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: Uncle Frank who wrote (315)	4/29/2001 7:38:21 PM
From: BDR	Respond to of 5205

<<Roth does a pretty good job of describing them in his book, LEAPS.>> McMillan is the definitive text but I find Roth easier to read and understand. <<if one had been consistently selling front month slightly otm cc's on qcom since April 2000, I think they would have retained most of their profits, since those have yielded about 8%/month. >> I did just about what you describe starting in December and kept all the premiums until the April cycle. The problem was that I was keeping premiums of 5+% while the stock (mostly techs) were dropping 20+% a month. It helped some but I still saw my equity shrink dramatically. I would like to have done better, though in the long run it may not matter. I am already back up quite a bit.

To: Uncle Frank who wrote (315)	4/30/2001 10:25:46 AM
From: Getch	Read Replies (1) \| Respond to of 5205

>>Hmm, if one had been consistently selling front month slightly otm cc's on qcom since April 2000, I think they would have retained most of their profits, since those have yielded about 8%/month. Unfortunately I didn't begin until January of this year.<< I agree completely with your comments on the time premium wasting away of options, and that you are in effect selling time with CC's for a darn solid return. I do have a problem with the "random" selection of April 2000 to wish you had started. Why did you not select, say October 1999, to wish you had started covering your stock? In hindsight, stocks were overvalued then, also. Hindsight does not help in making current decisions. You started covering when you were comfortable with the process, and you made a good decision at that point. That is all that you can do. Actually, the true value of this board, and of the CC theory, will be determined when some of our covered stock runs away from us, and the options purchasers make the big money. It will happen. If your mental response to that last paragraph was "so what, I made my 10%" then this is the place to be.