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: adairm who wrote (897)	6/4/2001 12:45:29 AM
From: dday	Read Replies (1) \| Respond to of 5205

Just a comment from a weary but celebratory Keystone Stater predicting the 'Answer" is four to the question of how long it will take to dethrone Aristotle. Keeping in mind my previous comments made regarding my posture that cc writing (in its purest form) is a fixed income strategy designed to enhance income-----with that in mind----, Adairm, I think you are very much on the right track. In fact, I think you are there. (definitely not a dummie-<gg>) I might suggest that upon initiating cc position, that you employ stop loss orders on the equity side. That is, if the stock drops a certain amount- sell it and buy back the call. Due to the delta, the erosion in premium will probably not cover the loss in the underlying but it will help minimize the real enemy of the CC strategy----that is--a massive decline in the underlying stock. One debacle, like the Gstrf that UF described, can undermine an awful lot of successful positions. Regards, Bob

To: adairm who wrote (897)	6/4/2001 1:11:23 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> 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. Actually, I write otm strikes on stock that's in my ira, so I have no worries about triggering taxable events. The stress comes from trying to time sales to produce maximum revenue, and the need for constant attentiveness afterwards so I can take advantage of opportunities to close out the positions early. It's much less stressful to buy and hold based on fundamental analysis. Fewer decisions. duf