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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Vol who wrote (6491)	10/16/1998 10:48:00 AM
From: Tom Trader	Read Replies (3) of 44573

Vol re >>i've looked into selling out-of-the-money OEX/SPX calls each month to provide income with my long stocks as collateral<< If your objective is to generate income from your long positions, why not just sell covered calls against them--or if you are inclined to be aggressive you can even do a few ratio-writes. Selling index calls has the disadvantage that your portfolio may or may not move in line with the value of your portfolio--and that creates an element of risk--a function of the beta of the stocks that you own and event driven price action on the stocks. The other disadvantage is that the margin requirements may be more onerous when it comes to index options compared to just doing covered calls or ratio-writes. Just some issues for you to consider as you decide how to approach this.

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