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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: Gregory who wrote (12299)	2/1/2000 2:02:00 PM
From: RWS	Respond to of 14162

The answer to your questions is obvious. Buy the book 'Options as a Strategic Investment' by L.G. McMillan before you do anything else. Read the book. Then ask those questions you feel the book is unclear on. Good Reading!! RWS

To: Gregory who wrote (12299)	2/1/2000 3:37:00 PM
From: Dan Duchardt	Respond to of 14162

Gregory, Our thread founder, Herm, has a nice presentation outlining a systematic approach to CCs. coveredcallswins.com You can also learn a lot reading back through some of the messages posted here. SUNW appears to have made a nice bounce off it's 50 day moving average. If the market sustains today's climb, it could easily get back into the $86 range. The higher the stock price, the more premium you will get for selling calls, so if you are confident the price is going up you can wait. If you are nervous about things going down, and really want to protect some profits, writing calls now will give you that protection. There is no one right way to pick a strike price and expiration date. It depends on your risk tolerance, and whether you want to maximize your protection or your profit potential. Since you seem to want to keep your stock, and not risk getting called out, I would suggest you look at strikes somewhat above today's price, but not so far as to reduce the premium too far. Take a look at strikes in the 85 to 95 range over the next few months and see what appeals to you. Calculate the potential gain going forward from here as follows: Nut = today's price - bid price. This is the price the stock has to fall to before you start to lose money. Maximum potential gain = strike price - nut. Then pick the strike and month that suits you. One example: stock is now at 80_3/8; APR85 calls bidding 7_3/8. The nut would be 73, your present value is protected down to that level. The maximum potential gain would be 12 over about 3 months or 16.4% above the net $73 it costs you to hold this position; annualized return 65.75%. If you want a longer term view, consider the 2001JAN 95 or higher, and do the same calculation. This should get you started. Get the presentation to learn about what to do if the stock goes up or down a lot after you write the call. There are also calculators, spreadsheets, etc., available to compare different possibilities. Dan

To: Gregory who wrote (12299)	2/1/2000 11:41:00 PM
From: jebj	Read Replies (1) \| Respond to of 14162

>I am new on this thread. - Greg Greg, you will need a collage education in options to answer all your question - something I have not gotten to as yet but some on this board certainly have. I would have recommended McMillians book on options but have been told that James Bittman's OPTIONS FOR THE STOCK INVESTOR is very good. One thing I can say, NOTHING can be a more boring read than McMillian - a very good sleeping pill! :) And AFTER that, Roth's LEAPS is a must read, IMHO. AND, of course, this board right here will teach you more about options and some good, safe, profitable ways to use them. Start at the beginning for about 1000 posts to get a feel for how it came to be and them spend some time on Herm's web page to finish it off. jb