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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: CashnOut who wrote (11398)	8/19/1999 11:34:00 PM
From: KevinD	Read Replies (1) \| Respond to of 14162

"Newdie to thread." Now did you mean "Nudie" or "Newbie", I wonder :-?

To: CashnOut who wrote (11398)	8/20/1999 8:01:00 AM
From: Herm	Respond to of 14162

Hello CashnOut! Welcome to the premier CCing public forum. You have come to the right place for defensive moves while CCing. May I suggest you check out our WINs approach PowerPoint freebie at webbindustries.com along with our Excel template last updated by David. That will give you the entire gist of CCing in up, sideways, and down price moves and keep you in the black. You will get much more details in the review. Also, sign-up for the newsletter at coveredcalls.com which comes out this weekend. I do a column and this month the topic is option sideshows which also covers downward gaps and what to do to profit and many times see them coming. Now, to answer your question with out the full verse found in the PowerPoint presentation. 1. You select the right strike price and length of time based on the potential price range indicated by the indicators BB and RSI. I prefer much longer CCs in time. Usually, 3 months out for that exact reason you stated. I like large amounts of CC premies sitting in my account to work with in events such as you stated. That gives me much more downside protection and time to work out my defensive repairs. In the meantime, that CC is decaying and the CCer is paying for my insurance. 2. If you are struck with a downward dive out of the clear blue, you can buy at the money PUTs or in the money PUTs using the CCs to help cushion further drops. Buy as much time as you can afford. If you are swift you should be able to break even with the CCs and PUTs in place. Then, you ride out the bounce and sideways moves until the stock recovers. 3. Eventually, you should be able to cover after a large price drop because that will be reflected in the decay of intrinsic value pricing of the CCs. Thus, you can cover very cheap. Since there is only the time value remaining in the CCs, it does not make sense to wait 2 months for say 1/16 or 1/2 points when you can roll down a strike price or two and pick up another round of CCs at much higher dollars. I would much rather have 1 3/4 in my account than a 1/2 remaining on the old CCs. The old CCs have served their purpose like the space shuttle dumping of the fuel tank boosters. Again, I can not over stress the month out should be as much as you can get with ample open interest to increase your liquidity. That is the secret CashnOut! CCs is can be relatively easy income money with a little study here and real cheap downside insurance is that is all you want. Stay in touch..