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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (4400)4/15/2006 6:16:59 PM
From: Jerome  Read Replies (1) of 5205
 
Thanks Guys....the conclusion about unwinding a covered call position would be "it depends".

Some observations I've made about covered calls.

1) the best premium is the call with about six weeks to expiration.

2) If I could undo a call for less than 20% of its original net (including commissions) I will do it.

3) If you have a stock that is tied to a covered call then your hands are tied until the stock becomes uncovered.

4) A stock can fall rapidly and its decline may not be fully reflected in the call premium. (the law of unintended consequences)

5) On some occasions its possible to get two writes in the same month on a single stock. Provided that the call was undone.

Compared to you guys I'm just a two bit piker. But those are just my observations.

Any thoughts on this week.

Jerome
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