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: Casaubon who wrote (9540)	1/30/1999 11:12:00 AM
From: Herm	Read Replies (1) of 14162

The approach you indicated will place the risk on your shoulders. Selling the CC at the $15 strike price will bring in very little income and thus give you little downside hedge. If you look at that chart pattern it sure looks like a "head and shoulders" patterns at the $15 price level which usually means dropping prices because the stock has petered out in attempts to make a new high! Thus, everybody dumps and the stock will drop to a consolidation support level. That sure looks like $10.00. Once at $10.00, sideways movements may occur for a long stretch of time. That means dead money not working for you. You are better off holding other people's money in your account by selling deep and out a few months. That is pure WINs approach. iqc.com

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