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

To: BDR who wrote (411)	5/4/2001 11:02:42 AM
From: Uncle Frank	Read Replies (2) \| Respond to of 5205

>> But, if the NASDAQ continues rising 30% a month, this thread may die because simply holding the stock may be more profitable again. CCs limit upside potential in raging bull markets, and are a useless hedge in free fall bear markets. If the market reverts to either extreme, cc writing is ineffective. But neither of those states are predictable or sustainable, and 95% of the time the market will be up & down with only a mild directional bias. My hypothesis is that a consistent program of writing cc's against core holdings will yield marginally better returns than a pure ltb&h approach over the long run. >> Although I was making money on the calls I sold for the first three months of this year, overall I was losing money. Writing covered calls just meant I was losing it slower than somebody else who didn't. Based on my personal situation, I judge the results much more favorably. I depend on my investments for income, and writing cc's allowed me to generate hard cash during the crash which in turn allowed me to preserve my holdings intact. The true value of the cc program won't be obvious until these core positions recover, but I have no doubt that they will. Well, maybe a teeny doubt or two, but only late at night <gg>. duf