How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Qtrlytrades who wrote (1738)	4/17/1997 11:12:00 PM
From: Herm	of 14162

I hear you David, I hardest part of covered call writing is starting off. You must have a margin of profit to begin the process and stay out of trouble. Also, the more money you are investing, the more choices you will have to rake in the bucks overnight. Hence, lowering that net cost basis even faster. For example, the 8 ROST May 27 1/2 PUTS I picked up two days ago @$1 are now worth 1.25 x 8 = $1,000 or a $200 profit for me. If I cashed them in it would lower my net cost basis by fifty cents (200/400=.50). That would put me under $20 with my net cost basis in ROST. That is my goal to continue to work down that net cost basis and milk profits. The better I read that stock and sell at the money or in the money calls, the more profit I will crank in. I have become pretty good at betting my call buyers to the draw. You and everyone else could do the same thing. A cooperating stock like ROST is much easier. But, the concepts work with ANY STOCK! The technology stocks tend to move at a much faster pace. I'm starting to work my way to less expensive stocks like NOVL, AXC, APCC, EMC, RXSD. HD.

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