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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Gary E who wrote (3807)	6/13/2002 9:39:23 PM
From: alanrs	of 5205

>> My only point here is that so many of the supposed xperts that advocate selling calls on stock you own have NEVER shown me an example where they have come out ahead... I have an annuity invested in a GIC. It pays 6.25% this year with no risk to capital. I have a passbook savings account that pays 3% (ING Direct) with no risk to capital. I own a variety of REITS, which throw off a dividend of around 11% based on my cost. This year they are trading at roughly 160% of cost, but two years ago they were trading at about 50% of cost. I own tech stocks. They pay no dividend, but by selling calls against them I've managed a return of about 12% per year for the last two years despite following self imposed rules that leave me out of the option market most of the time. In aggregate these stocks are selling at roughly 50% of cost right now. As a specific example, while I wish I owned QCOM at $19 like UF, I bought my first 200 shares from marginmike at $128. Total cost on the whole batch is now $51.61. Netting out the procedes of call writing, and some call buying and some put selling, my cost is $43.71. The stock sells for roughly $32 right now. I would never post my individual trades for a lot of reasons. I don't crow when a specific investment is doing well and I don't complain when one is doing poorly. I would never suggest someone invest in anything, except to say that if it doesn't make sense to you, you should not do it. ARS Edit: I wanted to add that my self imposed rules have proven to be a mistake so far. I would have been far better off if I had sold calls with abandon the last 9 months.

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