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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: R. Gordon who wrote (6127)12/14/1997 2:45:00 PM
From: Greg Higgins  Read Replies (1) of 14162
 
R. Gordon writes:
When a stock reaches the top of of its trading range, would you go to cash and look for another stock?

I was going to say that it depends, but I changed my mind. I think that as long as the stock continues to exhibit the characteristics which made it interesting to you in the first place, you keep it. This means, if you own the stock, you don't sell, you continue to write. If you own the LEAPS you continue to write until you get called or, if they're in the money, you exercise them at expiration.

If you no longer like the stock, or if you think your money is better used elsewhere, then that's another story entirely. If you don't have the money to purchase the stock at expiration, you sell.

Using LEAPS instead of stock is a way of testing the waters, so to speak, without risking quite as much absolute dollars as you would buying the stock. If you like the stock, when you're done get in. If you don't get out.
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