To: Jerome who wrote (23764 ) 12/10/1999 11:23:00 AM From: manohar kanuri Read Replies (2) | Respond to
Jerome,the short interest for Cymer increased by 32,000 shares today at just these two strike prices ? I didn't realize there was some way to distinguish a regular sale from a short sale except via what firms report periodically. Volatile stocks carry a lot of short interest because the premium is high for covered call writing. First contradiction - higher the volatility, lower the delta, so lower the adjustments on the stock side. Even if you are looking at net open positions which you are not. Secondly, the premium is high or it is not. Nothing to do with whether it is covered calls or not. Writing covered calls because of high premiums is probably one of the less efficient ways of making money simply because of the mechanics of it. The high volatility implied by the high premium contradicts the "prudence" factor implicit in covered writing any which way you dice it. While I disagree with Curly's assessment of options in general (idiots will always find complicated ways to lose money, ways that they can explain away as "not" gambling, as a "sure" thing, so why blame options?) I do share his skepticism of covered call writing as it is promoted. It's a scam except for anyone trying to flog a (now) dead horse or doing it for yield on a doozey.
