Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Richard Gibbons who wrote (11915)	11/27/1999 7:59:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 14162

Richard ; I agree like I say mostly the idea is academic for me, I seldom short individual stocks, & when I do short it's mostly an index tracker such as the QQQ. While I write covered calls, they can become naked calls if the stock starts dropping as I wont just sit there and watch it go down and do nothing, and I'll sell it before buying back the calls this in effect puts me short calls, but it's not what I like to do. My bag is rather conservative and playing bull spreads, and will be until I see the over all market uptrend get broken, I look for stocks that appear to have fallen out of favor but also seem to be making a base ( Name brands at that ) then I buy in the money calls and hedge them off selling an equal amount out of the money depending on if & where I find a fair spread. By spread I mean if the stock is say 20..I may buy a leap at 15 for $8 then sell one at 25 for 3 in effect my break even is still 20 at ex date , if the stock goes on up I might roll my sold ones up. I'm in CPQ 15s bought, 35s sold total cost was $5.91 with commissions and I have till Jan 2002 on the contracts with my break even at 21 I consider it a fairly safe bet yet it gives me almost 4x leverage. In most cases on shorter term bets I only go for a 5 to 10 spread if I can get it under 3 to under 6 respectivly..and if my break even winds up being 1 or 2pts BELOW her current price. It's not like trying to break off a lot of big limbs but when I find a bull spread on a stock I like taht also lets me set up at a cost which gives me some downside safety I jump on it. If the stock moves up enough that both positions come into the money then the spread generally disappears so if I still like it I roll up buying back the one I sold and re-selling up enough to capture the next good spread. Jim