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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Dan Duchardt who wrote (1497)7/15/2001 10:37:46 PM
From: alanrs  Read Replies (1) of 5205
 
Dan

opportunity for profit on the calls as the stock swings

I'm a little light headed right now and both your and mathemagicians posts deserve more sober thought,and are both very thought provoking. In regards to buying/selling smaller positions of the underlying instead of the options, I find I am conditioned somewhat by my trading experience.
In effect, I have tried doing exactly this for years,but was always frustrated by the high commission costs. If I felt the general market was ahead of itself I would attempt to cut back 10% (for example), but not being in mutual funds I always had to pick an individual stock to sell part of, and up until recently pay up to $75 for the privilege.
While I was surprisingly successful at this, options and new lower commissions have solved a lot of my frustration. I am able to maintain a steady exposure to the companies I want to own, while increasing or decreasing my exposure at the margins thru the options. Now, as I have made changes affecting my commission costs (& continue to drop them effectively to zero with IB), I may have to rethink this whole thing. However, my success rate has been so high using options that I am reluctant to screw with it too much, even to the point of being in no hurry to actually fully understand what I am doing. A combination of "ignorance is bliss" and "don't fix it if it's not broken".

Anyway, I must get to sleep since 5 AM comes early at my house. Thanks for the replies. I will read them more carefully soon.

ARS
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