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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (4097)8/23/1997 5:00:00 PM
From: John B.   of 14162
 
Herm:

Thanks for your response. Indeed, the stock price moved up
in one day and the intrinsic value increased. However, the
gain for the deep in the money call seem's like it should have
followed more closely to a 1 Delta with the underlying security.

dailystocks.com

If i understand correctly, from McMillan and you, maybe a
general rule for BUYING calls is to attempt to purchase a call
with the lowest amount of time value in proportion to the
increased premium cost. Maybe, a general rule for selling
calls is to determine the resistance level of the underlying stock
and SELL the covered call with the highest amount
of time value left. Is this correct?

Shouldn't everyone have a predetermined exit point when
purchasing an option? If the option falls $700 in value, I will
sell. Rightline recommends Dr. Alexander Elder's book, "Trading
for a Living". In this book Dr. Elder covers exit points. He
recommends not allowing more than 2% of your total portfolio
to be lost on any option position. For example, a $35,000
portfolio will limit any plays loss to $700. What is your opinion
on this rule?

Have you purchased WNDR stock or calls yet?

For my last question, speaking of large premiums, Why are
Dolly Partons' ......... on second thought, I shouldn't ask that
question!!! :-)

Thanks for your help.
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