SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Herm who wrote (11818)11/15/1999 8:04:00 PM
From: StaggerLee  Read Replies (3) of 14162
 
Herm,

I've enjoyed reading your postings here on the covered call thread. I've been using a simple CC strategy for a few months and getting about 7%-10% per month in premiums (without margin). Each month I start over, putting about 15% or my portfolio into each stock/CC position. If one of the stocks tanks by mid-month, I buy the calls back cheap and sell a lower strike to minimize the damage. So far it's worked like a charm, but my stock picks have performed much better than I can expect long term. (i.e., I'm getting called out 80% of the time or so).

I'm wondering if this 7-10% per month thing is too good to be true. I always believed that options are a zero-sum game, whereby on each side of an option there is a winner and a loser, and the gains/losses offset perfectly. Over the long run, shouldn't you expect that the gains realized on CC premiums will be wiped out by the occasional massive crash in your underlying stock(s)? I would think the implied volatility used in pricing the option would guarantee that over time, the premiums would be offset exactly by losses. In that case, all you're really doing is generating brokerage commissions.

I've read all kinds of things about options, and heard a lot of hype...I even have a spreadsheet showing how I'm going to be worth $10.7 million in 4 years at the pace I'm growing <g>. Do you know of anyone who has been able to get 10-20%/month consistently over a long period of time? I'm wondering if I'm getting too excited over the possibilities here, or if this is in fact the road to riches...
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News