How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: JungleCat who wrote (13492)	1/22/2001 4:17:12 PM
From: Michael Hart	Read Replies (2) of 14162

I use deep ITM CC's instead of shorting against the box. The scenerio for me is that I own a stock that has run up to rapidly, is overbought, has a very high RSI and has penetrated the upper BB. I believe the stock will pull back and would like to "skim" the pullback with as much short term profit as possible. Of course the risks say I may lose the stock ( of course at a very nice profit ) or if there's something happening with the company I don't know about the stock may run higher and I will not take part. To minimize the tax implications assuming I get taken out I use CC's instead of Shorting against it so I DO NOT impact the holding period on the stock when considering the stock moving to long term gain status. Other tax considerations quite often make me sell the CC into the next tax year and beyond the long term gain anniversary. This allows me to move the gains to long term status and into next year so I can use the tax portion of my profits out to April 15th, 2003 in this case. My take, Mike

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