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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Dominick who wrote (4198)4/15/2004 3:12:08 PM
From: Uncle Frank  Read Replies (1) of 5205
 
>> Buying options is a "directional" strategy. If you were doing poorly with that, selling them or CC writing isn't going to help either.

I disagree, Dominick. Classical covered call writing against a ltb&h position, which is what this forum was designed to discuss, doesn't require any skill at prognostication. The mechanism is based on recognition of the wasting nature of time premium.

As an example, I have a block of qcom that I purchased 11//5/03 at 46.49. It's a core holding, so short term fluctuations are of little import, except that they allow me to derive an income stream. I wrote aaodm (april 65s) at 2.10 on 3/29, when the stock was trading at 65.50, and bought them back today at 1.10. I picked up a buck a share, and even managed to gain some slight appreciation in the underlying.

Now the buy/write strategy is a different story, but this forum was never designed to promote that riskier strategy.

jmho,
duf
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