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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Bridge Player who wrote (4894)4/14/2007 2:50:28 PM
From: Uncle Frank  Read Replies (1) of 5205
 
I'd characterize a "classic covered call" as a long term buy & hold investor's vehicle for deriving income from core holdings without triggering a taxable event. Calls are sold when the underlying equity is perceived to be at the upper end of its trading channel, strike prices are OTM, and the writer relies on wasted time premium to generate income.

I'd characterize a "classic buy/write" as a trader's tool. An equity is purchased based on stochastics rather than fundamentals, and an at-the-money or in-the-money call is sold with the expectation that it will be in-the-money at expiry. Once again, profit is derived from the wasted time premium.

Jmho but wtfdik?

duf
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