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

To: Uncle Frank who wrote (1865)	8/9/2001 8:21:29 PM
From: PAL	Read Replies (2) \| Respond to of 5205

While my sole interest is in covered calls, the buy-write process is close enough to be of interest. I would think it unfortunate, however, if this thread became yet another general options site. If my bringing up the subject of covered short strangle gives you the impression that this thread has become a casino, then I plead guilty. However, your impression is completely incorrect. Trading options in the purest sense does resemble a casino. Only the big boys can win this game. Even they, the hedge funds managed no less than two Nobel Prize winners in economics have shown catastrophic loses. Shorting, naked calls/puts, spread and the like have more of a casino activitities. Options as you already know can be used as a protection against wild fluctuation. From that standpoint it is a conservative approach, an insurance againts catastrophy. You said "my sole interest is in covered calls" which gives me the impression that you don't consider that as a risky approach. Well, if you do a covered call with no caveat because of "safe strategy" I can show you disastrous results from a covered call around 1 1/2 years ago. Covered calls should be done in an environment where the market is neutral to slightly bearish and should have an exit point to avoid large losses. If you read my posts and the subsequent responses by Rydad, I hope that you can conclude that "covered short strangle" is more conservative than just covered call. The spread is considerably wider before a loss is suffered. No one knows where this market is going the next few months. Everyday we hear from so-called experts that the market will go north, yet the next guest on the show states the opposite. If a person limits his/herself into covered call he/she must know the direction of the market. I for one is not that smart to know where the market is going. Using the "CSS", it does not matter. It covers in either direction. I hope you can see that the extension of covered call gives a person more protection to the investment, hence, an even more conservative approach. I do not day trade options. Good Luck Paul

To: Uncle Frank who wrote (1865)	8/9/2001 10:49:49 PM
From: Dan Duchardt	Read Replies (4) \| Respond to of 5205

Uncle Frank, I appreciate your concern about the direction the thread is taking. While my own interest in options is considerably broader than covered calls, you are quite right that we need not discuss all conceivable options strategies on a thread dedicated to covered calls. There is a lot to be said for keeping the thread focused on one strategy, and doing it well. I hope I have not wandered too far afield in my contributions here. My intent has not been to convince anyone that CCs are not appropriate, given the right circumstances, but to challenge people to think about whether their circumstances, or their trading patterns are getting the most from the strategy. Perhaps enough has been said at this point and it would be best to delve deeper into the branch-off topics in another setting. Before I posted on this thread, I made it a habit to monitor "Options for Newbies -(Help Me Obi-Wan-Kenobe)" at Subject 15384 to be of any help I could to anyone interested in options. I was invited by someone there to come over here and contribute where I could. Funny thing is, that person doesn't seem to be around here anymore. I thought that might be a good place to move the discussion, but it's probably best to keep that thread dedicated to the basics. I will continue to monitor that thread and will be happy to answer any questions there. In addition, my little contribution to help you and others in the core group who started this thread keep things on the straight and narrow is to start a new thread and suggest that people who are interested in exploring some of the broader topics move the discussion over there. siliconinvestor.com Dan