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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Wyätt Gwyön who wrote (2105)8/19/2001 4:16:18 AM
From: Uncle Frank  Read Replies (1) of 5205
 
>> the thing i don't like about covered calls, in the context of certain nonexistent, hypothetical investors who think they're diversifying their portfolio by, for example, adding a storage "gorilla" and a back-office software "gorilla" to their wireless "gorilla" (with a portfolio weighting of 33% each!), is that CCs can get people thinking bassackwards about what "conservative investing" means.

I think you're really addressing portfolio allocation rather than covered calls. The former is of paramount importance, while the latter is merely an opportunistic method for generating revenue during a choppy market.

>> i would sell ATM (where premia are best) and i would ALWAYS let myself get called out when the underlying trades above the strike.

Good recommendations for buy-write practitioners, but you don't address the interests of those who are writing against highly appreciated long term core holdings.

>> that is not to say one couldn't sell covered calls and be prudent at the same time. but i think the policy horse needs to lead the tactical cart (CCs).

Agreed. That's my biggest objection to buy-write, where the selection process tends to focus on premium potential rather than the underlying equities.

uf
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