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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Teresa Lo who wrote (10751)5/12/1999 12:40:00 AM
From: tuck  Read Replies (1) of 14162
 
I.S.,

I think the main advantage of CCing versus naked put writing is that one can use margin to enhance the return of the CC. The interest income from parked collateral cannot compete with that, IMO. Also, it is theoretically possible to hold a stock one is CCing for long enough to be taxed at a lower rate. In practice, the volatility -- and thus the good premiums -- usually dry up well before then, and the trader then sells and looks for greener pastures. But it's really the judicious use of margin. I try to use no more than half of what's available to me, and that seems to keep me out of trouble.

Cheers, Tuck
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