The Beano Family
Before we join the Beano brothers, let's go over their accounts and see where they stand in relation to each other. As you know both purchased 1,500 qcom over a couple of weeks ago at $134 and as a result, the tabulation for Bobo is quite easy with the Q closing at $135 5/16, the total in his account reads $202,968. Hat gives Bobo a profit of $2,968. Bebo on the other hand as you may recall not only purchased the same amount of shares but took that opportunity to write calls on his shares. He chose to write the April 132's and is still quite pleased with his decision especially in light of picking up $21,000, the first of many such deposits he hopes will change his life. Bobo has chosen to put the good life on hold and play the casino in hopes of hitting it big and one day getting the gold ring. Bebo, on the other had has decided to enjoy life now and is more than willing to give up whatever gain there may over the strike he has written. This good life began with the lease of his dream car for approximately $900 per month and he and his wife and they have been approved for the loan on their dream home of $250,000 contingent on the sale of their present residence. The beauty of Bebo's decision to write CC's and take the income now is that these two real life dreams of Bebo and Betty will only require approximately $3,700 of the estimated $18,000 to $20,000 CASH FLOW that Bebo should be able to pull in Monthly. Now to this weeks episode -----
Part five -
Well gang, it is the third Friday in the month of March and that can only mean one thing and I don't mean Options Expiration either, nope, on this night will be decided the Bantam County Bowling Championship and that is exactly where we join the Beano brother's as they prepare to meet the perennial county champions, Burnstein's Bagel Blasters. Bebo and Bobo are renowned through these quarters for their bowling skills which they honed when working at the old downtown bowling center as pin setters. They have been bowling for about three years for Baker's Bondo Bombers, and this is their first Championship final. We join them just as Bebo is pulling up and parking two spaces beyond Bobo who is leaning through his car window from the outside, apparently in heated debate with wife Barb. About that time, he turns and heads toward Bebo," say Beeb, you got a couple hundred until the first, Billy and Brit ( Bobo's kids) are leaving on a field trip for the weekend and I guess we are overdrawn. Personally I think the bank made a mistake but Barb swears we are overdrawn, at any rate she is pissed as hell because the last check I wrote was for this new ball, also said she is embarrassed as hell, Bobo turns to Bebo with the usual refrain, damn, women, I just don't understand why they get so upset over a little money! ", I have told you before Bobo, like Voltaire says " a woman will forgive anything but poverty ".
While making their way to the bowling alley, Bebo turns to Bobo and ask why he chooses to go through all the crap he has put up with all his adult life as a result of money problems, fighting, stress, embarrassment, frustration and the like, when he could remedy all of his problems by just writing Calls on his Qcom stock." I do not want to limit my ability to make the big money I have always dreamed about retorted an irritated Bobo ". " First of all, you do not understand the principle of Call Writing and the opportunities it affords but more importantly you are going to kill yourself in the process of trying to make your million playing the casino, says Bebo" . " By the way, thanks for the two Texas tens, says Bobo, I'll hit you with them on the first for sure, now get your shoes on and let's get ready to blast the Blasters, ok?" , " Ok agrees Bebo but on one condition" he says, " what's that, mutters Bobo? ", " That you read the notes that I write on this blank scorecard when you get time", Bebo tells him," ok, ok" agrees Bobo, " write down what you want me to understand " says Bobo " and I promise you I will read them". Bebo begins to list the important things about Voltaire's philosophy on CC writing.
1. An investor must realize this is a philosophy and not a strategy per se and getting the nth return out of a Call is not the primary intent, reducing stress and improving one's quality of life is our main goal.
2. One must understand that wealth and quality of life are in no way synonymous. One can have millions in the market but until they decide to partake of a portion of it, the quality of life remains the same or worsens.
3. Investor must realize life begins and ends with that infernal monthly billing cycle and that he or she and their families can enjoy almost everything they have ever desired by adopting a " happiness now and not later " attitude " especially when it is realized that an average amount of money situated for monthly returns of 8 to 10 % is a literal Gold mine.
4. Realize that most wants and desires of man are relatively FINITE, mainly in the form of THE home, THE automobile etc., and once paid in full there is little else outside of one's family needed or wanted that would bring on that silent killer of us all, STRESS.
5. He or she must be able to comprehend how much in life can be purchased monthly by so little of the monies available through CC writing.
6. Must be willing to quit playing casino with at least half of his STAKE.
7. Must be willing to accept that the above mentioned STAKE is the vehicle that should provide him with said income in perpetuity and should never be destroyed even in parts.
8. Must stay with quality stocks hopefully paying 8 to 10 per cent per month.
9. Realize at the above mentioned return rate, one would have to have in the bank at 5% C.D. rate, over 25 times as much money as one would hold provided the writing was done on margin or in Bebo's case, 5 million bucks.
10. Must understand, savor and appreciate those three great aspects of Covered Call Writing, a. provides downside protection up to almost two thirds of what the uncovered investor enjoys, b. provides monthly income on a consistent basis, c. provides cash flow for what ever purpose, d. income is taxed as ordinary income and provides the benefit of not having to pay FICA, FUTA, SUTA and MEDICARE taxes that are now deducted from the investors pay check.
11. And finally, one must be willing to put quality of life and stress reduction ahead of projected potential " pie in the sky " fortunes.
Conclusion - The Bondo Bombers were blasted by the Burnstein Bagel Blasters 6 to zip. As the brothers headed into the night, one could vaguely make out their conversation " Bebo asked an irritated Bobo, did you not say, that the RINGER that Barney Baker brought in for tonight's match was from Akron "? " Yes ", replied Bebo, "but Bebo" , growled Bobo, " there is not a bad bowler in Akron, Ohio , for Christ's sake they wear their bowling shirts on vacation ", " uh, no" retorted Bebo, " he is from Akron, Calif".-------- " Ah jeez! Cried Bobo, no wonder we got our asses kicked "!
Voltaire |
