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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Barbara Jo Nigh who wrote (11044)	6/16/1999 10:34:00 AM
From: Georgecc	Read Replies (1) \| Respond to of 14162

I believe that the put you want to buy, if you are buying it at the time you are selling the call, as you said, ATM or slightly ITM at a strike near the upper BB, the put would be at a strike near the lower BB, so it would usually be cheap, 10-20% of the call's price. Now, I'm new too so I'm trying to get a feel for whether the strategy works better with the put or without it (and looking for more thoughts from the group too). Cause if you watch the stock fairly closely, then you can roll down, or make adjustments without having that put. If you buy the put, it's there for insurance in case the stock dives, or if the stock just rolls between the BBs and bounces back up off the lower BB, you can sell your put for a profit, buy your call back for a profit, wait for the stock to go back up to the upper BB, then you can roll your position to one month further out once it hits the upper BB again. I have seen tech stocks where the put is too expensive as you said. Some of these stocks may be a little dangerous for this strategy since they have so far to fall as we have seen recently. And without the insurance put you may take a loss that will take a while to repair. You might consider one strike further down for the put where it is cheaper, viewing it strictly as insurance against catastrophic loss. I think the near month is almost always a better percentage shot because the time value is eroding more quickly. If a 2 or 3 month out call goes down enough to make the same percentage as the near month would have made with the same move, then this stock may be a little too volatile. I've seen some stocks with 2 weeks or so left till expiration of the near month option with the ATM call still at about 10%, but it will erode pretty quickly from this point on, which is good for you. Considering that call will be 0 after expiration (assuming its ATM or OTM) and then you can sell the next month out, this would be better than selling the 2 month to begin with, by nearly a factor of 2. -George

To: Barbara Jo Nigh who wrote (11044)	6/16/1999 10:38:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi Barbara, Just about all your questions could be answered in 1/2 hour worth of study of the WINs approach PowerPoint presentation. Checkout webbindustries.com Here are some comments on a few of your questions. I also tend to write CCs two or months out. So, yes! WINs does work and save your beacon during those pull backs. The PUTs are sideshows that are optional. Meaning? If you are an aggressive investor and wish to maximize on the pull backs by using your CCer's premies for your downward insurance and/or protect yourself during earnings release dates by buying cheap PUTs. In short, WINs provides a whole approach in up, down, and sideways stock price moves by always bringing in either income and/or capital appreciation. You may want to join the free email newsletter at coveredcalls.com. I'm writing a column in this new newsletter. You can also list your stock data and have it appear in the newsletter as a case study. It is a learning, networking and sharing newsletter.

To: Barbara Jo Nigh who wrote (11044)	6/16/1999 12:25:00 PM
From: jw	Read Replies (1) \| Respond to of 14162

Barbara, George and Herm answered much better than I could have. I sold some Dell calls few weeks back for 4¼ and was greedy and didn't use part of the premium to buy some OTM puts. Bought them back couple days ago for 1/8. Now had I bought some puts (side show) they would have increased in value plus the 41/8 that I made on the buy-back. Stocks do not have Options for all months. (most don't). Generally there are couple months (either back to back or they may be separated) IBM doesn't show Aug. & Sept. Dell doesn't show Sept.& Oct. Orcle doesn't show Aug. & Oct. Look at, quote.cboe.com, for IBM. Type in any symbol and see which months are absent. One way to generate income and be very,very conservative and hope to keep stock would to sell current month calls OTM expiry this Fri. Take IBM, June 130 at 1/16, no good, won't pay commish. June 125 @1/4 will give you $200 this Fri. Think it will be above that? Or July 130 @1 15/16, Oct.130 @7 3/8. Or look at the 135/140/145 strikes. Further OTM brings in less but maybe not as likely to be called. Hope I haven't made it too unclear. Happy trading, /jw