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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: hivemind who wrote (908)	6/4/2001 11:33:19 PM
From: adairm	of 5205

Hive: <What do you think of my SUNW 02 15's?> I hope you get called out! Selling puts does put you into a focused mindset: You're bullish! The faster the stock goes up, the quicker the premium erodes, you can buy-to-close, and sell again! Unwinding a CC position is more complicated. Assuming the stock is rising quickly, you have to choose to close the short call (probably at a loss) or let the stock be called away. Selling CCs puts the writer in a peculiar mindset: Sure, you want the stock to rise, but not over the written strike price. Or, you want the short call price to fall, but not the price of the stock. The CC writer is kinda in a straight jacket. Selling a put is much more straight forward. The stock goes up, the value of the short put goes down, you buy it back (or let it expire) for a profit. Nice and simple. Unless you really wanted to be put so you could aquire the stock at a 'discount'. But, this is a Covered Call thread. So, accordingly, we should really be discussing how to successfully implement CC strategies. Adairm

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