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

To: adairm who wrote (1074)	6/19/2001 2:35:02 AM
From: tradeyourstocks	Respond to of 5205

I heard you guys are expert option traders by now so I thought I'd come over and learn some new tricks.<g> I don't know if my reasoning is the same as Dr.ld's, but I also think that this is a market to sell puts vs calls. While calls have lost much of their premiums of late, puts have been priced up. My approach is to establish a way out of the money put-call spread for my stock holdings. For example, in the last 12 months I've sold Jan02 $40 puts on QCOM as well as $180-$220 calls for a total of about $15/sh. My goal is purely income oriented. The position is in a taxable account, so I'd rather not be called or assigned. (Actually, at $220 I'd be willing to let a few shares go. <g>) My approach takes patience and only requires a few trades per year. I wait for periods of extreme negativity to sell puts and periods of optimism to sell calls. Sure feels like it's time to sell some puts. MicroE

To: adairm who wrote (1074)	6/19/2001 3:42:56 AM
From: Uncle Frank	Respond to of 5205

>> However, neither naked puts nor covered calls is an effective strategy in a bear market. These strategies work best in flat to mildly bullish markets. I agree about covered calls, but don't understand your logic about shorting puts. It would seem the latter would be appropriate under anything other than bearish conditions. Guys like edamo were creaming it by writing puts in '99. Am I missing something (other than my former net worth)? duf

To: adairm who wrote (1074)	6/19/2001 11:08:31 AM
From: Dr. Id	Read Replies (1) \| Respond to of 5205

Assuming that the writer really is writing for income and not to acquire stock, I'm not sure I quite follow your comment, "This is the market to sell puts, not calls." I am writing for income, but also with the "consolation prize" in mind of picking up a great companies stock at a huge discount should it get put to me. If it's a stock that I'm interested in owning for the long term, it's a strategy that is a win-win (as long as the "purchase price" is a reasonable one...I made the mistake in early 2000 of selling puts on stocks that were quite overpriced...I don't think that that is the case now.)