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

To: Uncle Frank who wrote (215)	4/25/2001 12:30:16 AM
From: BDR	Read Replies (2) \| Respond to of 5205

<<indicating it was the superior approach even though less money was returned.>> It was the superior approach even though less money was returned because you had yet even less money at risk in the net position. I think we could go round and round on this for days. (g) If you are more comfortable with your approach, stick with it, but I think your approach recognizes the limited profit potential of covered calls without giving adequate credit for the reduction of risk.

To: Uncle Frank who wrote (215)	4/30/2001 8:12:59 PM
From: Brian Sullivan	Read Replies (2) \| Respond to of 5205

If I had not written calls, the return for the contract period would have been (48-35)/35 = 37.1% Writing calls, my return was (40-35+10)/35 = 28.5% Using this method, it is clear that I would have done better by not selling the calls You made an error in computing your return here: (48-35)/35 = 13/35 = 37.1% (40-35+10)/35 = 15/35 = 42.9% The simple way to look at it is to take the 10 dollars option permium and add it to the strike price, 40+10 is 50 Thus unless the stock exceeds 50 at expiration you come out ahead by writing the covered call.