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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: robwin who wrote (12865)5/30/2000 9:35:00 PM
From: Casaubon  Read Replies (1) of 14162
 
give your calls a chance to work their magic for you. Let them decay in time value. The only way to do that is to do nothing. Unless you are close to long term capital gains on the stock ( which might get called away), you're probably best off doing nothing at all, until closer to the expiration date of the calls. You probably should not be buying back the calls at loss! If you think SUNW is going to run from here, and you want to take advantage of more upside, you might consider buying calls one strike out of the money (although this kind of defeats the purpose of the play you have already established). It is usually best to wait until the week of expiry to manage your position. At that point, most of the time premium will have eroded and defensive action will be more clear. For instance, if you want to keep the stock, you could buy back the calls you sold (without paying so much time premium), or you could roll out to a further timeframe (in other words, buy back the calls you sold, and sell calls with more time premium). The problem you are currently having is a form of meiopic greed. You want to get the time premium from selling the calls but, you also want to take advantage of the whole upside potential of the stock. When you sell the calls you are fixing (limiting) your profit potential!
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