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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Dominick who wrote (3251)	1/13/2002 9:50:12 PM
From: BDR	Read Replies (1) of 5205

<<So I just buy a stock CD, get my 3 to 5 percent interest immediately then wait 30 days to get my principle back.>> Just a word of caution if I may. In an earlier post you said you have been trading options since October. In that time frame stocks have been stable enough to give covered call writing the illusion that 3-5% a month with preservation of capital is a slam dunk. Be ready to use other strategies when the market conditions change. More importantly, be prepared to recognize when market conditions have changed. It hasn't always been so. I don't mean to come across as lecturing, but I applied covered call writing to the wrong market (10/00-4/01) and suffered a steep loss of capital during that time frame that exceeded the call premiums collected by several fold.

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