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Technology Stocks : IFMX - Investment Discussion
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To: FJV who wrote (9573)2/20/1998 5:18:00 PM
From: Robert Graham  Read Replies (1) of 14631
 
Yes, this is one common approach which is less risky. The option writer has to go where the premium is in order to benefit from time erosion by being able to cover at a lower price locking in a profit. The other possibility is volatility of the stock. However, I do not see this stock itself going anywhere in the near future except perhaps down a bit, which it already has was to the benefit of those CC writers that were quick to roll over from Feb to March calls.

IMO there are just too many stock holders of IFMX writing CCs to make this approach worthwhile unless you take advantage of the stock's volatility particularly where it swells in value around news announcements. The CC writer now must become good at timing their CC writing in relationship to the underlying stock. Many who use the above approach of writing an "out of the money" call for its time premium are not good at timing their strategy in this way. For instance, the time to write has already passed when the stock peaked out at near 9. Too late now.

Bob Graham
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