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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (1896)8/10/2001 1:29:10 PM
From: PAL  Read Replies (3) of 5205
 
STRATEGY: Writing Covered LEAPS Combinations (which he later states are more commonly referred to as "strangles")
OUTLOOK: Very Bullish
ADVANTAGES: Combines covered Call writing with Put writing; collect two premiums
DRAWBACKS: Complex; needs monitoring; Double Commitment
DEGREE OF RISK: More intense than stock
SUMMARY: Covered combination writing, like its cousin covered straddle writing, is a complex strategy suitable for those who are quite bullish and sophisticated.

Very good Frank. Now we are going somewhere. Now you have an expert witness in Harrison Roth. And you believe everything that is written without analyzing and being critical. Think Frank, and be true to yourself.

OUTLOOK: Very Bullish... Why would anyone write a CCS if the environment is Very Bullish? You would be better of just hold the stock and sell puts. Writing CC in that environment limits your gain.

CCS allows for a wider range before you lose money as compared to just straight CC, and gives more return. It should not be done in a very bullish environment .

DEGREE OF RISK: More intense than stock
Any option including Covered Call is more intense than just owning a stock. That is given.

Think Frank, Think.

Good Luck to All.
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