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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Sonki who wrote (4802)3/10/2007 6:09:13 PM
From: alanrs  Read Replies (1) of 5205
 
I was just pointing you at a vehicle that avoids specific stock risk, if one were inclined to play the covered call game. Obviously, your return would depend on how well you were able to sell the tops and buy back the bottoms, and it's hard to make money if what you own goes down in value, no matter what.

The reason I mentioned QQQQ is that I've been day trading it (along with the Y-mini & Russell 2000 index futures) and am finding that a 1% a day return is not unreasonable for 4-5 hours work. I don't know if I can keep that up or if I improve with practice, and I would never put all my assets on the line in such a venture, but it's an interesting use of a small portion of my portfolio, as are covered calls.

QQQQ trades like a stock. Buy a few 100 shares (commission at IB is 0.005/share with a $1 min), and sell a few calls. Or sell a few puts instead of buying outright. See where it goes. Might interest some who already are plenty exposed to individual stocks.

ARS

Edit: I also wanted to add that my bias in the futures is short, since I'm already way long the market. That way the worst that can happen is that a portion of my long portfolio is hedged if the futures go against me hard. I will go long and short these vehicles, so selling calls is not what these are about for me, although I have sold calls against a long QQQQ position that made me nervous. I don't short individual stocks.
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