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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: LindyBill who wrote (2220)8/24/2001 7:15:16 PM
From: alanrs  Read Replies (2) of 5205
 
Far be it for me to tell anyone what to do, but I did want to weigh in on Uncle Franks' side with regard to your options.

"I only get tempted to close early when I can keep >50% of the premium in <25% of the time."

While I am not too rigid about it (& I doubt Frank is either) this is in the neighborhood of what I look for. The rest of his post also seemed to be right on . There are other ways to go with options, but it really does seem prudent to get a good plan working and keep it up for a while-maybe a long while, why fix it if it's not broke?- before taking on other approaches. My own time-table had me writing covered calls only for 1 year. I have now gone to selling a few puts and setting up a few spreads, but covered calls is still what I mostly do. If the puts and spreads work out ok for a year, maybe I'll try something else, maybe not. For sure, I'll have a better understanding of what might be appropriate by then.

One of the things I still keep in mind and believe to be true is the old joke about how the best way to make a small fortune in options is to start with a big one.

Anecdotally, I was trying to get my Dad interested in covered calls for a small part of his funds. He doesn't really need the money but does watch the market and I thought he might be interested. He talked to his broker (Merril Lynch-the oldest son of his third wife-nice guy-does mutual funds) who told him that ML had tried a fund doing this and that they were unable to make any money. Don't know if this reflects on ML, or options, or even if it is true-it may just be the brokers' bias. I didn't bother arguing.

ARS
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