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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: David Lind who wrote (11943)	11/29/1999 5:11:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

Hi David, You have a sizable working pot to do some serious income generating and remain conservative with the majority of your working capital. Keeping 25% as a cash backup reserve and investing the rest without margin is a slick way to go about it. The biggest bang and for the buck (Large ROI) would be calendar spreads with LEAPs. Basically, CCing against the LEAPs as a surrogate to the stock itself. 40% of that 75% would be a nice size. Trying to work in lots of 10 to 15 contracts per position. You would work your way up to that amount of (5, 10, 15 per round) contracts until you get comfortable watching those massive bucks roll in and out and you get your timing down. You could even stage the CCs and spreads so that they don't all have the same expiration dates. That way, you have steady income each month and enough reserves to sideshows. With the LEAPs, I would say 8% to 10% ROI monthly unmargined would not be difficult to work into. 4% to 6% ROI unmargined CCing without factoring in any capital appreciation for the underlying stock themselves. Growth in the price of the stock is just gravy on top of CC income for say another 15% annually on the real conservative side. Much will depend on what types of stocks you select. A good price range would be $25 to $55 on stocks and $45 to $100 on the parent stocks for the surrogate LEAPs. You can buy and control a great deal more value in the stock by buying those LEAPs. Thus, the ROI is fantastic. A three month spread should typically not yield less than +30%. I actually think there is less risk trading the LEAP spreads than the CCs. Just make sure to dump the LEAPs when they are just about ready to cross into the 12 month or less remaining time line to avoid that time decay to work against you. You cash out the LEAPs for what ever value remains and buy new ones if you still like the stock. I hope you have a copy of the WINs freebie materials off my web site at coveredcallswins.com. I would be interested in hearing your progress in moving into position. Have you selected an online broker account yet? Do they offer any special software like the Executioner or Level II feeds. You could do some serious scalping with your pot of gold. Thanks for sharing that David. What type of investing have you been doing in stocks? By the way, on those mutual funds. If you watch the Investor's Business Daily and check out on Saturday the Mutual Fund Index they post, you have a beautiful timing instrument for your funds. Pull out when that index drops below the 50-day moving average for more than a week and park the money into the money markets. If it drops below that 50-day it will usually move down to the 200-day average of that index. That way, you can protect your bucks and catch the bounce off that 200-day average. The Telephone Switch newsletter for $140+ annually is practically nothing more than that index for $1.00 each Saturday. It works very well! PS - I once worked with a retired couple that had $100,000 to start and they managed to fairly quickly (within 4 months) generate on an average of $8,000 per month between CCs and LEAPs spreads without margin. Again, only using $80,000 of the original sum as the downstoke. They picked industry group stocks they felt comfortable with and understood. Few techs and more mom and pop stocks like DIS and HD!