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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (2114)	6/20/2001 8:15:30 PM
From: PoetTrader	Read Replies (1) \| Respond to of 2241

Dan "The grim truth about CCs, IMHO, is that when a stock takes a nasty tumble a CC can be worse than outright stock ownership. If you have the discipline to exit a bad CC position, it reduces your loss compared to outright stock, but if you think you are in the stock long term and are going to write CCs every month you can easily get "trapped". With a net investment of only 54.50 (writing the JUL60 calls), it is not very comfortable to be thinking in terms of writing calls with strikes below 55 in the coming months, since being called out means taking a loss. But with stock prices in the 30s, even strike 55 calls have too small a premium to be worth selling. The higher strikes have no value." Boy isn't that the truth. But what if you wanted to gamble a little and wrote Aug45's...yes, it's below your "in" price, but there's probably also a good chance that Cien won't hit 45 anytime soon, and with time decay you could buy it up and close it out two weeks into August...and then continue to do that until cien comes back? Aren't you just making more money and reducing your cost basis? If it is a stock you plan to hold for YEARS, then isn't this strategy okay? By the way, thank you so much for your incredible response...I learned a hell of a lot from it. PoetTrader