Eric, et al,
Writing covered calls is the safest options play around. Quite some time ago on this thread there was some discussion of buy-and-write strategies. I think Fred Fahmy and Ole/49r were involved. As a matter of fact, there is a very active thread titled
How To Write Covered Calls - An Ongoing Real Case Study!
Subject 12574
It's too active for me to spend time following, but it may be worth a look.
A word of caution for those entertaining some options plays for the first time - tread carefully, and don't bet the rent. It's disgustingly easy to lose 100% of your investment, and not nearly as easy to make 100%. Writing covered calls mitigates downside risk, but also limits upside potential if the stock rallies. Volatile stocks like USRX command large time premiums due to their volatility, and it's easy to see a lot of value vanish as expiration approaches. You might want to try a couple of phantom trades, set some target objectives, and see how they turn out.
Yesterday morning, I bought UQXDL (USRX April 60) calls for 1-3/8. They closed the same day at $2-1/2, up ~80% on the day. Pretty smart, huh? They closed at 1-5/8 today, paring my gain to about 20%. Equally as important, tomorrow being a holiday, I'm now effectively 5 days closer to expiration. Time flies when you're buying, it creeps when you are writing.
Good luck, and for goodness sake, be careful. |
