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

To: FaultLine who wrote (1973)	8/13/2001 10:53:30 PM
From: rydad	Read Replies (3) \| Respond to of 5205

I was examining the buy-write strategy just now. I was trying to establish parameters to apply to this strategy as I would need for my personal situation. One requirement is to offer a safe investment that will return greater than the paltry 4% for a CD at the bank. This was what I was thinking: 1. Need to buy a good stable stock, with low downside risk. 2. Write call ATM or near OTM 3. Collect the money and forget about it. I was trying to think of certain stocks that are solid established companies that I could be confident they wouldn't drop too much more. <Big if!> Off the top of my head, I thought of these companies. Company/ Closing Pr/ ATM Call/ Premium/ monthly return 1. MSFT 65.83 / Sept 65 / $3.4 / 5.2%/mo 2. EMC 17.48 / Sept 17.5 / $1.35 / 7.7 3. INTC 30.56 / Sept 30 / $2.05 / 6.8 4. AMAT 44.84 / Sept 45 / $3.4 / 7.5 5. QCOM 66.6 / Sept 65 / $5.8 / 8.9 (maybe?) Any other suggestions for similar types of steady stocks? Keep in mind, this is a simple Buy-Write. I would expect to get called in order to get the higher guaranteed return. This would significantly beat the CD rates available. The big if is what is the downside? Remember 4% per year is only .003 return per month. At least the premiums would cover me on the downside. All I want to do is get a better return, but safely. Any comments? (Please feel free to comment) rydad <kindofthinkingoutloud>