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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (18375)	4/22/2002 11:34:02 AM
From: rolatzi	Read Replies (1) \| Respond to of 74559

If I may respond with my own strategy, the biggest loss in time premium for an option is the last 30 days. In addition, an covered call must be held for 31 days if you want to sell the option and take a loss on it. I prefer to have the flexibility of selling the call option for a loss than have to have the shares taken away. A reason for selling the call would be if the stock has already been held for close to a year and if I want to be sure to have a long term gain. For these reasons, I buy call options with 5 to 6 weeks of life and put options with about a month left. If the stock makes a quick move and the option loses 75-80% of their value, I will cover it for a profit. If near expiration it is clearly out of the money, I will let it expire. If it goes into the money I will let it be put to me if I still want the stock. Ro