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

To: Dr. Id who wrote (1698)	7/31/2001 3:54:55 PM
From: Alias Shrugged	Read Replies (1) \| Respond to of 5205

Doc: <<<...in that I sell a longer term call at say 5, collect 5k in my account, and then plan to buy it back at 3, to make a 2k profit. However, it seems that I might be reluctant to add 3k to my account to make the purchase, and be tempted to hold longer with the hope of getting a better price to buy back. In other words, a greater cushion, but also more room for questionable judgment and greed to enter in...>>> I try to create a large price and time window where I will take no action. Say I buy QQQ at 42 and sell Jan 03 40 calls for 12. On the upside, I would probably close out the position if qqq hit 60, or maybe buy some puts if qqq rallied to 50 or higher and put in what appeared to be an IT top. On the downside, I would probably do nothing until qqq dropped to 35 or lower. i would buy back the calls maybe if QQQ dropped and seemed to have put in an IT bottom. So, there is a 15 point spread (35 to 50) where I will do nothing. The key decision is if QQQ is heading south big time. When do I admit that QQQ has not set a long term bottom at 35 and close out the position for a loss.