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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Alias Shrugged who wrote (1685)7/31/2001 11:14:30 AM
From: Uncle Frank  Read Replies (1) of 5205
 
When I write covered calls, I choose calls which are ATM or slightly OTM for usually the maximum time allowable. The critical decision is choosing a stock which you think has bottomed, since, as stated above, one is basically shorting puts naked when doing buy/writes.

Your comments highlight the differing considerations between buy/write versus writing calls against long term positions. I'd note, however, that your approach to buy/write differs from what I have seen as typical, ie writing the front month call with the expectation of getting called so as to realize a handsome short term return. When writing the max time call, aren't you concerned about getting "trapped" into a synthetic long term position by a down market?

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