How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Mark Mandel who wrote (6190)	12/19/1997 7:57:00 AM
From: Herm	of 14162

Tech stocks prices tend to drop very fast. The defensive strategies that could be employed during such drops are: 1. Writing at or in the money calls. Reason? The CC premies will be high and you will benefit from the CC value erosion as the stock drops dramatic. End result? You are able to cushion your portfolio value (drop) significantly. 2. Use the CC premies to buy PUTs for your stock(s) usually one or two strike prices down. Reason? Hey, you get a golden parachute and may break even or actually make a profit if you move quick enough. AGAIN! The better you understand the dynamics here and act on them the better the defensive results.

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