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: Clean who wrote (7596)	6/10/1998 5:14:00 PM
From: Tom K.	Read Replies (2) of 14162

Clean, <<I've thought about doing naked puts where the strike price is so far out of the money, there's very little chance of the stock hitting it.>> That works.... In my case, I set aside the funds to buy the stock I'm interested in and then sell the PUT at a strike that is just shy of the current price and for the up coming expiration. The premium is higher and the short window gives a higher annualized return (can do it more often). Whether it gets put to me or not, I get to keep the premium. The important important important key with this approach is do you really want to own that stock.... I try to make that decision first. The only time it would not be easy is if your stock tanks and it gets put to you at a huge variance from the market and for some reason you have to sell. So far I've not had this happen, but I'm not naive.... that's why the choice of the stock is so important. Good solid companies can withstand normal fluctuations and will over the long haul maintain an uphill trek. Tom

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