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Strategies & Market Trends : The Market Taught Me That......

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To: benmoti who wrote (1)	11/5/1997 12:16:00 PM
From: ratan lal	Read Replies (2) of 151

Behrouz << One method that seems to be profitable is selling out-of-money calls near expiration if premium is worth-while, and buying the underlying issue. >> If you do the above, make sure you buy only those stocks that you are willing to keep for a long time thru highs (usully taken away by the optionee) and lows. Once you sell Covered calls, you will be stuck with the stock and will not be able to sell it if it starts heading down. And that is where the danger is. One bad news can drop your stock and keep dropping it. And you cannot get out till you buy back your option. The loss in option price relative to stock price may be 10 to 25% only. Over 5 years I have found options to be a losing proposition. I only SELL PUTS in stocks that I am planning to BUy and keep for a long time esentially buying the stock at a lower price. Ratan

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