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

To: Jeffrey Beckman who wrote (3583)	3/30/2002 4:46:25 PM
From: FaultLine	Read Replies (1) \| Respond to of 5205

Hello Jeffrey, I think the beauty of buy/write is that all your outcomes are predictable -- you may not know which one will occur but if you are OK with the several possibilities it's simple and conservative. I like to Keep It Simple Stupid though. Say, I buy/write NTAP at 20. Most of you would sell the 25's, but I'd probably go for the 20's, two months out, say $3premium (off the top of my head). The next week, the thing runs to 25 and still holds 1.6 premium. Do I hold, unravel it all, or buy more stock at the top to keep from killing myself (g) I say, do the buy/write, bank the $3 premium and forget about it until the expiration. If you get called or it stays the same, you make about 15% on your money. Break even down at $17 -- below that, well that's life. :o) No muss, no fuss, no grief. At expiration, evaluate your status and probably just do it again with the stock you have retained or with a new block purchased with the previous proceeds. Or, if things are really turning sour...time to sit on your hands awhile ( or play the put game ?). --dfl

To: Jeffrey Beckman who wrote (3583)	3/31/2002 5:02:33 PM
From: Mannie	Respond to of 5205

Hi Jeffrey, I might suggest expanding beyond tech stocks, when looking for buy/write opportunities, as the volatility of the techs can blow away the assumptions one tends to make when entering a buy/write. I know the premiums in the techs look tasty, but it's what you end up with that counts. Tech valuations are still very high. I have posted before that I have using the oil sector lately, returning about 5% a month. Good luck, Scott

To: Jeffrey Beckman who wrote (3583)	3/31/2002 8:59:17 PM
From: Victoria Walley	Read Replies (1) \| Respond to of 5205

Ditto what Scott said... you have to adopt a different attitude to be successful at CC writing. You can't be LTBH and a CC writer on the same stock at the same time. If you are going to worry about a stock running away from you (in this market?) and still want to do CCs, then only write against half your position. Let the stock be assigned if it comes to it. You can always establish a new position later. Put writing requires the same discipline, you must be ready to accept assignment or take corrective action if your play doesn't go as you originally thought. Set up your game plan in advance, including what you will do if the stock rises above (or falls below) a certain point. That will take all the emotion out of your decisions. And it doesn't have to be a tech stock!