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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: alanrs who wrote (1378)7/9/2001 11:27:19 PM
From: Stock Farmer  Read Replies (1) of 5205
 
Hi Alan - you've articulated one of the major "ah-ha" elements of covered call writing.

That of viewing the return as a "total position". Macmillan writes about it too.

Many people seem to get hung up on wanting to own the underlying stock and forget that they could find themselves in a position to own more of the underlying if they just let themselves be called out.

So they end up spending more money to protect their holding than it would cost them to pay the commissions to re-establish the position with the money they would realize.

Many of the grizzled pro's I've talked to pick the underlying stock not because they want to hold it, but because they don't mind holding it. Big difference.

John
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