John,
Well, I'm glad I caught you. What a great response.
I find it hard to jump right into complexity. Have to build my way up.
I think you are right about this so I'd suggest you try the simple buy/write approach for a couple of months. Option-wise it's foolproof. Of course the underlying stock may go down -- but what else is new?<lol>
Buy a block of say, 300-500 shares of something you would not mind holding (perhaps SEBL, NTAP, JDSU, CREE, more QCOM, whatever) and write contracts on it at or slightly OTM. Just collect the premium, sit back, relax, and watch what happens. (I consider 3 contracts to be a minimum to keep the commission/contract costs down. I'm paying $35 each way at Schwab.)
If the market rises and you are called, fine, you keep any price run-up to the strike and keep the premium too. If the stock falls, you keep the premium and you now hold something you can cover a second time. If the market drops sharply, may as well buy to close, keep the difference, and prepare to write another contract. Of course you've read all this here several times over and you've seen the discussions of how to safely get into a position. Keep us posted.
Personally, I think writing contracts on stock you do not want called is a more complicated proposition because of the defensive moves you may be required to take.
Turns out retirement is a time consuming vocation.
You're not kidding. During my first week of retirement, unclewest remarked that you get so busy you'll wonder how you ever had time for a job.
Cheers,
--Ken/fl |
