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: FruJu who wrote (7861)	7/10/1998 5:37:00 PM
From: Herm	Read Replies (2) of 14162

Good Question Evan, The magic number for me (cheap puts or cheap calls sideshow) is enough contracts to make a good profit, cover my cost, and protect the value of my position in the (just in case or) anticipated reversal. So, if I have 10 CC contracts I will try to buy 10 puts or calls. Percentage wise? I would be willing to spend up to 20% of the value of the position. Reason? Hey, look what happened to VVUS in two days! You could have lost/made 40% easy with the whipsaw action. Remember XRAY a few weeks back. A 6 point one day drop out of nowhere! Cheap 3/8s puts turned into 5 1/2 in a blink of an eye!

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