Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Uncle Frank who wrote (893)	6/4/2001 12:17:28 AM
From: adairm	Read Replies (2) \| Respond to of 5205

Indeed, UF, some of the stocks that were recommended and followed closely on the Porch had extremely high risk, and were subject to extreme capital devaluation. In fact, even our beloved gorillas have dropped considerably from their highs. Who'd have thought CSCO would fall from the 80's to where it is today? I still plan on keeping my LTB&H portfolio of kings and gorillas for capital appreciation. My CC portfolio will be designed to provide income. I am fortunate in that it will not be my sole source of income as I also have a healthy residential real estate portfolio. (When friends ask me "How's the market?", I reply, "Thank goodness for real estate!" <g> Generally speaking, I plan to write CCs on the same stocks in my LTBH portfolio. These are not generally the high Call premium payers. I'm shooting for about 2% in call premiums. The aggressive guys look for 5% or more. (I used to be in that group.) About your comment that you find CCs high stress, under your circumstances, you are creating stress for yourself. On the one hand, you want your stock to go up. But if it does, you'll get called out, and you don't want that! So, you want the call to expire worthless, or decline in value to the point where you can buy it back cheap. But that means that your underlying stock has not appreciated or has declined in value! I know, I've been there. That's why I'm setting up a totally new account to do buy/writes for income.