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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: jaytee who wrote (11888)	11/24/1999 9:08:00 AM
From: Herm	Respond to of 14162

You answered all of the question exactly correct. The loans dollars actually earn about 4% while I have possession of the money outstanding. And, they charge me 5% for the use of the money. Thus, it cost me 1% net for the actual use of the money. If I then turn around and invest that loan money I will pay taxes either short term or long term capital gains. Had the money remained in the tax shelter it would have grown by at least 20% in a mutual fund. Therefore, I figure I must crank out an annual 40% return min. with those dollars to make it worth the efforts. It delays my payment of taxes since the money going into the tax shelter is not taxed. As you know, you need money to make money and critical mass in covered calls writing portfolio sure works better when you have CCs expiring every month without having to rush the timing of the CCs. That means you need to ultimately have several stocks within a portfolio with more than 400 shares in each stock. You can then get it up to a level income level where it generates a steady stream of income that you can extract if you need the money without hurting the portfolio. I'm not retired and I'm not in need of those outside investment dollars at this point. So, I just continue to build the money machine. Of course, my goal is to have the investment generated (dollars) income exceed my salary in the future and generate enough profit to sustain the working capital principal. Like my own Herm ATM. :-)