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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Uncle Frank who wrote (1015)	6/11/2001 5:29:26 PM
From: adairm	of 5205

Here's the results from my paper trade... Remember that I put on 4 positions, buy/writes on QCOM, CSCO, TXN, and DELL. All are showing maximum profit, except QCOM. (Max profit would be all called out since I wrote OTM calls.) The QCOM position is showing a negative 0.6% return. (2.59% premium less 3.19% capital loss for a negative total return of -0.6%) Interestingly, QCOM is the only stock selling for more than $45. Still, it's too early to draw any conclusions. Ok, we've had a lively discussion today about gains, losses and repairs. Assuming I'm a buy/write kind of guy. Where should I set my stops? When my 'Total Return' goes negative? Accept some level of loss (say 2%) and not exceed that? Draw a support line on a chart and sell if it's violated? The loss of capital sustained by QCOM is offset by gains in CSCO and TXN. (DELL was sold ATM, so as long as it stays ATM or better, it doesn't have any effect on capital.) Overall, I'm pleased with the results. It's becomming apparant that it's important to have some diversity in the portfolio so that gains in one stock can offset losses in another. (My goal is preservation - or slow growth - of capital while generating free income.) Adairm

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