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Strategies & Market Trends : Options

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To: Tom K. who wrote (7445)	5/5/2000 11:25:00 AM
From: Seldom_Blue	Read Replies (1) of 8096

No question selling calls in a down market makes money. You said you are familiar with the risks, which is unlimited if you sell naked calls. I personally do not like unlimited risks. Selling puts does not have unlimited risks. It has a floor - stock can only go to zero. I would suggest if you want to sell naked calls, do so in a spread so you are protected in case they get bought by CSCO and the price doubles overnight. No matter how remote the possibilities, that sort of things do happen. I went naked for the first time on my PMCS calls recently. I only did it on 2 contracts. I have $30 profit built in already on these calls. I will close them if it moves against me for 15 points. Of course as soon as I did it, the market had a mini rally. I have been thinking along the same line you are thinking. If I find a stock that is grossly overvalued, I will probably do a bear spread using calls. But since I usually track stocks that I like, I have not found any candidate for such a strategy yet. Seldom Blue

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