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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: im a survivor who wrote (4841)3/13/2007 3:20:44 PM
From: Uncle Frank  Read Replies (3) of 5205
 
I get confused easily, too, so I try to keep it simple. My approach is to identify the trading channel of a long term holding, and write calls when it's at the top end, or write puts when it's at the low end. But problems arise whenever there a news related discontinuity.

I don't try to fight it, because in the post-bubble markets I'm more concerned about loss of capital than I am about opportunity loss. If I've sold covered calls and the stock spikes, I let myself get called, and buy back when it fills the gap, which generally will happen. If I've written puts and the stock dips, I accept the consignment, because I only write against stocks I like to own.

Whenever I consider the consequences of straddles, strangles, or any other tricky strategy, I get a migraine headache :-/.

duf
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