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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: BDR who wrote (412)5/6/2001 10:42:57 PM
From: Seeker of Truth  Read Replies (1) of 5205
 
I'm sorry. I also don't like the misuse of the word volatility. The person to whom I addressed my email was using it in the sense of dangerous and jumpy. But I think the word only means jumpy. So if we use it in the original and correct sense then surely bring on the volatility. The more the merrier. The problem is that we found out most of the volatile stocks were also dangerous, with plenty of huge down side. Ideally we'd like a jumpy stock, swayed very much by each news release but with a beautiful long term in the offing. How about QCOM for such a role? Then we can sell calls every month and have a reasonable chance of getting back in in case the calls are executed. If we can't find such a thing then we have to sell calls which are very far above the current price so the extra income gets a lot less important and the whole CC game decreases in importance.
The semiconductor stocks bring great income from CC but unfortunately their cyclical nature also brings the possibility of substantial drops. If we simply hold on we'll be back on the plus side in 1-3 years but meanwhile do we sell calls for a lower price than we paid? I"m also thinking out loud with no firm conclusion. Currently I am out of SEBL, thinking 47 is too high a price but I am selling puts on it at 40, thinking that 40 MIGHT be acceptable. I am also selling puts for June at 35 thinking that's still more acceptable..
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