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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (3131)12/13/2001 9:21:09 PM
From: Dan Duchardt  Read Replies (1) of 5205
 
uf,

>> one of you recommended that when the stock price hit the strike price plus premium to roll up
and out.

That would be Dan.

I'll admit to that <ggg>, but for any latecomers I want it to be clear that the breakeven point for a call buyer (strike price + premium paid) is a decision point for the call seller, not an automatic roll trigger. One has to assess the likelihood of a continued rise given the market conditions and decide to roll or stand with what you have. If you wait much longer, and the market does continue to rise, there is not much to be gained by rolling with the stock at a higher price. And of course every roll up increases the cost basis and downside risk.

Dan
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