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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (37111)	12/3/2000 11:07:10 PM
From: rocklobster	Read Replies (1) \| Respond to of 42787

I'm assuming you're being sarcastic... obviously if your stock drops ninety percent it doesnt matter much if you made 120% selling calls... it was still a stupid move.. My point was just that there are many more ways that these companies can keep the smoke and mirrors investment gains rolling in regardless of short term moves in the stock market.. Many people who do covered call writing make in excess of 100% annualized gains though... I'm not saying they can do this year in and year out, this is definitely not a good strategy in a bear market, as you will get killed by the depreciation of your share value.. however in a secular bull market such as we have had for most of the past 10 years, this strategy has been a huge money maker.. much more so than simply buying and holding a stock... Your only real risk in an uptrend is that your stock will appreciate beyond the strike price of the calls you sold and you will be left with cash instead... hardly a very adverse affect.. However. even in a down trending bear market, this strategy begins to make much more sense than a simple buy and hold strategy, because each month you sell calls, you are reducing your cost basis in the underlying position.. It is not too difficult to reduce your cost basis to zero over time using a strategy like this. rok