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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Mike Buckley who wrote (1601)7/23/2001 9:59:44 PM
From: JohnM  Read Replies (1) of 5205
 
Mike,

Thanks for the detailed response. A couple of thoughts.

Why have a holding that isn't a core holding? That being the case, why not write against it? Why not write against the company's stock I understand better than any position in my portfolio?

I think I typed too fast at this point and am misunderstood. I meant shares, not companies. Thus, my wife and I are beginning to accumulate two sets of shares on companies. One set is a long term buy and hold set; a second is short term cc writing. So half of our Ntap shares, to take one example, are in a core holding, the other half are to write ccs. We are actually, at least for the moment, keeping the cc shares in a separate account in a brokerage which makes option work much better.

I suspect this strategy is a short term one, in which it simply eases my mind as I learn. I feel much freer to think my way through alternative strategies if I don't worry so much about losing the shares. Once I get deeper into this morass, I may be willing to write against all our shares in a company. We'll see.

With 26 calendar days left, I'm comfortable with my perception of how far the stock would need to recover against a backdrop of an earnings report that I don't believe supports such a recovery.

And in the context of an economy not showing any serious signs of short term recovery; nor of a stock market either.

John
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