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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: JohnM who wrote (3726)	5/8/2002 1:46:12 PM
From: Kayaker	Read Replies (1) of 5205

Given that the volume is quite low as compared to say, QCOM, am I likely to have an unusually difficult time selling back my calls? Should I, thus, look to stocks with higher option volume? My understanding of options --> Options are derivatives. They don't exist in the same way that company shares do. They are created and destroyed by the market maker (?) as required. He sells you, or buys from you the option contracts and then does an offsetting transaction to zero out his risk. If you buy or sell option contracts there is unlikely to be a retail investor on the other side of the transaction. So, as I understand it, it makes little or no difference what the volume is on a particular put or call. You can pick an option with no 'volume' and no 'open interest' and do whatever buy or sell you want. Option orders where there is higher volume may move more quickly or have better spreads, but I'm not sure on that. Again, that's my (limited) understanding of how it works.

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