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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: adairm who wrote (897)6/4/2001 12:45:29 AM
From: dday  Read Replies (1) of 5205
 
Just a comment from a weary but celebratory Keystone Stater predicting the 'Answer" is four to the question of how long it will take to dethrone Aristotle.

Keeping in mind my previous comments made regarding my posture that cc writing (in its purest form) is a fixed income strategy designed to enhance income-----with that in mind----, Adairm, I think you are very much on the right track. In fact, I think you are there. (definitely not a dummie-<gg>)

I might suggest that upon initiating cc position, that you employ stop loss orders on the equity side. That is, if the stock drops a certain amount- sell it and buy back the call. Due to the delta, the erosion in premium will probably not cover the loss in the underlying but it will help minimize the real enemy of the CC strategy----that is--a massive decline in the underlying stock. One debacle, like the Gstrf that UF described, can undermine an awful lot of successful positions.

Regards,

Bob
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