To: minorejoy2000 who wrote (29636 ) 1/22/2001 9:27:26 AM From: im a survivor Respond to Whether or not you write, buy back and write again, depends on several factors......your strategy, the stocks volatility and the general market conditions. A stock like extr with it's big swings, allows for several Opp's to write, buy back, write, buy back and etc.......Not all have enough volatility to allow this to happen. Additionally, as Jill pointed out, it is not stress free investing, as you must pretty much keep up with market daily. The less stress free thing is to simply buy and write, then wait til expiry and figure out what to do then based again on your individual strategy, market conditions and etc......as far as whether to write ITM or OTM CC's, Jill brings up another good point. Typically, if you are buying in the hopes of having your stock called, you would write atm or slighly itm calls versus otm calls. The further OTM, the less likely it will be called...and if you want it to be called....well you get the point. On the flip side...you may have a stock that you dont really want to sell. You would if it gave a large % gain in that month, but for the most part, you prefer to hold the stock, but make some extra money on it, while having a little downside protection. And hopefully let the calls expire wortheless and then do it all over again. many folks have stocks they have held for awhile and have huge gains, they dont wish to sell the stock...or maybe they just bought the stock and feel there is alot of upside.....in this instance, you write the OTM's which give you a tad bit of downside protection, while a much higher price if it runs and gets called ( or you roll over to next month prior to expiry). In EXTR's case, you can get 10%+ for an OTM call....10% is not too shabby for OTM's.....anyway, there are so many strategies and ways to go about options, I 100% agree with scott and recommend the book he did...it's a great way to get started.....and yes, some paper trading is not a bad idea either.
