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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Dan Duchardt who wrote (2691)	10/14/2001 11:38:55 PM
From: Uncle Frank	of 5205

>> As you say, you have decided to hold certain stocks for the long term, so every time you sell a call you are risking the possibility of being obligated to sell a stock you want to hold at a discount to the market. Since I sell short term OTM calls, that risk is balanced by the generous profit I would realize in the process. As well, I would then have cash in hand with which to reestablish the position on any retracement. I've successfully done that several times since I began writing cc's in earnest at the start of this year. Based on the mood of this year's market, I'm only concerned about sustainable runs during earnings season, and refrain from writing calls at such times for that very reason. >> A put seller may be just as committed as you are to wanting to own certain stocks, but is willing to take a comparable risk to the CC that she might lose the opportunity to purchase that stock by trying to obtain it at a discount to the market price. That's certainly possible, but over the years I've run into very few ltb&h practitioners who would consider that approach (Dr. Id being the exception). In my experience, most put writers are ta oriented and prefer swing trading. jmho, duf

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