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

To: FaultLine who wrote (646)	5/18/2001 4:49:48 PM
From: J F Allen	Read Replies (1) \| Respond to of 5205

This post is a follow up to my May 10th post #526. Please remember this applies to non-taxable accounts. April 18th sold INTC calls with 35 strike.---expired sold JDSU calls with 30 strike.---expired sold TXN calls with 40 strike.---expired sold QCOM calls with 70 and 75 strikes. ---expired sold EMC calls with 40 strike. May 18th buy to close gave back 20% of premium received. sold CSCO calls with 20 stride. May 18th buy to close gave back 15% OF premium received. Sold CREE may 25's when it was at 19. Cree closed today @$34 + This illustrates the real downside of the covered call strategy.I locked in a gain of $6 per share plus my call premium $1. I gave up the shares and lost out on a $9 gain. If you sell covered calls this will happen to you. I will probably buy back the CREE as I still like the stock, However I will have to come up with an additional $9 per share. I keep high cash balances so I will be able to do so however had it had a parabolic rise (QCOM) I may not have been able to. Cree was a mistake. I should not have sold for such a small premium $1 and I should have run a calculator to compare the implied and historical vol.s and I did not. (LAZY -SLOPPY). The good side of this happening is that I am forced to really look at CREE again since I intend to rebuy and I will review in detail the fundamentals and other critical criteria i.e. law suit status, earnings date, news, etc.