Well, you're not alone, Sorin.
From years of experience, I've learned a few things about options. When you set up a play, you decide what you're doing and why, and you don't have regrets. In this case, you could have written shorter calls and let your stock go for a nice trade (huge annualized return). But when you write LEAP calls, it's a wholly different game. Hanging around for months with no flexibility is a tough risk to take; you're printing dead money. If it's a small portion of your account, then okay. But if it's material, you don't want your hands tied behind your back.
That's why people like James Cramer don't write covered calls at all. (He doesn't write puts, either, but that's another story.)
In writing front month calls, I'm trying to hedge a bit of risk, not be a hero. If I'm wrong, I'll buy 'em back and maybe roll them to the same strike in the next month--or raise the strike for a modest debit spread. But I wouldn't write calls on the Nets (let alone short them). What I do is write puts or buy calls. With puts, I tend to go out 3 months or more. With calls, it's always a crapshoot as to the interval. In the case of CMGI, the "value" trade looked like just in-the-money LEAP calls, so I took them.
Hope my experience is useful to you, and good luck with your trade.
BAM
|
