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

To: Stock Farmer who wrote (1129)	6/20/2001 5:16:11 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> Isn't the difference merely the psychology? I don't think so; I see the objects as very different. The buy-write or put writer need not have a particular vision about the stock underlying their trades. They tend to rely on ta and chart reading as their decision making tools. They are generally adverse to long term stock ownership. Their objective is to capture premiums. Lltb&h cc writers aim for long term equity participation in issues that they feel have a competitive advantage based on fundamentals. Their objective is to own the stock in the expectation that the enterprise will flourish, and premiums gianed from cc's are just gravy. It's basically the difference between traders and investors. Both want to make money, but their approaches differ in technique, objective, and psychology. jmho, duf

To: Stock Farmer who wrote (1129)	6/20/2001 5:17:06 PM
From: FaultLine	Read Replies (1) \| Respond to of 5205

<i.For identical positions, the timing is identical and capital risk is identical too. If one looks at the total position. Don't think so, John. The exit strategy makes all the difference here. The LTB&H will not allow the shares to be called, being willing to suffer a loss in the buy-to-close process. The Buy/Write seller, however, does not mind in the least if the stock is called (and may actually hope for it) and therefore cannot ever suffer any buy-back losses. Naturally, losses due to a stock drop are identical. --dfl