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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: FaultLine who started this subject	7/4/2001 3:57:53 PM
From: fmikehugo	Read Replies (4) of 5205

I am retired and looking at covered calls as a source of current income. I have a trading account of about 50K, currently invested in AAPL, which I will sell before earnings on 7/17 and move to a monthly CC strategy. The valuation of a specific call seems fairly straightforward. I’m much less sure about selecting the “right” underlying. From what I’ve read here and elsewhere, I should look for a company (1) with high enough volatility to offer a good premium, (2) with a fairly regular trading range, and (3) that I feel confident will not crash and burn. Two candidates that come to mind at once are AMAT and QCOM. For example, if I had the 50K in hand I would buy 700 shares of QCOM and write 7 July calls at the 65 strike for a premium of $1,680. If called I would gladly take the profit of $791 on the shares and repeat the process. I know there are subscription services available for selecting the underlying stock, and for determining which call provides the best return. I’d appreciate hearing about experiences with these services, as well any comments on the approach I intend to take.

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