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Gold/Mining/Energy : NORTHGATE EXPL (NGX.TO)
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To: John Dally who wrote (16)6/6/2002 9:06:04 PM
From: tyc:>   of 158
 
On the subject of covered calls, here's a posting I meade on another thread. Perhaps you'll find it interesting.

Message 17458527

There is a phrase that covered call writers use. It is the "Return if exercised". This is the maximum that the covered call writer can earn. Note that this maximum return is achieved if the call is exercised. These returns are sometimes very attractive particularly in a rising market when speculators have bid up the price of calls. A knowledgeable covered call writer hopes the call that he writes is exercised so that he achieves this attractive return. He sure as hell doesn't want his stock to fall in price. He relies on his judgment to select the optimum strike price.
Anyone who writes covered calls in a falling market is almost sure to lose money. Ask people on the covered call thread how well their covered calls served them in the current bear market. Generally they tend to "lock" a person into a losing propositiion.
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