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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: M. C. Orme who wrote (388)	5/2/2001 12:48:19 PM
From: BDR	of 5205

Your post points out the importance of your comfort level with the stock in question and with the possible outcomes of either being called out or not. Looks like you have a some good trades there. GMST has always has hefty premiums. I already own some RMBS. The premiums are rich and I didn't want to own a lot more unless it was at an even lower price, given the volatility of the stock. Therefore I sold ITM calls on my new purchases today. I bought RMBS for 16.15 and sold the June 15 Calls for 3.90. Return if called away 21.8% in 44 days, downside protection 22.9%. The returns represent the higher risk nature of the trade. Not for everyone and not for a large part of anyone's portfolio.

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