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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: TimF who wrote (4679)12/21/2006 5:17:28 PM
From: alanrs  Read Replies (1) of 5205
 
Of course if one has to buy calls, buy as much time as possible. However, just because the near term options are going for little doesn't mean the longer terms ones are.

The bad experience I had with buying leaps and selling short term calls against them happened right around 9/11, when I was still relatively new to this. I had collected the premium on the short term call in August, and obviously collected the premium in September, but all the leaps became worthless overnight. While I did loose money, that was not the part that bothered me most. The worst thing was that I had to look at them in my portfolio for 2+ years until they finally expired. I would have paid someone to take them off my hands, but there is no mechanism for entering a -$.05 ask.

ARS
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