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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Hepps who wrote (4692)	12/27/2006 7:49:32 AM
From: Bridge Player	Read Replies (3) of 5205

You gained more than half of the possible profit on 4-month options in less than 3 weeks. Good enough reason IMO to close out. One of the things I need to work on is closing early. I tend to write shorter-term options and ususally wait until they expire. I just love to enter that "exp" in the cost column of Schedule D <g>. Interesting issue: choice of strike and expiration when writing naked puts (or calls for that matter). More premium vs. shorter time to exp? Weighing premium, risk, time. How do others here make these decisions? Anyone use formulas of any kind? Seat-of-the-pants? And another issue: if you write a short put, being willing to be assigned the underlying, and it goes in the money near expiration, do most tend to go ahead and take the stock? Or do you roll the option out to a later month, taking the loss on Sched D but also taking in more premium than the amount of the loss? Several of my short puts are underwater and I may face that decision in January. More than adequate margin available to accept stock if that is the decision.

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