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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Matthew B. who wrote (6046)12/7/1997 3:25:00 PM
From: Greg Higgins  Read Replies (1) of 14162
 
Matthew B. writes:

From your experience, what proportion of CCs have been exercised early, and on average, how early?


Well none, actually but that doesn't mean I don't consider the possibility in every trade. Remember, I look for security, return, repeatability.

I'm just not in the habit of having my stocks rise 18% the same week I buy them. If I knew how to do that consistently, I'd be a call buyer, not seller. The golden pie as Patrice put it.

The same time I was selling JUL 130 calls for 14, DEC 140s were selling for 5/16. The DEC 140s now sell for 3. 900% is not bad for a weeks work if you can do it consistently. I can't, that's why I don't.

Maybe it will be OK in this case too. Maybe the stock will drop and not go to $150. I certainly expect to get called away early at $150. If not, time is on my side as always. Even if it stays at 140 between now and Jul, eventually the premium will degrade to $10 (i.e., on the Friday prior to expiration). I might at such a point decide to buy it back and sell a new call.

I only really lose if the stock breaks completely between now and then and I consider it unlikely unless the entire market breaks.
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