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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: LindyBill who wrote (2089)8/18/2001 10:43:11 AM
From: PoetTrader  Read Replies (2) of 5205
 
To All on the thread:

It's early Sat am and I don't know if the caffiene has just not worked its way into the brain stem yet or not...but with this market being so ugly I was working out a CC repair strategy for stocks I want to let go of. But the strategy I came up with seems too good to be true. For instance. I bought Sanmina a while back at 32 it's now at 19.00...I've sold a couple of calls and reduced my price to 29.5...but now I just want to get rid of it. I look at Sept calls and I could sell a call at a strike of 10.00 for 9.00. I would make the premium which would reduce my price to 19. -- If the stock gets called away (and it should -- cuz if it goes below that I'm throwing in the towel!) that's what I want, but I've at least mitigated my loss. I could go in and do the same repair strategy on aol. Purchase at 45. at the strike of 25 there's a 14.90 premium...I've already bought the stock...no longer want it...and would reduce cost basis to close to 35...so I end up ahead 4.00 from the current price of 39.00. Am I not getting something? This seems too painless. Especially for this market. I could see this as crazy if you loved your stock and wanted to hold it...but I want to rid myself of some of the dead in the water stocks and reposition my portfolio. Please advise this very weary dumbling...and thanks much in advance. PoetTrader
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