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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Uncle Frank who wrote (102)	4/21/2001 11:33:20 AM
From: William	Read Replies (2) of 5205

>>Note: I hold the same position.<< In your case it's sheer brilliance. For Id, it was just plain dumb. No, really. The stock is off 90% in about six months, has only closed below the strike price five days, and traded under the strike on another 5 days, and one expects it will not be called. OK, you want to do it as a hedge, that's fine. But don't be upset if it gets called away. When I write calls, my attitude is "I will be more than happy if someone buys this stock from me at this price in this time frame." The strike price plus the option proceeds should be enough to make me glad that I entered the trade. The calls that I wrote that expire today (yes, calls expire on Saturday) were QCOM 70 written on 3/21 when stock was 55 for a 27% increase on the stock, plus the option premium, and JDSU 35 written on 3/9 when the stock was 26 for a 34% increase on the stock plus the option premium. So my message for newbies is to select a strike price and option premium that will put a smile on your face if the option(s) is(are) exercised AND if it is not exercised. If it doesn't meet this test, don't write the option. William

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