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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Tom K. who wrote (11516)9/15/1999 1:13:00 AM
From: NateC  Read Replies (1) of 14162
 
To: horseshoe who wrote (11514)
From: Tom K. (who wrote)
Horseshoe,

You said...I was interested in your experience on making money with puts.

Realy quite simple...

1. Start with a realistic objective.... mine is to exceed 30% annual returns;

2. Establish a plan.... mine is to sell OTM PUTs 30-60 days out on only high quality issues.

3. Track your performance.

4. Know how to exit and repair.

4. Manage yourself.... be patient and wait for the opportunities; don't be greedy (high premiums are high risk); be
willing and prepared to buy the stock if necessary.

This was a useful post. I too have found Herm's teachings to be invaluable, just about options in general. Like many lurkers here, I bought McMillan, Trester, andall the other books. McMillan makes a pretty good case for selling puts being basically the same thing as CC'ing.....and he also shows why it's preferable.

I've done some (sold naked puts) ....haven't done too well yet....mainly because I picked out potential vipers, with high premiums. Like several messages here recently, I've improved my performance in the last few months....by STOPPING the practice of buying stocks with 10% monthly ROI....that volatility is just too high....rather I like to do solid FA, then pick out a stock I want......buy it....and then sell CC's while I own it. But I do like a 4-5% monthly ROI, or 7-8 if going 2 months out. I sell OTM CC's in uptrending markets, but in this weird market.....ATM, or even Herm's ITM make me sleep better.
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