A crap shoot...
I know this may sound bad, and I fully expect to be rebuked for even thinking about it, but I've got a piddly account (about $1,700) with which I'd like to play a covered call. Of course, I'm probably limited to 1 cheap stock and selling 1-3 contracts depending on the price of the stock. I can simulaneously sell a call and buy the stock, so I'm not limited to a $17 stock. For example, based on Friday's action, I might buy CSCO at roughly $19.50 and sell the Jan02 20 at $4.80. If called, I make ~25%. If CSCO goes under $15 or so, I lose. I would be very happy with 25% in 7-8 months (at most) in this account and like the risk/reward ratio.
Yeah, I know it's dumb throwing one's full account at one play, but I have others that are fully diversified (tens, fifties, hundreds, etc <g>), so if I lose it, no big deal.
Thoughts or ideas? The point is, I want a good premium, and I want a good chance of being called - or better yet covering the call at a much cheaper premium then having the stock run again. :-)
Sam |
