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

To: EnricoPalazzo who wrote (212)	4/24/2001 4:25:33 PM
From: Uncle Frank	Read Replies (2) \| Respond to of 5205

>> I'm looking into the idea of writing OTM covered calls and OTM covered puts. Fwiw, there's no such thing as a "covered put". Perhaps you are addressing the fact that you have cash or margin available to buy the stock if it is put to you. In that sense, all short put transactions are covered due to brokerage requirements that you have sufficient margin to enter into them. duf

To: EnricoPalazzo who wrote (212)	4/24/2001 5:03:27 PM
From: Mike Buckley	Respond to of 5205

Ethan, The fact is, I can enter into a transaction today where I pay $10... You're right. However, the flaw in your thesis is that you are applying it to two transactions, not one. From a practical point (to HELL with nitpickers! :), consolidating the first two transactions into one net transaction makes perfect sense but only in the case of the buy/write tactic. Maybe I missed something, but I thought the discussion was trying to arrive at one calculation that applied to all covered calls regardless of when the stock was purchased. --Mike Buckley

To: EnricoPalazzo who wrote (212)	4/25/2001 12:51:27 AM
From: BDR	Read Replies (1) \| Respond to of 5205

<< covered puts>> The only time a put sale is covered is when the seller is also long a corresponding put with the same or higher strike, that is, a put spread (McMillan, p. 281). I can't help you much with spreads. I have never done them. For margin purposes selling a put when you are also short the stock is also considered a covered put. I have done this to pick up some cash while waiting what seemed like forever for the stock of a sick company (ZONA) to die but otherwise have limited experience.

To: EnricoPalazzo who wrote (212)	4/29/2001 10:06:22 AM
From: jghutchison	Read Replies (1) \| Respond to of 5205

Mark, Buying options on speculation of market movement is mostly a suckers gambit. Fully 80% of those options expire worthless. I believe I mentioned that tidbit previously. So, logic suggests being a seller, rather than a buyer of option premium. Option time premium accelerates toward expiry, so you want to sell close in options, and buy far out options...like leaps. Read McMillan's books on the topic. Go to his web site. Option trading is another world. In order to be successful and win, you have to know the rules of the game. Jack