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

To: William who wrote (1656)	7/29/2001 3:12:44 PM
From: LindyBill	Read Replies (4) \| Respond to of 5205

Bill - What is your plan of action? Thank you, William! You are causing me to structure my thoughts on why I am going to write CC's. While floating off Waikiki this morning, I came up with the following assumptions. 1) The stocks I own are the ones I believe will do the best when we get back in a Bull Market. I want to stay in them long term. 2) I don't see a Bull Market for at least a year. 3) I think the Naz will fluctuate in the 1950 to 2300 range over the next year. 4) I want to try to make some money on my holdings during this time. 5) Since my holdings are in an IRA, It does not matter much if they get called away. No tax consequences. 6) I am limited to CC's in an IRA. I can't get fancy. Plus, I would probably screw up if I tried. To take advantage of my assumptions, which, of course, could be dead wrong, I plan to do the following. A) Write 30 day ITM CC's on all of them when I think we are at the end of a rally. B) Rewrite them if they expire at the end of the month, and I believe we are not going up in the next write period. C) Enter a "good till cancelled" order to replace the stock if it gets called away, at the price it got called away at. D) Monitor this activity, and modify it, if it is not successful. I don't see how I can get in too much trouble doing this, on the downside. This strategy will preserve capital just as well as not writing them, if I keep the stocks. My major risk is missing out on a permanent run up in one or all of the stocks, on the upside. My technical question is: Should I should write them ITM, or just OTM? All comments will be appreciated. LindyBill