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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: FaultLine who wrote (449)	5/8/2001 1:03:14 PM
From: TimF	of 5205

"1. Setting up the call write so that, if exercised, you end up losing money in the underlying stock. This is possible if you sell calls with striking prices below your original basis in the stock.... Doing this might make sense. If you don't think the stock will go back to your purchase price any time soon. You might get a net loss when you get called out, but you at least get the premium plus extra for the underlying assuming you sold an OTM call. You get more then if you just sold the stock instead of writing the call. Of course if you are so certain that the stock wont recover maybe you should just sell it as it could obviously continue to go down. Tim

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