Scott--you sold cc on CSCO? You don't mention which stock.
Traditional thinking is one sells cc on a stock that either is overbought (at a high, and about to trend down), or just sidelining (as qcom was in a trading range for months--until recent breakout, or what I believe will be a breakout--you could sell cc at 145 and buy back at 125 regularly because the stock was going sideways in a trading range).
Voltaire's thinking is different: you buy a stock, which is your "vehicle", and you sell cc on it. You choose a stock with a high percentage return. Your ccs are your monthly income. You don't care if you get called out. If the stock goes up a lot, your equity appreciates, and if you want you can buy back your calls (short term loss) for more, and sell new calls further out and higher up (still getting your monthly income). I'm still getting my head wrapped around this. I think it makes a lot of sense, but of course as Tom knows I haven't done it yet!!!!
Your csco play does not make a lot of sense to me...but then again I'm not a cc expert. First of all, I don't think csco will fall back, its showing a lot of strength, and if msft settles as I expect, the whole tech market will be ebullient. |
