writing covered calls is a neutral to slightly bearish strategy, whereas buying a stock hoping for a boost after earnings is either bullish or gambling, depending on your view of things
as such, these strategies don't seem to jive very well
it may work some of the time, but it's just as likely that you buy the stock and it is flat to lower after even a solid earnings report, at which time you will get less for selling a call, since more time will have passed, and, as tim noted, the pre-earnings premium will be gone from the options...there is also the possibility that the company reports a solid quarter but doesn't give just the right guidance according to what the market wants to see, and takes a hit after the report...think AAPL, which had an outstanding quarter, and got smacked for giving their typical conservative guidance
in my experience, even with the lower premiums, it's much better to wait for earnings and the market's reaction to those earnings, before putting a covered call trade on...the idea of covered calls is to earn income in a reasonably conservative manner...if an investor is bullish, he should be buying long stock positions, not selling covered calls
JMHO of course |
