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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: PeterCS who wrote (12258)	1/26/2000 12:02:00 PM
From: PeterCS	Read Replies (1) \| Respond to of 14162

I also meant to say if the stock falls will the leap fall as much as the shorter term option? We would actually like the stock price to not move and the option to lose its premium. I can't see this happening with the leap in the short term.

To: PeterCS who wrote (12258)	1/26/2000 1:20:00 PM
From: David L. Hoevener	Read Replies (2) \| Respond to of 14162

I have used a leap as my covered call many times in the past for the sole reason of being content with the 20-30 percent return up front and the luxury of not needing to watch the position. This is much like the Dow Dogs theory where you enter your positions on January 2 and not look at the portfolio again until one year later when you make adjustments. However, I have found that following the WINS approach with options of much shorter duration and checking your portfolio often allows one to extract much higher percentage gains. This is especially true if one uses the CC premium to purchase sideshow calls or protective puts. Dave Herm- I am still interested in your opinion on Ameritrade. Thanks in advance. Dave

To: PeterCS who wrote (12258)	1/26/2000 5:48:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Good question Peter. The only way I can answer your concerns is to stress that the LEAPs strike price relative to the parent stock will generate a delta value accordingly. Thus, the more ITM the LEAP to the stock price, the more closely it will follow that stock price. That is why I tend to only buy deep into the money LEAPs as possible. Again, I only would do a spread when when 1. my nut plus the LEAP strike price is below the parent stock price. 2. I can write spreads (CC) at higher strike prices that exceed my B.E. and not be called out soon. That is another reason why I only write 3 months or more out! Since, I would only write those spreads when I feel the stock is starting to head downward, those CC premies are paying for my downside insurance. The hedge in this case is fantastic! Score another profit hit using the premies to buy sideshow PUTs and you are really racking in some high returns. Again, using your CCer's bucks and not yours. Summary! Stick to quality stocks you would not mind holding for a while. Buy the most intrinsic value as possible when picking up LEAPs. Avoid short term call spreads unless you are watching the stock daily AND you are a very strong technical chart reader!