How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Douglas Webb who wrote (5138)	10/1/1997 7:27:00 PM
From: Herm	of 14162

In fairness to the readers that warrant discussion. It's a good technical review and opinion (trading style) of defensive CC moves. I would agree with your suggestion that the closer the option month, the higher the delta and thus the faster the decay. So, in a major downturn your suggestion would work if you go In The Money on the CC and do so immediately when there is trouble. For example, an announcement is made and you need to duck quick. Then, round two of the CCs (if it's needed) would require you to go out a few months to grab a larger premie (bigger parachute) and thus a slower delta. Why? Because if the stock reverses at that point very fast you want a slower moving delta to be able to buy it back (cover the CCs) hopefully at a discount to what you collected (CC premies). Again! The idea is to stablelize your profolio. Any comments or variations? I pretty sure most people could handle the longer CCs better than the short ones. Unless, they have exceptional timing and chart reading skills. Good comment Doug! Herm

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