i would have to know the text of mcmillan's or roth's statements in order to comment specifically on what they said
however, in almost every case, if an investor is bullish on a company, and they turn out to be right, they would make more money by being long the stock than by being long and writing calls
for most of the covered calls i write, i look for companies that can consistently grow their earnings, but aren't likely to outperform the market by any significant margin...as such, i'm not bullish on the companies...you can say i'm somewhat bullish on the overall market, so that stocks in general will hold up during the time frame of my calls, but from the company standpoint, all i'm really looking for is the stock price to stay in its current range...an expectation that a stock price will match or somewhat underperform the overall market is neutral to slightly bearish...in fact, the only reason that i usually pick individual stocks instead of indexes to write covered calls against is that the premiums are higher
if i think a company's stock is likely to go up 20, 30, 40% in the next year, i'm not going to write calls and limit my upside...i'm going to go long the stock and look to benefit from the significant growth of the stock...that's a case where i'm bullish
in answer to your question, the reason i would have to buy a stock that i was neutral on and write calls against it would be that i could capture premium and thus income while the stock basically goes nowhere...in many cases there is also a dividend, which may provide a sizeable part of the stock's overall return for the year, and a decent extra bit of income every month or three months...this gives me spending money from part of my portfolio while i wait for the rest of my portfolio to reach its price targets in longer term positions...i obviously wouldn't be doing this with a stock that i thought was going to drop significantly, but i also wouldn't do it with a stock that i was quite bullish on, at least not for more than a few of my shares and/or at a much higher strike price |
