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Non-Tech : The Critical Investing Workshop

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To: RocketMan who wrote (29967)	8/21/2000 2:51:14 PM
From: Uncle Frank	Read Replies (1) of 35685

>> The problem is that during months when the stock goes down... Imo, CCs are not a good strategy for a trader. If you aren't committed to a lt position in a specific stock, it is best avoided. >> The fatal flaw is that during months when the stock goes up, one gets called and the gains are capped. In a taxable account, the name of the game is never to be called out. Instead, buy back the call, take the short term cap loss, and retain the profit in the underlying position. >> Maybe this is why McMillan says that CCs are used when one is slightly bullish, or at worse neutral on the stock. Well thought out LT positions are always based on bullish presumptions. Therefore, the volatility of the base position can be ignored. But the key is to recognize that CCs are an income producing rather than wealth building exercise. I'd suggest you transition from a theoretical analysis to paper trading CCs around some of your long term positions. uf

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