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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 (9664)2/19/1999 11:20:00 PM
From: Gary E  Read Replies (3) of 14162
 
Herm, It's been a long time since I visited your thread and thought I would try again to understand how this works.

If you take the example of VTS , and suppose that you would of found this stock some time ago and recommended it for covered calls.

Dont you first have to buy the stock ?
Or are you selling calls naked ?.... very dangerous IMO

Then sell calls , pocket the premium. ( because the stock is going down you'l never have to buy them back)

Keep doing this for several opt's contract periods.

This is the result, for 1000 shares

Cost of 1000 ..........@ 20.00................................(20,000.00)

several opt premiums in your account..A guess...2,000.00
__________________________________________________________________

Net cost.............................................(18,000.00)

But look at the value of the stock.........10.00.........10,000.00

This still looks like a loss to me..........

Growth, (rather negative growth), p/e , market cap (who cares), and other data that the street ignores, (well the really did not ignore it, they drove the price of the stock down )

What am I missing ? How do you make any $$ with this idea ?

Thanks
HG
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