Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: FaultLine who wrote (171)	4/23/2001 8:53:29 AM
From: tekboy	Respond to of 5205

I read it and liked it, and had actually been thinking of something similar. The distinction I was going to use was between CC as a strategy and CC as a tactic--that is, writing CC's continually, trying to derive a constant small stream of income off the side of one's LTB&H portfolio, and writing them because you think a particular trade is likely to pay off in a particular time frame. Sort of corresponds to your two categories. One thing I'd like to hear more about is what the ideal circumstances are for the two types of CC writing to pay off well. I mean, with LTB&H, your stuff just sits there and at the end of the day you pocket or lose the difference between your start point and end point. This strategy works best if there is a nice rise eventually between point A and B. With regular options, you're more into short-term gambling, profiting hugely if you guess right about where a stock is going to go next (and losing if you're wrong about that). If regular options increase volatility, however, writing CC's seems to have the opposite effect, acting as some kind of insurance if the underlying drops and capping the gains on the upside if it rises. So--is this correct, and if so, what are the conditions/expectations under which such a strategy would be the wisest choice? dtb

To: FaultLine who wrote (171)	4/23/2001 3:32:00 PM
From: JohnM	Read Replies (1) \| Respond to of 5205

I observe at least two distinctly different styles of using cc's. I discuss these ideas ad nauseam below for other beginners like me. Heellooo out there... As a former professor I get very suspicious when all I hear is silence. - Did anyone even read this post? - Did I stupify you with my dummy-ness? - Does it read like FORTRAN As A Foreign Language? - Am I missing Spring Break? --dfl@#4worksforme.com Yep, read it, printed it, and filed it. Understood about half of it but getting better. I'm building the file for later next month when I will have more time to work on all this. Ordered MacMillan from Amazon. Should be here today. A quick question. Does anyone have any views about Harvey Friedentag's Stocks for Options Trading? It was recommended on another thread but I have yet to read it. Great timing for the thread. I had begun planning to spend some time on covered calls. John