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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: OX who wrote (11342)	8/3/1999 10:06:00 PM
From: OX	Read Replies (1) \| Respond to of 14162

>naked puts look real nice tho, esp. in this environment) geez, did I really say that?! how about "EXCEPT in this environment" ok, as long as I'm not thinking straight... how about naked front-month OTM calls (1 strike out). if it rally's up, buy the underlying to cover (buy on strength!) or buy upstrike calls to cover. or just play the credit spread--that probably makes more sense, altho more conservative :-)

To: OX who wrote (11342)	8/4/1999 2:28:00 PM
From: David Wright	Read Replies (1) \| Respond to of 14162

OX, "sure you get the $'s right away, but you really don't get to keep it until it expires or thru a closing transaction. still everyone does it this way, so in my view, I'm just calculating a more conservative return." When you write a call, the premium is cash in your account that you can use from the date you do the trade. That is why they include it in the ROI calculation. How you eventually wind up on the CC combination awaits either expiration, or closing by you prior to expiration. Dave

To: OX who wrote (11342)	8/4/1999 11:27:00 PM
From: KevinD	Read Replies (2) \| Respond to of 14162

OX, I do it both ways. In my Gain/Loss portfolio listing, I keep my old average cost until the calls expire. In my individual worksheet for each position, I calculate my new net cost including the $$ received for the call so I can see my G/L position going forward. It helps me decide what to do as the expiration date approaches.

To: OX who wrote (11342)	8/8/1999 4:53:00 PM
From: NateC	Read Replies (1) \| Respond to of 14162

You wrote "on naked puts, if the stock rallys you're truly out of the upside. on CC's, at least you can roll up/out your calls to participate. at least that's the way I see it. naked puts look real nice tho, esp. in this environment) WITH NAKED PUTS.....IF THE STOCK TAKES OFF ON YOU....DON'T FORGET THAT THE PUT YOU SOLD FOR MAYBE $1.50.......CAN BE BOUGHT BACK FOR MAYBE $.25....AND YOU CAN SELL A HIGHER STRIKE PRICE PUT, IF YOU LIKE. ANOTHER NICE THING ABOUT THE PUTS.....AS OPPOSED TO CC'S....IS YOU ARE TOTALLY OUT OF THE POSITION......IF YOU FIND A MORE OVERPRICED PUT ON ANOTHER STOCK....YOU CAN JUST SELL THAT ONE....INSTEAD OF SELLING THE NEXT UPSTRIKE PUT ON THE ORIGINAL UNDERLYING Uon another note, I've never fully internalized 2 concepts on margin and CC. 1st is your stmt "but only $5,000 of your own"... if you buy shares on margin, it's as good as your own money. price goes down, you still owe. price goes up, you still owe. granted i like the 'up' better than the 'down'. and I see the leverage, but I'd rather truly use OPM) 2nd: I read how the books calculate net investment on CC's. In my calcs, I don't count prem received from the write. It just doesn't make sense to me (I know, I'm stupid). sure you get the $'s right away, but you really don't get to keep it until it expires or thru a closing transaction. still everyone does it this way, so in my view, I'm just calculating a more conservative return. I AGREE WITH YOU ON THE WAY THAT EVERYONE CALCULATES ROI...IT'S A PET PEEVE OF MINE ALSO...ALTHO IT'S HARD TO ARGUE WITH GIANTS LIKE HERM, AND LARRY MCMILLAN.....STILL.......WHEN I BUY THE STOCK....THEN SELL THE CC......THE WAY I CALCULATE ROI IS THE TOTAL END OF THE DEAL....THE PREMIUM IS THE ONLY INCOME IN THE NUMERATOR (PLUS ANY APPRECIATION IN THE STOCK PRICE)....AND DENOMINATOR SHOULD BE THE AMOUNT PAID FOR THE UNDERLYING STOCK.....NOT...REPEAT.....NOT THE AMOUNT PAID FOR UNDERLYING MINUS THE PREMIUM RECEIVED. THAT'S THE WAY I SEE IT. there, 2 of my pet peeves. I welcome any comments.