You stats seem to build a case toward CCing rather than straight
CALL buying.
And a bias towards the hybrid strategy vs CCing, although CCing is
certainly more conservative in the sense that a profit is more
likely.
If one already owns several stocks in a portfolio it is not likely
that the person would switch in/out of additional stocks just to
CC.
Yes, I agree with that. However, if you are looking for CC candidates
(whether from within your portfolio or not), it's useful to know
whether the options are "overpriced", or "underpriced". In some
cases, a CC premium isn't worth collecting, as it doesn't compensate
enough for the opportunity cost of possible missed profits.
Personally, I'm finding that the "stock ownership" perspective is
easier to deal with than a "monthly income" perspective. So, once
I decide to get back in the game, I will be acquiring stock using
cash-backed put writing and selling it after it reaches whatever
target price I was looking for using CCing. I'm not doing anything
with options currently as I think that I need to grow my portfolio
some more. I think that the "pick one or two stocks you like" idea
espoused by some is really playing with fire, so I am going to wait
until I have decent-sized positions in 5-10 stocks. I think most
non-market risk is out of a portfolio once you have 10 or so, as
long as they aren't all in the same industry.
Zach |
