re: AMAT covered calls:
I prefer to "play the range" by going long at the bottom of it, and going short at the top. This will make me a lot more money than staying long and writing CCs. On the last dip and rebound, I didn't play AMAT. Instead, I bought TXN calls on March 1, and sold them March 2 for a 43% profit.
Eventually, I will go long AMAT, and stay long till the stock is over 90. But, even then, I'm not sure I'll be selling CCs. AMAT is a very volatile stock. It may bounce along a trading range at the bottom for months and months. But then, when it goes back into favor (because of news that Fidelity Tech Fund managers hear before I do), the stock will abruptly double over the course of a month, and then keep on going up. So, if I'm selling CCs, I'll lose my stock just as the stock is taking off. After all, the reason to hold the stock is because I think it is going up. And, if I chose strike prices high enough so I won't lose my stock, I won't make much money from the calls.
But, from what I've heard, writing CCs is one of the few option strategies that usually makes money. |
