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

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To: Douglas Webb who wrote (8783)10/8/1998 9:42:00 PM
From: Vol   of 14162
 
Doug, Re: Index spreads

Nice work as usual Doug. The odds seem to be in the favor of this strategy. Plus it will work whether volatility is high or low, b/c since you're selling and buying options the vol is mute. the margin requirement is much less than the naked call strategy I suggested.

How would you manage this strategy in real life? You wouldn't want to be fully invested b/c one loss month wipes everything out. Maybe you could only commit 25% of your capital per month. The chance of being outside the curve 4 months in a row to wipe everything out is just about impossible. Or one would like to think so ;^)

What keeping us from jumping in head first?

vol
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