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: taxman who wrote (12158)	1/5/2000 11:30:00 PM
From: Casaubon	Read Replies (1) \| Respond to of 14162

is there any tax benefit to this strategy? Why not simply buy or short the stock? Are you exposing only a relatively small percentage of your capital to this strategy, or do you tend to be fully invested? I realize that purchasing the options limits your loss but, could you not achieve similar results with stops in place?

To: taxman who wrote (12158)	1/6/2000 12:15:00 AM
From: Dan Duchardt	Read Replies (1) \| Respond to of 14162

taxman is anyone else consistently buying, rather than selling, options I'm not doing it consistently, but as I have learned more about options I find it more attractive all the time. A combination of some bad luck and lack of skill in the CC arena over the past year has left a lot of potential profits sitting on the table that I could have realized with long options positions or simply holding stock. each option purchase that i make amounts to an outlay of less than one half of one percent of the total value of my account. i generally avoid selling covered calls. This sounds like a healthy approach. The idea of limiting exposure to the market with options, and taking advantage of the leverage they afford is attractive, and while it is certainly true that buyers are always paying for and losing time premium, the volatility of this market is worth more than what is reflected in those premiums in many cases, at least for those who are in a position to monitor the market during the day. I do think that a lot of what is talked about on this thread about timing long entries and writing and covering calls would be very helpful for an options buying strategy. After all is said and done, the goal of the WINS approach is to be long, uncovered, with stock or LEAP calls on a rising stock, and covered with calls on a falling to sideways drifting stock. When we start to see a lot of sideways motion again, CCing will be a lot more attractive, but when things are falling I would prefer to just be long a put than to have it as a means of protecting a CC position against a collapse, or when they are rising being long a call without it being a sideshow to a CC position with no further upside potential. Since this is a CC thread, it would perhaps be appropriate to use one of the other options threads to focus on long positions. Dan