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

To: alanrs who wrote (364)	5/1/2001 6:37:13 PM
From: EnricoPalazzo	Respond to of 5205

I always have a problem with valuation and when to sell. Having these shares called away has solved that. There was no internal turmoil about wether to sell or hold on. This is one of my favorite thing about writing options, both covered calls and cash-secured puts. I you don't have much confidence in my ability to time the market. Likewise, I don't have much confidence in anyone else's ability to time the market. So by writing an option, I'm basically betting against some random option buyer's ability to outsmart the market. Plus, I'm getting paid handsomely for the privilege.

To: alanrs who wrote (364)	5/1/2001 7:24:17 PM
From: FaultLine	Respond to of 5205

By concentrating on what my goal was in buying in the first place and mechanically having the process run it's course, I have had the most serene investing experience of my life. Thank you for taking the time to write up this informative post. The relatively stress-free buy/write approach seems to agree with you. I like it too. When I start out by deciding that I must not be assigned, I have to accept the nagging worry that I'll have to chase the stock after an inopportune rise. This is because I've imposed a boundary condition my cc strategy, a condition that raises the risk of the loss of capital. The buy/write strategy completely avoids the forced loss on run-up problem and is sold with the maximum possible at-the-money Time Premium to boot. --fl

To: alanrs who wrote (364)	5/1/2001 7:52:24 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> I believe the TQNT was called away today Just because the market price exceeds the strike price you wrote, it doesn't mean you've been called. Usually that won't occur until expiration. Why do you think you've been assigned? duf

To: alanrs who wrote (364)	5/1/2001 8:28:14 PM
From: BDR	Read Replies (1) \| Respond to of 5205

<<I believe the TQNT was called away today.>> I am having trouble understanding why TQNT would be called away today. TQNT closed at 31.24 and the August 30 call bid is still 7.20. There is still 5.96 of time premium. The person holding the call would do better to sell the call for 7.20 and buy the stock on the open market at 31.24 (net = 31.24-7.20 = 24.04). If they exercise they have to pay out 30 for the stock and lose all the time premium. People do irrational things but normally you are not at risk of being called out until the time premium disappears.