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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: tiloup who wrote (6492)1/18/1998 4:04:00 PM
From: Greg Higgins  Read Replies (1) of 14162
 
Norman Damiani writes: I presently own 500 shares of DEC at an avg. cost of 39.25.

Good, then the Feb 40 calls are an easy choice. Some folks would say go for the 42.5 or 45, but not me. I'm not willing to give up 40% of the premium for a 7 % move in the stock. If you want, you could wait and hope the stock goes to 42.5 before you write the 42.5s, but again, if the stock goes down first, you'll miss the first write and buy back.

If I understood your advice correctly, buying the leaps and cc still stands regardless if I own the stock and cc it.

First, let's agree to call it my strategy, not my advice. I'm not telling you what to do or suggesting what to do, I'm saying what I would consider if I wanted to take a position in this stock. Otherwise, absolutely. It's an add-on on top of your current position. But, make sure you want to have this much of your portfolio tuned to DEC positions.

I still believe in diversification amongst stocks, industries, etc.
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