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

To: Thomas Tam who wrote (3608)	4/4/2002 9:56:52 AM
From: BDR	Respond to of 5205

<<May 10s versus the April 10s . . . 10s vs the 12.5s.>> Choice of time frame: My preferred outcome is for the price to stay about where it is or to rise slightly and get called out of GMST. I am not looking at this primarily as a chance to establish a long term position in GMST at a low cost. The longer time frame provides a greater chance for the price to recover (and more premium). Choice of strike price: The lower the strike the more likely I am to be called, obviously. Selling the April 7.5s would have greatly increased the chance of being called and provided better protection of capital but a much lower return. On the other hand, if I was committed to holding GMST, I would have written the 12.5s. The choice was a compromise that suited my individual comfort level for risk/reward and desire to hold the stock.