How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Slava Chechik who wrote (7643)	6/14/1998 8:11:00 PM
From: Herm	Read Replies (2) of 14162

Hummm? Options are instruments (when utilized properly) that do exactly what they were designed for such things as protecting the downside risk (PUTs, Bear spreads, or CCs), enhancing your upside profit (CALLs, Bull spreads), or anything in between (strangles,etc.) Most investors guess wrong when it comes to options. Hence, a fairly high no $ payouts. Supply and demand are indeed at work when it comes to options. Excessive returns may not apply since the premiums are based on three factors. 1. Intrinsic value. 2. time value. 3. volatility. I would venture to say that the more buyers (and profits) the more volatility in the stock option as the MMs start jerking the price around to move towards a certain parity each month. Because options are profitable more and more investors are trying their luck. In fact, this past year was the largest transactions recorded in options trading. It is going all the time. CBOE travels around the country offering free workshops. Now, somebody must be paying right? Yeap, the dude that buys my CCs and pays a fee to the exchange. Pennies that amount to hundreds of million of dollars each year.

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