Big Dog's Boom Boom Room Message Board

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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Big Dog who wrote (142751)	12/19/2010 5:47:57 PM
From: upanddown	of 206181

Big, it is strictly an income strategy, no possibility of capital gains. The income comes from the time premium captured when you sell the calls plus any dividends collected before expiration or early exercise. I got assigned on ECA 28's Friday even though it was only .07 in the money. My actual cost was 26.41 since I got 1.59 for the puts. I can now turn around and sell the Jan 12 25 calls but I want a minimum of $5.00 for them. That would take my cost basis to 21.41. The return would be approx 20% annualized. ECA would have to decline 24% to lose money and 10.5% to not make max profit at or above the 25 strike. It is not for everyone but it works for me since my main goals are income and safety.

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