Hi Scott,
At the rate this market is falling, you could probably buy back your calls at a
discount to begin a new position when it moves higher. Also, I notice that AOL
usually has a higher premium than most stocks. Probably because of its volitility.
Does anyone know of any other stock that has good premium relative to its stock
price??
If I knew a stock would be going higher, I would just go long. The beauty of a way-ITM CC is that you don't care what the stock does, as long as it stays above the strike. Even if it dips below, you've got the premium as a cushion. When I bought LU at 88 1/2, and CC'ed at 80, I was betting that it would stay above 80 (or even 78) for a month and a half. Earnings aren't due before expiration, so I don't have to worry about that. LU just seems to be a stock that everyone is sorry they didn't buy when it was cheaper, and when it does drop a bit, like today, everyone rushes back in. What I'm giving up is the potential that the stock might rise way up, but that's too risky a play for me these days, and I would prefer an almost sure 2 points (2.25% in a month and a half - a pretty good annual return!)
As far as AOL or any other Internet stock, I would avoid any strategy that forces me to hold them for more than a few days. They're just too unpredictable. I would only CC an Internet stock if I were already holding the stock for the long term. I wouldn't open a new CC position using an Internet stock. Just my personal feeling.
I do agree that this is a great place to post good CC deals. If you see something attractive, post it. A far ITM call on a solid stock that is somewhat depressed, with a price significantly more than the difference between the strike and the stock price. Nothing with earnings due before expiration. Avoid NASDAQ. The strategy here is to be called out at or before expiration. (Do brokers charge you a commission when you are called? I've never done an ITM CC before this.)
Again, the above is all IMHO.
Scott |
