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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: alanballow who wrote (4572)11/18/2006 10:25:03 PM
From: alanrs  Read Replies (2) of 5205
 
It wasn't me. Since a lot of options are bought/sold 'in the money' and are unlikely to expire worthless, the 60/40 might be accurate. As UF posted, a common saying is that 90% expire worthless. It has been my experience that if you sell a call after a few days run up, or a put after a similar pullback, the chances of putting 50-100% of the premium in your pocket on an option roughly 10% out of the money approaches 100%.

I have had more than one run of 100+ profitable transactions in a row in the 6 years I've been doing this. This year, I have had 219 transactions and have yet to have a loss. However, I often take 25% in a few hours or a couple of days, and often sell the same option multiple times. Also, I only sell against a small portion of my holdings, and only when I would be happy no matter what the outcome. Even so, I've managed to put 51.7% of the premiums in my pocket this year. If you sell near or at the money the premiums are better but your chance of getting exercised are greater. Find something that suits you so that you sleep well. It's a great part time job, especially since it takes very little time if you are selling against the same core stocks year after year.

ARS
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