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: Herm who wrote (8577)	9/15/1998 11:14:00 PM
From: Joe Waynick	Read Replies (1) of 14162

Herm, thanks for responding. Can I offer a couple more points? First, feel free to beat me over the head, I deserve it! I wouldn't have bought this stk if I wasn't bullish on it's future. I just didn't want to be in that long. There are too many bear traps I'd like to be playing. My points are that LDG is a solid stk (if there is such a thing in this market.) They announced good 2nd quarter earnings, which caused it to rise, and the 500-point drop we recently took didn't phase this stk at all. At this point I'm seriously considering selling tomorrow at $37 or better, take the $3k hit, and stay naked the calls and puts. This reduces my maintenance by $8k, and when the stks does a temporary dip to $34 over the next 30-45 days, I can cover my calls @1 or so and sell my puts for about 1.625 and break even. Loading up on a few more cheap puts will help with this approach as well. The more puts, the smaller the change in option prices will be needed to exit gracefully. Does this seem reasonable to you? If so, what put/call ratio would you do? If it's not reasonable, why not?

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