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Technology Stocks : Oracle Corporation (ORCL)
ORCL 201.88-1.5%Nov 28 12:59 PM EST
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To: mike fredricks who wrote (3758)12/6/1997 12:32:00 AM
From: Trader Dave  Read Replies (1) of 19080
 
Writing naked calls is incredibly risky. (w/out owning the underlying stock.) writing calls when you own the stock can be a great way to generate income and reduce your risk. it also can be helpful in creating a sell discipline. I would'nt write them too far out though, you may change your mind about the stock and want to sell or not limit your upside. i like to write 40 day old calls. It seems that they start to decline in value when they're less than a month old, so most of the time you keep the cash. It's a great trick, but check your commissions on the stuff under a buck -- if you are an institutional investor you'll pay $0.03 a share or less, I don't know what the brokerage shops charge individual investors.

TD
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