N> Hit & Run...
...that's what Berney & Paul (Gersh?) have been doing for some time now, Nancy: Hit & Run. I think Berney is using stock, and that he compounds all those 4-7% gains; otoh, I think Paul is using options, and prolly is not compounding; ie., taking ever-larger positions (or employing all his kapital, as Berney often does) - ask him.
iirc, Berney is managing/trading (large) IRA/401K's so, he's either LONG or idling in CASH:MM%
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I was curious to see / experience how a "textbook" buy-and-hold constant equity basis w/covered calls would work. Managing the constant equity basis is simple enough: you can pre-enter BUY and SELL LIMIT orders to maintain $100K equity (or whatever) and the whole thing is mechanical. The underlying assumption is, of course ~ growth ~ because lower-lows decay the equity basis... so, you really need that long-term, investor-friendly UpTrend !
The only time finesse is required is when to sell those covered CALLs. Interestingly, buying those CALLs back ~ uncorking the bottle, so-to-speak, is not as critical as when to write - because, you can always sell another CALL.
But imho the big lesson-learned for me vis-a-vis "the textbook approach" is that, regardless of your CCALL writing finesse : when the downside extent is greater than ~10%, you're better off getting the hell out !
-Steve |
