit and may miss a big up move while you're covered. Dr.Id@itshappenedtome.pov

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