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Non-Tech : The Critical Investing Workshop
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To: LLCF who wrote (19944)5/24/2000 11:03:00 AM
From: Clappy  Read Replies (1) of 35685
 
<Don't come over here without being less than cordial.>

What is this, a private club? That wasn't cordial advice given out to the poor fellow... it was dangerous IMO.

No silly, it's not a private club.
It's called, being polite to a polite person.

Now, without any further arguing or name calling:

Could you explain why writing covered calls to remove a margin is dangerous.

Your method is to sell the stocks to get out of margin problems.
I agree this may be a good idea.
However, if he wrote enough calls now to prevent the margin calls for a fall of another 10% to 15% additional stock price drop, it could buy him more time. Then as the cycle begins an up swing he could attempt to reduce his margin when he feels the price and time is better for his situation.

To simply sell off his high margin, still does not help his tax situation either.

In addition, selling off now would mean that he is convinced that his stocks are going to go lower.
If he is convinced of this, would writing covered calls be more advantageous. He could write far out as possible.
Perhaps write leaps as well.

At least it would continue to give him a little more time for the market to recover.

I am sincerely interested in your opinion and I'm always open to other ideas to help me learn.

-Clappy
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