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: hpeace who wrote (537)	3/8/1997 2:13:00 AM
From: Art	of 14162

Steve and Thread, Started reading McMillian, Kolb, etc. I'm following Steve's step-in-strangle strategy fine, but I am not fully grasping the "roll up and out" concept. (Sorry I'm being so dense Steve) My goal is to NOT be called out of my stock for any reason. (I have a nice capital gain that I want to compound tax free long term). In my case, would I want to limit selling calls to when I think the stock is high and also buy some cheap puts for downside protection? Then, if the stock price gets within a half point of the call's strike, I would buy the call back right before expiration date (for a net loss) ? Then, I think Steve suggests selling another call at a higher strike to end up with a net profit. This might conceivably go on and on until the stock finally starts to fall again and the call expires worthless. Is this called "up and out"? Also, in order to prevent the call from being executed at any time during the life of the contract, would I need to buy the call back before expiration if the person who bought it could make a profit by executing the contract before expiration? Thanks for any advice, Art

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