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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: StockHawk who wrote (763)	5/23/2001 8:03:46 PM
From: JohnM	Read Replies (2) of 5205

Unfortunately this is a dangerous game, which often plays out with several wins and then one huge loss. Thanks for the comment. This exact point worried me. What happens if the stock dives to $3? Since I have very little money at stake this time around, it's not a concern. But it is a concern for the longer haul. I thought about employing stop losses. You seem to have some concern about that. Care to expand? As for the Wade Cook reference, that's interesting. I've seen his books around but never picked one off the shelf so I don't know what his arguments are. One more aside. It's interesting that several of these optical networking stocks share this characteristic. I've been checking three others, all of which we were/are looking at for the longer term. My reading to date, though, suggests your concerns about stocks with low prices and high option premiums are warranted. And it's a good warning for someone who doesn't understand their stocks. Interesting, that this coveredcalls.com website warns, repeatedly, about this danger. John

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