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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 75.26+1.2%Jan 15 3:59 PM EST
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To: Ira Player who wrote (50981)4/3/2001 7:40:35 PM
From: Robert T. Quasius  Read Replies (1) of 77400
 
I have to correct one "gotcha" about writing covered calls. Once you write a covered call on a stock you hold, it "freezes" the holding period for long term capital gains. In other words, if you have a stock you've held for 11 months and write a covered call, the clock stops running until the option expires or is bought back to close it.

I too write covered calls. I will write a covered call when a stock is at or near a target price where I would be willing to sell it. If the stock price rises and I get assigned, that's fine with me because I have my target price plus options premium. If the stock falls, I'll buy it back or let it expire, then write more covered calls when it rises again.
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