Dan,
Here we go.
I would suggest you start with 3 to 4 month out calls while you are trying to get comfortable. Alternatively, restrict yourself to low volatility stocks, which unfortunately offer very little time premium.
Interesting advice. Never heard that argument before but it makes sense. I'm going to think it over, perhaps write one set of calls this way just to see what it's like compared to short term calls.
I should perhaps, make clearer than I might have, that almost all of my covered call writing is and will be on shares we already hold. Some small portion will be buy/write but that money is largely for learning. I hope to get sufficiently comfortable with this to produce a reasonable income flow until stock prices start a longer term move back up. So I'm less worried about downside risk (since we plan to hold the shares) than I am about upside (losing the gain--I have some fear that we've ridden the stock prices down only to lose some of the gain back up because I'm into cc writing).
At the moment, many of the QCOM options are undervalued based on the historical volatility.
Fascinating. How did you arrive at that conclusion? To be a bit more precise, where did you find data to conclude that? And how did you calculate it?
The last section of your post, the one in which you expand on your notion of the virtues of holding half a position just intrigues the hell out of me. I've just read it twice and can't crack it yet. Unfortunately, I made the mistake of thinking I would be sharper in the evening than in the morning. However, went to dinner at a marvelous fish place on the Hudson River, looking up at the Manhattan skyline. Ate much too much, and am too full, a bit lightheaded from a bit too much beer. And not going to be able to get any more concentration out of my cranium this evening. At least not this heavy.
I'll take another shot tomorrow. And I will. It looks like exactly the kind of stuff I want to understand and understand cold.
John |
