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

To: Gary E who wrote (3807)	6/13/2002 5:45:27 PM
From: BDR	Read Replies (1) \| Respond to of 5205

Well, it is a bit hard to write covered calls for a net profit in a bear market. Some people here are not looking for short term profits but for additional income from their core position (e.g. Mike Buckley). I am looking for short term profits but the market has turned down and that doesn't look like that will happen with the June expirations. May was a lot better. "If anyone has a real time exapmle's ...speak up.... Post what stock you are buying and the call you are selling....maybe we will all learn something..."" Message 17283002 GMST bought at 9.50, sold May 10 calls at 1.25 Message 17486085 Some were called away at 10 for a 17% gain in 5 and 1/2 weeks. Not every trade is a loss, just as not every trade is a gain. The profitable ones can be very profitable and the losses, with enough time, will become either less of a loss or even a gain. Be patient. Definitely don't believe anybody who tells you covered calls or anything else is the key to wealth.

To: Gary E who wrote (3807)	6/13/2002 6:35:05 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> My only point here is that so many of the supposed xperts that advocate selling calls on stock you own have NEVER shown me an example where they have come out ahead... Here's an example. I bought qcom for $17 in April, 1999. I began writing calls against it on a repetitive basis at the beginning of 2001. My adjusted cost basis is far less than zero. I could give you others, but my point is, a disciplined program of writing covered calls against core holding over a long term period is a reasonable approach to both income generation and capital preservation. jmho fwiw.

To: Gary E who wrote (3807)	6/13/2002 9:39:23 PM
From: alanrs	Respond to of 5205

>> My only point here is that so many of the supposed xperts that advocate selling calls on stock you own have NEVER shown me an example where they have come out ahead... I have an annuity invested in a GIC. It pays 6.25% this year with no risk to capital. I have a passbook savings account that pays 3% (ING Direct) with no risk to capital. I own a variety of REITS, which throw off a dividend of around 11% based on my cost. This year they are trading at roughly 160% of cost, but two years ago they were trading at about 50% of cost. I own tech stocks. They pay no dividend, but by selling calls against them I've managed a return of about 12% per year for the last two years despite following self imposed rules that leave me out of the option market most of the time. In aggregate these stocks are selling at roughly 50% of cost right now. As a specific example, while I wish I owned QCOM at $19 like UF, I bought my first 200 shares from marginmike at $128. Total cost on the whole batch is now $51.61. Netting out the procedes of call writing, and some call buying and some put selling, my cost is $43.71. The stock sells for roughly $32 right now. I would never post my individual trades for a lot of reasons. I don't crow when a specific investment is doing well and I don't complain when one is doing poorly. I would never suggest someone invest in anything, except to say that if it doesn't make sense to you, you should not do it. ARS Edit: I wanted to add that my self imposed rules have proven to be a mistake so far. I would have been far better off if I had sold calls with abandon the last 9 months.