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

To: lucifer who wrote (1266)	6/30/2001 1:20:30 AM
From: Dan Duchardt	Read Replies (1) \| Respond to of 5205

Might be time to buy protective puts. I've read back through a few hundred messages on this thread, and done a search, and I can't recall seeing any mention of puts other than writing naked puts as an alternative to covered calls. If I missed such a discussion, I apologize, but it seems worth noting the last several messages have expressed concern about writing calls too soon and limiting too much upside potential. That suggests that the premiums on the calls are not all that attractive compared to the possible movement of the stock. If the call premiums are not very high, then put premiums are not all that high either. It is worth keeping an eye on the puts as a way of locking in recent gains w/o limiting the upside potential. With any luck, the stocks will continue to rise to the point where you can sell a higher strike call for more than you paid for a put instead of settling for a smaller call premium or a low strike call now. In the long run you might be better off. I just did this with DELL in the last several days. I bought DELL and then AUG27.5 puts a few days later for a net cost of $27.50. I could have taken a small profit or sold calls on DELL instead, but I figure DELL is about to either break resistance and go a lot higher, or it could get beaten back down. If it goes above 27.50 I can capture the whole move and write calls or sell when it tops. If it tumbles I break even, or maybe even take the profit on the pust and hold on for the eventual rebound with or w/o covering calls. Dan