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

To: FaultLine who wrote (457)	5/7/2001 6:04:23 PM
From: alanrs	Read Replies (1) \| Respond to of 5205

I think that buy/write is so easy it is like falling off a log. LTB&H writers have a much tougher problem -- how to get a decent return on their write transactions while never allowing exercise. I typically have shares of various companies at a variety of prices. I will go through the list (on the weekend) and identify shares that I would be willing to have called away. I then go through the options tables to find the premiums at the strike I have decided on, and compare the various amounts of time involved, relative to the premiums. Someone (mathemagician?) pointed out using a "cents per day" analysis so that the various premiums and times can be compared apples to apples. While it is true that closer in options tend to be the most valuable on a per day basis, this is not ALWAYS true. In any case, by doing this with a basket of 6-8 stocks, I can usually come up with one or two with a premium that stands out relative to the others. If I can't, I don't sell anything. If I can, I usually put in a limit order at the high end of the bid-ask range or 5-10% above the ask, depending on how the stock has been acting in the very recent past. I then monitor the remaining possibilities for any price spikes and review the whole thing the next weekend. This has worked for me, although I often have to sell 3 months to get the price/premium I want. This also stops me from selling all the calls I might want to on any given day or week, which recently has worked to my advantage with the market going up. ARS