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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Al Greenleaf who wrote (4580)	11/19/2006 8:01:30 PM
From: Uncle Frank	Read Replies (2) of 5205

>> I hardly ever sell covered calls. It seems to me that you want to sell them after a run up. But if you sell then, any drop greater than the premium amount puts you into a loss. This thread has promotes writing calls against core holdings as a means of generating income. If your plan is to remain invested in a stock, any covered call premiums generated by them are pure gravy. >> On the other hand, if you expect the stock to run, why not BUY a call? Because you'll be wrong most of the time. Half the time the stock will go down, and even if it goes up, it usually won't rise fast enough to offset decaying time premium. Writing covered calls is a sound and fairly conservative method of milking an income stream from core holdings. Buying calls is gambling. duf

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