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: JohnM who wrote (3942)	8/28/2002 1:29:28 PM
From: Dominick	Read Replies (1) \| Respond to of 5205

You're not alone on getting stuck with a falling stock. Most of the time the fault lies with not determining in the beginning how far a stock must fall before you admit you're wrong and get out. I got stuck with PSFT. I bought it at 36 and it ended the day near the high with good volume. So I decided to hold it overnight. I came back late the next day and found I'm 12 points down. :(( But via averaging down and writing calls my basis is now around 17. Averaging down is normally not recommended for a stock as opposed to an index but I felt PSFT would bounce back about half way from the decline so I took the chance. This time I lucked out. Dominick

To: JohnM who wrote (3942)	8/28/2002 2:22:00 PM
From: DiB	Read Replies (1) \| Respond to of 5205

John, you write: "if not called, they will produce X%", or "Return on uncalled is Y%" I don't think you can call X% or Y% as "return". These numbers show downside protection, but not return. Hence a question: when you're not called on a stock, but its price is above your breakeven point, do you normally sell the shares the following Monday, or look to resell more calls? I've been doing similar thing past several months, with the difference that I look for calls with better downside protection. Thus I settle for closest ITM calls one or two months out on 4-5 stocks I don't mind holding long term that developed some sort of a base. Usually they give about 5-10% return if called, and if not - a good opportunity to get a great return next month or two.