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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: the options strategist who wrote (7616)6/11/1998 10:12:00 AM
From: Herm  Read Replies (1) of 14162
 
Jen,

The actual rate of return for CCing on stocks will vary slightly depending how much the commissions bit into the premies. For example, my option commissions with DLJ Direct is a $35 min. flat fee for the first contract and an additional $1.50 per contract there after. So, the more contracts I write, the cheaper the cost per contract and the higher my net rate of return. I will always use 500 or more in any examples I use to encourage investors.

Now, LEAPs are far much cheaper investment for CCing. You can afford to buy a whole lot of LEAPs compared to 100 share lots of stock for CCing. Don't attempt to CC with LEAPs using less than 5 contracts.

The answer to your question is "the more contracts per CC round, the cheaper the cost, hence, the higher the rate of return."
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