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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who wrote (461)5/7/2001 6:25:56 PM
From: alanrs   of 5205
 
No, I typically am willing to have my most expensive shares called at cost or a small profit. If I have 800 shares bought at $20, 30, 40, and $50, and the current price is in the 25-35 range ( a rough approx. of a lot of what I own), I would be willing to have 200 called away at $55. This is not a written in stone method, but is how I approach the problem. To accommodate this, I often have to sell more time. I tend to look for a $3-$4 premium 3 months out, or at least this is how it has worked out most often.
Sometimes I can get the premium 1 month out and sometimes I can get a better premium or the same premium at a $5 higher strike, but that is just luck and timing.

Edit: I do have a theory (that I can't substantiate) that I am probably not selling to some wild eyed optimist, but to someone short the stock or someone using a more complicated option strategy whereby he/she makes out ok even buying what I consider to be very expensive calls.
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