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

To: Dan Duchardt who wrote (2194)	8/23/2001 7:01:52 AM
From: Road Walker	Respond to of 5205

Dale and Dan, Thanks for the excellent explanations. I can now visualize the short put repair strategy. John

To: Dan Duchardt who wrote (2194)	8/23/2001 7:12:35 AM
From: BDR	Respond to of 5205

Looking back over my experience of the last year I can see that there would have been an advantage to selling puts compared to writing covered calls (for me, at least) even though they are considered equivalent positions. It has to do with the psychology of investing. Both strategies are best used in a slightly uptrending market. The past year, obviously, has not been that kind of a market. I was writing covered calls and congratulating myself on how smart I was as those calls repeatedly expired worthless. The illusion of profitability allowed me to ignore or minimize the erosion of my capital base. Had I been writing puts instead I might have been forced to confront what was happening to my portfolio more directly. I might have gone more to cash earlier or taken other steps to preserve capital. Slow learners like me need all the feedback we can get on our decisions. When you are wrong with short puts, you know it right away.