I am watching the runs in SEBL and QCOM and will probably sell calls at some point just because I expect they
will pull back somewhere along the way.
edit- Oh. I just looked at prices and maybe it's happening now.
Pullbacks, during times of strong stock appreciation are normal, and good. The question as to whether covered calls are prudent now hinges on whether one believes we are at the start of a new bull phase, or in a temporary bear market rally. It is typical, after a bear market, for people to distrust rallies and sell too soon - or cover inappropriately.
While this rally may well fail, I would suggest that anyone trading in this market take a look at IBD for the past few days. The 5/18 issue shows, with charts, the "end" of the bear and the breakouts in the DOW and S&P. It also predicts a similar breakout of the Nas, which happened on 5/21 an is described in the 5/22 issue.
They note several signs, such as volume increases, increases in block trades, etc. that may indicate that this rally has some legs. If that's true, waiting to sell calls, or legging in slowly may be wise.
StockHawk |
