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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: sandbag who wrote (11282)	7/23/1999 11:44:00 AM
From: tuck	Read Replies (1) \| Respond to of 14162

sandbag, Herm, et. al., Speaking of closing out puts for breakeven, I finally managed to get out of the EDFY Aug 12.5s for a loss after commissions of $1.75. Whew! 7 bits is cheap tuition for this lesson: figure out how much you want to spend on protection and then buy ITM options with that amount. This means fewer options, but you're buying less time premium, which is in keeping with the theme of this thread and our investment strategy: sell as much time premium as possible and buy as little time premium as possible. Come to think of it, the latter could mean buying spreads. Anyway, note that this applies to both puts and calls. If I want to be known for contributing anything here it would be these two things: 1) Always use spreads to roll up or down. 2) Always buy ITM options for sideshows and protection. Period. Not that these are original thoughts, but they are ones I would emphasize, as I've recently learned them the hard way. Comments? Thanks to Herm, whose WINS TA allowed me to keep my shirt this month. Using IQC charts showing RSI, Stochastics, BBs, and MACD allowed me to sell my calls and buy my puts at Edify's latest peak. Had I mistimed these transactions, I'd be down to my undies. Cheers, Tuck