Hi Bill -
Glad I made you think a bit and ask a couple of questions, exactly what I intended.
I can't disagree with your 1 through 6. Much the same applies to me. One difference is that I have been doing options since the early eighties, so I have made a few more mistakes than you have <g>. I actually have been selling calls since the peak during our San Diego gathering, even before that. I did make a nice chunk of cash all the way down that cushioned (very little) the losses of the past 16 months. Anyway, a couple of comments on your planned approach. I, as well as Uncle Frank, Ken, and a bunch od others, tend to write OTM calls, not ITM calls, mostly for the front month(next 30 days). This tends to:
return a bit more profit if Mr. Market goes up after we write the calls
result in fewer cases of the stock being called away
have lower commissions for closing calls/buying back stock
have all the option premium be premium and not intrinsic value.
I think the one thing that hit me in both your notes was the selling ITM calls, and I just ask you to think if that is the best approach for you (others, feel free to comment on this please).
My other comment is that if a stock is called away, that you think of buying back a bit below where it was called, not where it was called. Rarely is "todays price" the lowest ever price (with the exception of QCOM April 1999).
Welcome to Optionsville, Lindy. Enjoy (and profit from) the dance.
William |
