How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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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 (4111)	8/24/1997 6:25:00 PM
From: John Rountree	of 14162

This hole line of reasoning has made me think of a strategy they may be profitable. When you consider that many of these "overvalued" stocks may now suffer the consequences of sell-offs, if you purchase the stock and write deep in the money calls (bearish approach), you can lower your cost basis as the stock falls and eventually when it bottoms you might be able to own it at a low cost (assuming you aren't called out. Now the investigation is to focus on stocks that are overvalued (high P/E, struggling to make earnings better, etc ... ). They I would think, would be easier to find these days. I would think this would be much better then shorting since the worst case is you would break even. Sounds pretty cool to me?!?! John

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