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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who wrote (65)4/19/2001 8:24:53 PM
From: cfoe  Read Replies (1) of 5205
 
Here is my situation and what I have done with cc’s recently. Comments and criticisms much appreciated.

My situation:
1. I am only doing cc’s with QCOM, where I own enough stock to produce some worthwhile income.
2. I am doing cc’s to generate current income and am willing to see stock called away - under the theory per UF (alias DUF) that the price will always come back to you, eventually (as we all know too well with QCOM <g>).
3. My larger position is in my SEP, so cc’s and possibly capital gains will be tax-free. My smaller position is in my taxable account.

Recent actions (all in my SEP):
1. At the end of March, I sold April 65s for $1-3/8 and May 70s for $2-1/8.
2. The 65s are now ITM and the 70s look close.
3. Today I sold May 70s for $5 and 75s $3.30 (an equal amount of each).

I pulled the trigger on these cc’s today because I think the market, including QCOM, pull back tomorrow. If I am correct and the April 65s look like they will expire worthless, I will obviously do nothing. If the price is hovering around the strike price, my broker suggested I wait until the last hour and see if I can buy them back for less than I received ($1-3/8).

In my personal account, I am trying to sell May 80s for $2. Since I am underwater on these shares, even at $80, I am only doing this to generate some income (as stated before).

Again, comments, etc. welcome.
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