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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herman J. Matos who wrote (1055)3/15/1997 10:31:00 AM
From: Leroy   of 14162
 
HOW NOT!! TO WRITE COVERED CALLS, A REAL LIFE DISASTER UPDATE

Thread;
Last week in post 554 I gave a real life case study on how not to do covered calls. I have ordered the McMillen book and have instituted some repair action. I met my margin call and sold a sept. call on zitl. Took the premium money and bought another 100 shares of wstl. This cuts my "nut" down to a point where a small rise in the stock will allow me to sell some three or four month out calls. I will continue to work these dogs and will hopefully get out even eventually although it may be a year away.

Now then, onward and upward. I have opened a second account with a different broker, Lombard, to cut commisions. I only have $4000 in the account and just got set up late yesteday. I intend to buy 200 shares of rost at the open monday. I do not think that $28 is prohibitive although I wish I had been able to get in earlier. I should still be able to work a nice profit out of the April 27.50 calls. I am interested in Herm and Steves opinion on this. Being such a small invester I can only write covered calls. This means I can not buy upstrike calls, but this is not that serious because it represents protection against lost oportunity rather than the loss of ye old "nut". I think that I can buy the downside put for insurance as long as the strike date is the same as my cc. Should I do this in this case, and how cheap do they need to be?

Once again, I want to thank the thread posters, especially Steve and Herm, for the time and trouble..........

............Leroy
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