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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: NateC who wrote (10538)	4/24/1999 9:00:00 PM
From: David Wright	Read Replies (3) of 14162

NateC I usually work with the lower priced stocks, I always CC 2 months out, and I would be doing the 45 strike price. I don't know if that makes a difference in the ROI/month calc, or not. With Dell, here is how the ROIs/month come out after the May 50. Note that these are calculated using the template in McMillan, and Ameritrade's commission and margin structure. June 50 5.06% Aug 50 5.18% Nov 50 5.35% Jan 50 5.55% Given that the percentages per month are nearly the same, per your own comment, it sure seems to me that you would be better off compounding every two months, than every 4 or 6. Looking at the 45 series May 45 12.41% Jun 45 10.02% Aug 45 8.32% Nov 45 8.36% Jan 45 7.98% This series seems to bear out my comment, even including the May option. I think the important point here is that people should check this return per month each time they write a call. 12.41% per month sure looks better than 7.98%. Dave

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