SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Robert Graham who wrote (794)3/13/1997 4:58:00 PM
From: CCWriter   of 14162
 
RE: Risks of Covered Call Writting

Robert,

I think you are misunderstanding what this thread is all about. We are not talking about buying options. We are talking about selling calls on stocks we already own (writing covered calls). Steve has added to this strategy by encouraging the buying of protective puts and calls (at very low prices) near danger times (earnings anouncements, important industry and government anouncements, etc.).

The writing of a covered call is considered the option strategy with the least risk. It is the beginners level of option activity that brokerage firms allow new investers to get their feet wet on. They allow this because of the protective nature of covered call writing. In fact, the covered call strategy is considered less risky than outwrite stock ownership.

According to Lawrence G. McMillan, "The strategy of owning the stock and writing the call will outperform outwrite stock ownership if the stock falls, remains the same, or even rises slightly. In fact, the only time that the outwrite owner of the stock will outperform a covered writer is if the stock increases in price by a relatively substantial amount during the life of the call." (ref 'Options as a Strategic Investment", McMillan)

As far as "breaking of people's bubble", I'm not sure what you are talking about. Please provide more details.

Thanks,
Blaine
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News