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

To: JohnM who wrote (1311)	7/4/2001 12:11:46 PM
From: Dr. Id	Read Replies (1) \| Respond to of 5205

It is possible that QCOM is heading toward a higher trading range. The problem, however, is that there is no way to know where the market is going and how it will affect the stock. In May, I sold NTAP covered calls at a 15 strike (not my best move). It then proceeded to move into the high 20's, and seemed to be in a new trading range between about 23 and 29. Right before expiration, it dipped to about 23 or so, and I bought my calls back (at a pretty large loss). The stock then immediately went to 27 and I felt pretty smart. Then the market turned down again and the stock went down to around 11. I didn't feel so smart anymore... I'm not saying that this will happen with QCOM. But it could... (which is why this stuff isn't easy!) In retrospect, the best thing would have been to let it be called away and then buy back later. However, if I had to do it over again (and without the benefit of such foresight), I'd probably roll forward several months to a higher strike price, which would give me more time to see what happens with the market, as well as a greater return should it run up and I get called away (It would have been less painful to sell NTAP at 25 in Oct, than at 15 in May). At a longer and higher strike, I would have been able to buy the NTAP calls back at much less when the stock tanked. Dr.Id@mucheasierinretrospect.pov