"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!)"
I don't know about everyone here, but my guess is that most are far more diversified than the posts might lead one to believe. In my own case, my stock portfolio is heavily weighted toward tech-about 70% in about 20 companies-but is only roughly 40% of my half vast empire. It's boring talking about CD's and GIC's and REITS, and one can't incorporate them into any option strategy. Others have pointed out the value of learning how a limited universe of stocks and their associated options behave and sticking to them. Tech stocks, being volatile, are potentially well suited to this.
"in my opinion, a covered call should not be written unless one is willing to be called out."
In general, I agree with this and the points you made in this regard, especially the repair strategies part. There are specific circumstances where this may not apply though, as I believe Frank rightly pointed out.
"call premia have come down quite a bit anyway"
I've definitely noticed this and am looking for different ways (spreads, straddles, selling puts) to approach all this. Like everything else, it's a process, and learning takes time. Also, what works today may not work tomorrow.
ARS |
