Copied from another thread, Can anyone give me some guidance ?
To: Caroline (8374 )
From: Petrus
Wednesday, Aug 26 1998 9:51PM ET
Reply # of 8375
Dear Caroline,
Many thanks per your kind reply.
Neither do I want the shares of my best stock (DELL) getting called away from me.
The Strike price (risk) vs Premium (profit) ratio is
related to your future expectations of this stock, since it does not depend on market
conditions whatsoever. With Dell's behaviour, any strike price seems hours away. My
main concern is how to obtain an additional income (writing covered calls), while not
limiting my upside potential. Should I just buy back the call, when the stock reaches its
strike price (hopefully with the least time value possible) ? *Probably the best (if one
can afford) would be to buy another set of shares,, better yet sell everything & just buy
Dell (only keep some Cisco)?, but then the same dilemma would persist, for what Iam
trying to do is get an additional income (26% / year range), writing calls 8-10% out of
the money every month. While still keeping my favourite shares for ever.
Do you, or any other fellow investor have any thoughts??
Your comments will be much obliged,
Petrus |
