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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 (345)	4/30/2001 9:47:20 PM
From: Brian Sullivan	Respond to of 5205

I guess that I would use constant cost. Using cost reduction seems wrong unless your goal is to exaggerate your gains and corespondingly your taxes owed. You can see why the IRS requires you to use cost reduction. Basically if you are trying to write calls that return 6% per month, then assuming that you reinvest this extra return each month you can compute a compound rate of return. Using the rule of 72 you could expect to see your assets double in 12 months at 6% per month. Typically you'll have a bunch of different rates of return each month, so you'll have to use a spreadsheet to calculate the annual rate of return.