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

To: Mike Buckley who wrote (466)	5/7/2001 10:02:47 PM
From: FaultLine	Respond to of 5205

perhaps the best reason to write covered calles was because it forced the prudent CC writer to keep a certain amount of cash under the mattress. LOL I can't decide if you are the little guy in white on my right shoulder, or the one in red on my left...but between the two of you, you're keeping us honest. :o) --ken/fl

To: Mike Buckley who wrote (466)	5/8/2001 12:20:41 AM
From: Dr. Id	Read Replies (2) \| Respond to of 5205

That being the case, tying up the cash should be factored into the equation that determines the returns one gains when writing CCs. I don't remember seeing anyone accounting for the cash earning money market rates that could instead be deployed in other investments. Of course, considering what happened in the last fifteen months, perhaps the best reason to write covered calles was because it forced the prudent CC writer to keep a certain amount of cash under the mattress. --Mike Buckley I'm not sure what your reasoning is here. Writing covered calls doesn't tie up any cash. The proceeds that you get from the call sale can be used in any way you like. If you write puts, you have to keep a certain amount of cash (or buying power) in your account. Selling covered calls requires no tieing up of capital. Dr.Id@orareyoutalkingaboutsomethingelse.com p.s. I just re-read Faultline's post that you were responding to...never mind! :-) I guess that's why it's not a good strategy to purchase new shares to cover a called position...