Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: BDR who wrote (3208)	1/2/2002 10:25:20 PM
From: PoetTrader	Respond to of 5205

Dear Dale... Thinks for such an inciteful post. I understand what you mean about having twice as long for HAL to recover. After today's action it might not be a bad idea at that. I think it is indicative of what may well happen -- a market that can't quite get off the ground. Everyone says there is a recovery but no one quite feels it yet. So going for the 04's is probably a good plan. re; the other comments: "Explain to your Fidelity rep that you are creating a calendar spread (actually a debit diagonal calendar spread is, I believe, the correct terminology). If he doesn't know what a calendar spread is then ask to speak to someone who does. You are not writing naked calls because you are protecting yourself with a long call position at a lower strike price. The long calls happen to be called LEAPS but that shouldn't make a difference. The risks and the margin requirements are no where near the same as they for a naked short call position. I would, under certain circumstances, consider either buying back the short calls or letting them expire, leaving me with the long LEAPS, but I would not sell the LEAPS without also closing the short calls. If I did the latter, then I would really be naked the short calls and that is something I would want to avoid at all cost. Fidelity just doesn't seem to be attuned to options other than covered calls. I think you can sell puts and calls using their PowerStreet trading software without being long the stock, but that doesn't run on my Mac. Even with PowerStreet you can't, I think, enter an order like we are talking about as a spread (buy ABC LEAPS and sell ABC calls for a net debit of $XXX)." Actually you can do spreads. I have done many when I have rolled up and out -- as well as doing some buy/writes. If you are in PowerStreet Pro and trade right off the option chart the option chart opens to the right and then the order table opens to the left of that. On the right hand corner (of that left hand table) is "select action" and that lets you pull down to execute a spread, straddle and buy write. You have to be approved for level 4 or 5 I think to get that screen. When you sell uncovered calls, it doesn't show up on your order screen however unless they feel. So that's somewhat of a pain. Thanks so much for your feedback. I'll let you know how my HAL experiment goes. If it falls further tomorrow I plan to look at 04's and then call fidelity and talk to them about selling cc's. The first guy I spoke to didn't seem to even know what I was talking about, so you're probably correct. All Best. PoetTrader