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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: dara who wrote (20246)	9/12/2003 9:59:50 AM
From: Gary H	Read Replies (1) \| Respond to of 39344

The only dumb question is the one that isn't asked. g

To: dara who wrote (20246)	9/12/2003 6:12:44 PM
From: yard_man	Read Replies (2) \| Respond to of 39344

dara just ask Jay. But here's my take on what he is doing: The covered call part of the strategy is simple -- buy the stock sell the call -- you hope to reap the call premium. If shares are called you do just that -- but you can't make any more than the call premium if the stock moves higher. If the price goes down and stays below the exercise price at expiry, you still have the shares at a reduced cost == share price - minus the call premium you took in. Being short puts is different (but not by much) -- it is also a bullish, but "naked" play with limited upside potential. If the stock is above the put price at expiry -- you keep the whole premium -- but you can't make any more than the entire premium you sold the puts for -- should the price rise higher than the put exercise price. If on the other hand, the price is below the put exercise price at or near expiry and the shares get "put to you" at the exercise price -- you have picked up the shares for == excercise price - put premiums you received. May sound risky -- but it is actually less risky than a GTC limit order to buy the stock once it reaches some given lower price -- why?? because you take in the put premium. from a risk standpoint -- he would be doing the same thing if he simply sold twice the number of puts -- left off the other part of buying the shares and selling the calls -- the only difference would be the potential to receive dividends if long the stock. Just selling twice the number of puts would have the advantage of requiring less margin -- but when selling puts -- one should always keep the cash available in the account to buy the shares in case one is "put."

To: dara who wrote (20246)	9/12/2003 7:07:07 PM
From: Cogito Ergo Sum	Respond to of 39344

dara remember Jay's term shorted Covered Calls can be confusing. It's as tippet says. Shorted covered calls means wrote covered calls. Shorted puts means write naked puts. regards Kastel

To: dara who wrote (20246)	9/13/2003 10:30:31 PM
From: TobagoJack	Read Replies (1) \| Respond to of 39344

Hello dara, I have been doing NEM since the days of iDotCom and eSlashNet. The best explanation I can give is a journal of my NEM trades during 2003 achamchen.com ... I treat the premiums as pocket money, selling insurance to others, and to keep in practice, like exercising for a triathlon :0) I twitch and duck at times, suddenly reversing stance on NEM, depending on what startles me or what tempts me :0) Chugs, Jay P.S. I do some variation of the same acts on Harmony achamchen.com