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

To: tomjoe2 who wrote (1493)	7/14/2001 8:07:16 PM
From: alanrs	Read Replies (3) \| Respond to of 5205

Can't respond to the book questions, not having read any on options, but my personal opinion is that posts about other options strategies are welcome. My impression is that the thread title, in addition to being catchy, is meant to imply the journey into options land by relatively unsophisticated investors. Covered calls seems to be one of the most conservative approaches and various posters had been dabbeling in them when the thread started. As always, JMO, but I have yet to see the content police called in any form. I did end up selling 2 QCOM calls Friday, so I am back to 6 contracts out. I got 5.42 each for the Jan 03 140's. I have sold this one before and is back to my original strategy of selling calls against my most expensive shares at a strike well above cost, mostly ignoring the time element. Previously sold for 6.52 and bought back for 3.97 between 5/3 and 6/13. All in the IRA. A low risk dividend, with trading possibilities thrown in. Regarding puts, I was thinking of selling the following: 2 NTAP Jan 03 10's @3.70 1 SEBL Jan 03 25 @4.50 1 QCOM Jan 03 50 @10.20 Knowing very little about puts, I have no feel for the merit of this plan, but feel that I would most likely be willing to buy those stocks at those prices, and that 18 months will give me ample opportunity to get a starting point of understanding and maybe chances to trade. I will be obligating myself to keep $9,500 in cash for 18 months (not really, I know, but under my own rules for now I would), for which I will be recieving roughly $2200 now, so my total investment is $7300. When I put the whole thing into a word proposition, I don't find any negatives I am unwilling to risk, and a fairly decent return, especially for a learning experience. Any opinions about this fairly clumsy, unsophisticated first take? TIA ARS

To: tomjoe2 who wrote (1493)	7/16/2001 11:09:04 AM
From: FaultLine	Respond to of 5205

tomjoe2, Good morning. Let's see if we can clear the decks a bit. I started reading through the posts from #1, but you all have been more prolific than you give yourselves credit for. And it is amazing how much is date sensitive. Yes indeed. I've experienced exactly the same frustration when the discussion makes little sense without a running knowledge of the currently referenced stock price. I personally have tried to make it easier for people to follow along, without running to check the price, by always mentioning the relevant current quotes. I do think, however, that we have had a number of interesting general discussions about strategy , cautions, tax matters, etc. and those hold up well (after you manage to locate them). Books: I've gotten what little I know from websites and chatting with others. I see you have McMillan's "Options as Strategic Investment" listed as a key reference. Why that as opposed to his other book "McMillan on Options"? What do people like about one over the other? I started out with a First Edition copy back in 1981, recently moved to the Third Edition, and have never bought his newer book so I simply plead familiarity as one reason. I've used the Third Ed. in my discussions because most everyone has a copy and I can actually reference specific figures and pages which is very convenient. Please, we'd love to hear your opinions of other reference books -- have at it. Also, are there opinions on the following: Sheldon Natenberg's "Option Volatility and Pricing," George Fontanills "The Options Course" and the Options Institute's "Options: Essential Concepts and Trading Concepts"? My options trading is very simple (minded) and "Mac" has covered my needs so far. I've not read any of those but perhaps others have. Probability calculators: what calculators are people using and what data source are you using for things like volatility? Haven't used/needed the calculators -- see the header for the VIX and VXN reference some of us use. It appears the site started with people looking to write calls on their QCOM and SEBL holdings. And the talk seems to focus on those, plus a couple others, such as NTAP. Exactly correct. We are interested in what we call the G&K-type companies. We wanted to move the several ongoing, relatively simple covered call discussions on those boards to a single place where Birds of a Feather could Flock together. We figured there might be Strength in Numbers. The header pretty much Sums it Up (we like homilies too..). That means people seem to focus on OTM calls. Are people here interested also in ITM calls and on other things or would that windup being mostly OT. I like buy/write strategies and I will go ITM on these more often than not. This is not OT so have at it. Although the discussions do briefly touch on put or put/call strategies, the thread's focus has been straightforward cc discussions for the large part. An example, BEAS at 25.5, Sept20 last bid 7.30, breakeven 18.21. (BEAS may not be the best example as it has been breaking down lately, and is one of the high priced fliers still out there, though back in April the low was 20). VSGN has been trading in a range between mid-60's and 48 or so, closed Friday at 54.48, just below the 50 day average. DITM Sept40 bid at 17.00. Or is that too DITM? VRSN offers some interesting possibilities. Or if people prefer to stay one month out, some interesting low priced cc's: AVNX closed at 7.56, Aug7.5 is 1.1, stock shows support around 6.90. RMBS just got its earnings out of the way, and appears to have survived for the moment. RMBS @9.85, Aug10 1.1. Several (most?) of us really only trade in companies that we 've monitored for a long time (years). We feel as though we "know" how these companies will react to news and other market forces. This is a conservative strategy -- something welcomed around here by the old farts who don't like surprises<g>. I hold RMBS but the premiums have been so low it's hardly been worth the trouble to write. Finally, looks like high call premiums on two that have had wild rides, AVIR and OPWV. OPWV has throw in some candlesticks that suggest some indecision, possibly that selling pressure easing up. stock @ 21.76, Aug20 bid @4.30. AVIR @ 47.44, Aug45 @8.80, Aug50 @ 6.5. ...not in my realm of operation. Thanks for your questions and observations. I hope my answers, such as they were, are useful. Best regards, --dfl "wild rides" -- Ha! My heart can't take it....