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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: FaultLine who wrote (1)	4/19/2001 12:23:25 AM
From: spiral3	Respond to of 5205

err, um, uh, is that a trick question?

To: FaultLine who wrote (1)	4/19/2001 1:11:06 AM
From: Uncle Frank	Read Replies (3) \| Respond to of 5205

That's a great lead post for your new thread, Quaker. >> but probably the most interesting issue is how to unwind the many in-the-money cc's out there in the aftermath of the big, record volume, run-up today. I'm in the same position with my sebl and gmst covered calls, both of which are core positions I intend to maintain. Here's what I've been planning. I'll appreciate any constructive critiques. In my ira, I'll let the stock be called, purchase back all of some portion of the shares on Monday, and sell May cc's at higher strike. In my unsheltered account, I'll play a game of "chicken" with Mr. Market <gg>. I'll wait until Friday afternoon, when virtually all of the cost of the call is intrinsic value, and roll out an up to a level where I can break even on the transaction if possible. >> I have missed out on a goodly fraction of the run-up today because of these cc's but that is the bane of cc's isn't it? Not at all. The psychology of this game is always positive, since you never lose capital. uf

To: FaultLine who wrote (1)	4/19/2001 1:26:51 AM
From: J F Allen	Respond to of 5205

I am basically a LTB&H investor in G&K stocks (if you ignore occasional gambling on market over reactions)who has been writing covered calls primarily in my IRA accounts. If you read McMillan (Options as a Strategic Investment -required for any options user) He will tell you clearly not to try to recover from calls that are deep in the money. I let them be called, then re-evaluate whether I have to own the called stock. If I do, I re-buy as much as I have to own and do a buy write. This does enforce a discipline in that on rapidly rising stocks I am forced to make constant valuation reasonableness decisions. For ease of management I only write out of the money calls in the front month. I felt bad last year when I lost some of my QCOM but not for too long.

To: FaultLine who wrote (1)	4/19/2001 1:35:34 AM
From: cfoe	Read Replies (1) \| Respond to of 5205

Thanks for starting this thread. I am trying to generate some extra income with cc's, but very much fit the description BEGINNER! Have exchanged a couple of PMs with UF seeking his advice, but this thread is a much easier and less burdensome on any individual way of getting needed support and advice. Will post my situation and plans tomorrow AM as I too want to make some moves by or soon after Friday expiration.

To: FaultLine who wrote (1)	4/19/2001 2:02:07 AM
From: BDR	Read Replies (1) \| Respond to of 5205

For Dummies - my kind of thread. I had SEBL April 30's that I had sold for $3.10 and which I bought back for $5.50 on April 16. I thought about rolling out to the May 30 or 35 but decided to just take the loss and step aside. I took smaller losses closing out my CC's on GLW and JDSU. I sold RMBS APR 25 calls for $2.15 and they looked like they were going to expire worthless for sure, but now even that stock is making a run. I still have NTAP APR 15 and AVNX APR 12.5 that I was going to roll out/up this week before Greenspan made his move. Your SEBL 25s show an ask of $9.50. You could roll those out to the May 25s (bid $10.40) for a net $.90 if you thought there was going to be a pull back by then. Or go to the Aug 30s (bid $9.40 net -$0.10). I can't say that either is really attractive. You are facing the same problem I am with my deep ITM positions. I think there might be a sell off tomorrow or the next day so I am waiting to see if the spread widens and will either buy back for a loss, roll up/out, or allow the calls to be exercised depending on what happens and the stock. I have ITM calls on NT and I am going to let someone else have them. Taxes may or may not play a role in your decision. I have significant gains from covered call writing over the last four months so a loss is of some value to me in my taxable accounts. Unfortunately today is one of those days when I would rather be opening new CC positions and not trying to figure out how to extricate myself from existing ones. Proof that I am a Dummy and why I need this thread. Thanks for starting it.

To: FaultLine who wrote (1)	4/19/2001 9:24:00 AM
From: gingersreisse	Respond to of 5205

Thanks for opening this thread. As a generally long term investor who looks for an opportunity to leverage holdings, income from covered calls has been welcome. I've written calls regularly on high volatility stocks I own (BRCD, NTAP, GMST, SEBL, etc). I wrote the SEBL april 35 call / 35 put combo against a few hundred shares in my trading account (about 25% of my SEBL position). Pocketed about $6.50, and expect to have the shares called. Also wrote the August 35 at 8. I bought shares at about 36 in the after market to cover my position. I expect to have all the shares called, the April shares called will give me $5($6.5 premium less comm), the Augusts should give me about $6.50. The shares against which the calls were written were purchased recently, and will be a short term gain, it's nice to have a gain problem again. GSR