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: Andrew Williams who wrote (12119)	12/29/1999 4:14:00 PM
From: Tom K.	Read Replies (1) of 14162

....is it possible to estimate your downside exposure?... Andrew, the extreme downside is that you'd own the stocks you had PUTs on and they would be below the market value. The reality is that that is unlikely if you do it properly and manage your positions. Specifically, provide enough cushion and you can take a 10% drop in the price. Stay near term and you're even better. Diversify a little and you've got more protection. And if you've dealt only in quality issues, so what if you wind up owning MSFT or GE or CSCO. Not only will they come back, but you can sell CALLs to lower your cost basis. This is an excellent approach, but don't be naive.... it takes some work. Good luck. Tom P.S. the market is crazy today.... 3 days ago I sold 10 QCOM 320 LEAPs and today they are up $14,000.....but only on paper until I close.

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