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

To: NSipraner who wrote (1792)	8/4/2001 5:34:48 PM
From: TShirtPrinter	Read Replies (1) \| Respond to of 5205

Welcome to FL's thread, How many ways can you say "better"? I can only tell you my personal strategy varies depending on the underlying equity. On any stock other than QCOM, I tend to let it ride and try not to buy back. As Uncle Frank coined us, I happen to be a QTIP (very long QCOM and almost fanatical about it's future success), therefore I keep that very close if I can. In other words, front month, on a bounce, and when it drops 50% from where I sold it, I cover. Tony

To: NSipraner who wrote (1792)	8/4/2001 7:11:10 PM
From: Dan Duchardt	Respond to of 5205

Which strategy is "better" or shows more consistent profits? The one that fits the behavior of the market. If you knew in advance where the market would be at the end of every month and how it would get there, you would know which strategy is better. If I knew that I would swap long calls for long puts at every top, and swap the other way at every bottom, margined to the max. Without knowing that, the strategy needs to best fit the stock. IMHO, for low volatility stocks, writing near term calls and letting them expire is better. For high volatility stocks, writing farther out to capture higher premiums, and buying back if the stock drops significantly is better. If it runs up well before expiration, buying puts to protect profits and create opportunity to profit from a retrace is often a good idea. You seem content to be called out on some of your holdings and not inclined to be paying very close attention to what is happening between selling and expiration. If you are confident that your underlying stocks are not going to collapse, and you don't regret a stock getting away from you to the upside, you probably cannot do "better" than what you are doing. I'm curious how you select the months and strikes to write, and what you do with stocks that are not called out because of a substantial drop in value. Do you ever close a position that is going bad, or implement "repair" strategies? Do you write again at every expiration? Dan

To: NSipraner who wrote (1792)	8/5/2001 6:29:22 AM
From: JGoren	Read Replies (1) \| Respond to of 5205

Some folks are bigger traders than I. Some folks sell further out in time, with the intent to buy back at a lower cost and resell closer in-at a lower strike price the market fluctuates; they usually sell further out because they can sell at a higher strike price and for a larger premium and have more time to take advantage of market fluctuations. Some sell closer to ITM and they are more liable to take advantage of mid-month dips to exit and maybe resell. For me, I perceive less risk of getting called by selling less time. I figure I have a better feel of the market short-term. Because I want to keep my stock, I sell well OTM, usually one month out with the intent to let them expire worthless. If Qcom dips and I think it may go lower, I may buy back and resell at a lower strike price. I may buy back before expiration in order to sell the next month out before this month expires, figuring I get a better price than waiting until the first few days of the week following expiration. Sometimes, like last month and this month, I wait to sell until Qcom seems to have peaked and patiently waited to to sell until about 2 weeks into the month. It really depends on market conditions. But, for me, the basic strategy is to sell OTM and let them expire, but it changes somewhat based on how Qcom is performing in the market. With stocks other than Qcom, that are not as volatile, I sell and let them expire; with those, I don't have enough shares to make it worthwhile commissionwise to do much trading in them. I just pocket a few hundred bucks and don't watch that carefully. It's only Qcom and Amgen that I have enough shares to watch carefully and big unrealized LT gains to worry about avoiding exercise.